Pocket Listings – Good Idea or Bad?
From time to time I have a client ask me if it is a good idea to list their property privately as a pocket listing for a week or two before advertising it publicly on the MLS. Read on to find out my thoughts and experience on this increasingly popular phenomenon.
What is a Pocket Listing?
A Pocket Listing is when a real estate agent has an exclusive right to market a property, without a requirement to distribute that property publicly via the local MLS.
Why Pocket Listings?
The theory behind pocket listings is that you can create an illusion of exclusivity behind the property which can drive some buyers to increase their potential offer price. Additionally, some sellers know that their price is very high, and just want to test the waters and see if there is anyone out there interested in buying the home at their admittedly high list price. Finally, some sellers are aware that the dreaded “days on market” count goes up the minute a listing gets placed on an MLS, and therefore want to avoid putting the home on the MLS until they are absolutely ready.
Are Pocket Listings a Good Idea?
No. Almost never. The only one who benefits from a pocket listing is a listing agent. Pocket listings are much more likely to be “double-ended” (when the listing agent represents the buyer as well) by the listing agent since smart buyers who use a buyer’s agent are not likely to see the listing advertised. The seller is much less likely to get multiple offers which drive up the purchase price when the home is not advertised publicly on the MLS.
If you fall into the category of not being serious about selling the home, and just wanting to test the waters, you can add as a term to your pocket listing agreement a caveat that the listing agent cannot double end the deal. This ensures that the listing agent really has your best interest at heart. Other options that are becoming more realistic for home owners are For Sale By Owner or Zillow Make Me Move’s. However, these options come with downsides as well. In the case of a For Sale By Owner, there are many ways you may not be protected during negotiating and escrow if you have not done it on your own before. Your property will also not be advertised to as many people as a standard listing. In the case of a Zillow Make Me Move, one obvious downside is that you will be contacted multiple times a day by real estate agents trying to solicit you and soon you will not even bother to check if the response is from a real buyer or not.
If you are considering a pocket listing, find a real estate agent that you really trust and tell them your reasoning behind wanted your listing to remain private. More likely than not, you will be better served by waiting until you are ready and then putting the home on the market at a reasonable list price.
If you have any questions about pocket listings or real estate in general, do not hesitate to ask us first!