real estate for sale sign with real estate agent and home buyer

What Is A Pocket Listing – Everything You Need To Know

Have you come across terms like “in-house listing” or “off-market listing?” These are all different names for the same type of listing, more commonly known as a pocket listing. But what is a pocket listing exactly?

In this post, we’ll discuss pocket listings, including who should use them and how they’re different from standard listings.

What Is a Pocket Listing?

Usually, a traditional listing is put on a multiple listing service (MLS) by the listing agent. The information on the home is then available to any Realtor with access to the MLS of that local market.

So how is a pocket listing different? A pocket listing is not listed on a multiple listing service (MLS). Because it is not available to the public, it is in the “pocket” of the listing agent.

That listing agent will then try to market that property through word-of-mouth or through private online networks where they think they can find an interested buyer. Or, the seller might have a buyer in mind already.

A sign in front of a home that says "new listing."

When Should You Use a Pocket Listing?

Why would someone not want to list their home on the MLS? Pocket listings are beneficial in a few different cases.

First, one use for a pocket listing is if the home belongs to a celebrity, politician, or other public figure who wants to keep the sale of their home private.

Public figures may want to do this for their own privacy and safety, as well as to limit visits to the home from people who have no intention of actually buying. A pocket listing can ensure that only serious buyers have access to the home.

Another time to use a pocket listing is if the seller already has a buyer in mind. There’s no point in the seller putting the home on the MLS if they already have a buyer willing to pay the asking price. This could be a neighbor, family member, or friend who has always had an interest in owning the property.

Lastly, another use for pocket listings is to test a home on the market before placing it on the MLS. This way, the listing agent can determine if the price is fair or not and then raise or lower it depending on the reaction they get.

The MLS tracks the price history and how many days the property has been listed. Using a pocket listing to test a home’s price means the seller can avoid lowering the asking price and having their home listed for too long on the MLS. These are both negative signs that buyers and agents will look at when considering a home.

Downsides of a Pocket Listing

While these scenarios sound like good reasons to use pocket listings, there are actually far more downsides to this type of listing. In fact, if you’re wondering “what is a pocket listing” because you’re thinking about selling your home this way, you should reconsider. In general, sellers, buyers, and agents should avoid pocket listings.

One reason pocket listings are bad for sellers is that they miss out on the opportunity to get the maximum amount of marketing and exposure for their home. When this happens, the seller might end up getting a price for their home that is too low.

When a home is listed privately, there is less of a chance that the seller can create a bidding war for their home. A bidding war is beneficial because the seller might come away with a higher amount than they originally asked for.

The other downside to pocket listings is that it can be harder to make sure Realtors comply with anti-discrimination laws. The real estate agent may show the home to only certain groups of buyers without realizing it, which excludes many other potentially interested buyers. With a traditional listing, you give a greater number of buyers a fair chance at purchasing the home.

A zoomed in photo of a pair of keys and a contract that says "real estate listing on it."

Pocket Listings Affect MLS Accuracy

Real estate agents also might want to avoid pocket listings to ensure an accurate MLS database. All Realtors rely on the MLS for up-to-date information about different markets. In addition, sites like Zillow and Trulia collect data from MLSs to give their users accurate data.

When the information on a home is not available on the MLS, it throws off the data for other home valuations in the area.

For this reason, the National Association of Realtors officially banned pocket listings as of May 2020. NAR’s “Clear Cooperation Policy” requires that Realtors list the properties they are working with on the MLS within one business day of marketing it to the public.

Lastly, a significant downside to pocket listings is an increased risk of having a dual agent scenario. In this case, a single agent represents both the buyer and seller in a single transaction.

When this happens, it’s hard to know if the agent truly has your best interest at heart. Particularly if you’re the buyer, you have to be mindful that the listing agent has an obligation to get the best price for the seller. This means you might end up paying way too high.

So if you do decide to purchase a pocket listing, at least be sure to hire your own real estate agent to represent you in the transaction.

Final Thoughts On Pocket Listings

So, now that we’ve answered the question, “what is a pocket listing,” should you work with them if you’re a real estate agent? And if you’re a buyer or seller, should you buy or list a property this way?

Overall, it’s best to avoid pocket listings unless you have a good reason for wanting to keep the sale or purchase of your home private. To get the best price for your home and sell it as quickly as possible, you need as much professional marketing and exposure as you can get.

What are your thoughts on pocket listings? Let me know in the comments below!

Kyle Handy

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