How do Pocket Listings work?
You’ve seen the signs in your neighbors yards, “Coming to Market Soon”. As soon as their home is listed, it is already “Sale Pending.” What about the homes that never even have a sign and all the sudden moving vans? How do home listings like this work?
The idea of selling a home without ever listing it is appealing to most people. Similarly, knocking on the door of your dream home and finding the owner willing to sell is like a dream come true. Have you ever heard of a “pocket listing”?
The term pocket listing typically refers to an agreement between a seller and real estate broker that allows the broker to market the property outside of the multiple listing service.
The property is marketed through the broker’s network and the buyer is targeted by word of mouth marketing. There are a number of risks for any seller considering a pocket listing…
Selling for Less than Market Value – How is the sales price being established? Don’t rely solely on a prelisting appraisal. There are many buyer and seller variables that cannot be accounted for by an appraiser. How can the seller be confident that the best price was received?
Have you considered the exposure? – By listing on the MLS, you are exposed to the market in almost every way possible. An estimated 45 percent of homebuyers in 2013 found the home they bought on the Internet, not through their agent.
What is your motivation to sell? – Is the plan to save on Real Estate agent commissions? Truly the savings expectation is different than reality. Agents most interested in your pocket listing likely have a buyer lined up so the conventional agent split doesn’t apply to them. It’s not uncommon for the end result to be a commission that approaches the norm and a selling price below market.
Are you willing to compromise? – Don’t expect to be able to skip the inspection or concessions that are involved in a typical sale. A competitive market provides options to the seller. Repairs, appraisal problems or unforeseen challenges can be negotiated or ignored when there are multiple interested buyers.
Pocket listings can present challenges for both the seller and the buyer. The National Association of Realtors doesn’t have a formal policy about pocket listings at this time. For the best price for your investment we recommend maximum exposure. Need proof? Check out our recent sales above asking price.