A pocket listing is used in real estate for a property not actively marketed. In other words, it’s a property “in the pocket” of a real estate agent or broker and not available to the general public. This type of listing usually occurs when the seller has already agreed to sell their home to a particular buyer, and they don’t want other buyers to know about it. Typically, pocket listings result in a quicker sale at a higher price than if the property were listed on the open market.

Pros and Cons of a Pocket Listing

There are a few points to know regarding pocket listings from the buyer’s and seller’s perspectives.

Pros for the Seller

• More privacy. If a homeowner wants to keep a low profile on the sale of their property, a pocket listing may be used by a listing agent. For example, suppose a prominent politician or celebrity wishes to limit exposure during showings or avoid disclosing information about the home on the internet. In that case, they might opt for this type of arrangement.
• Experimenting with the market. A pocket listing is a method for sellers to dip their toes into the market and determine whether or not they can sell their home at their ideal asking price. It allows homeowners to establish a realistic selling price before putting their house on the MLS.
• The home could spend less time on the MLS. There are three ways to permanently remove a home from the multiple listing service: have it transferred, sell it and pay the transfer fee, or list it on another real estate site. Homes that remain on the MLS for an extended period may raise concerns with potential buyers, especially if the asking price has been reduced.

Cons for the Seller

• Fewer bids. Without an MLS listing—and with no walk-in traffic from a “for sale” sign in front of the home—fewer people will have a chance at making a bid on a pocket listing, which means the home won’t reach the same competitive pricing as it would in a bidding battle.
• It may take more time to sell your home. Because pocket listings do not get the same exposure as open market sales, home sellers may have to wait longer to find a buyer willing to pay their asking price.

Pros for the Buyer

• Less competition. There’s usually a little risk that a pocket listing will sell out from under-home buyers when they look at one. Because there are fewer competitors during the house-buying process, a buyer may be able to get the property for less money than if it were on the market. 

Cons for the Buyer

• Less space for negotiation. Even if you’re not planning on selling your property, it’s best to get a little price reduction while you test the market. Some pocket listing sellers will accept a lower offer to avoid listing their home on the MLS, but many are simply testing the waters and may be unwilling to negotiate their asking price.
• Lack of photos and details. Without seeing the property listing, potential buyers will most likely need to come to see the house in person without having access to online information. Buyers won’t be able to go back and look at or learn more about the home after viewing.

Conclusion

Pocket listings can benefit buyers and sellers, but it’s important to understand the pros and cons before entering this type of agreement. If you’re thinking about pocket listing your home, make sure to consult with a real estate professional to see if it’s the right move for you.

Need to speak with a professional? Contact Hawkins/Ryerse Group today to see how we can help!