The Execs And Cons Of Pocket Offers: Ought to You Be Secretly Promoting Your Dwelling?

By Jack Last updated Aug 9, 2021

In today’s hectic real estate market, some sellers take the unconventional approach of purposely limiting the visibility of their home to potential buyers.

You read that right – some sellers are reducing the number of house seekers who can compete for their home. The technique is known as pocket listing and is becoming more and more common. Pocket listings – also known as office exclusive listings or off-MLS listings – are properties that are never made available to the public.

Typically, agents register listings with their local Multiple Listing Service (MLS), a regional database of homes for sale. Once a home is posted on the MLS, it is automatically shared with other brokers and on aggregated listing sites such as Redfin, Zillow, and Realtor.com.

Pocket listings do not appear on these sites, however, as they are never attached to the MLS. Instead, agents market pocket listings to other agents in their office or to an exclusive network of buyers.

“A pocket listing is essentially a privately sold home,” says Amber Taufen, senior editor at HomeLight’s Buyer Resource Center, an advisory blog for homebuyers. “Buyers need to have some sort of connection with the agent, broker, or home seller in order to find out about the property.”

By nature, it is difficult to determine how many homes are being sold this way, but housing market analysts say pocket deals have become more popular during the pandemic.

According to a Redfin analysis, the number of homes listed and immediately marked as sold or “pending” rose from 1.8% in June 2019 to 2.8% in June 2021, with a high chance they were privately marketed before moving into the MLS, which would make them pocket lists.)

One reason they have become more prominent is that “a lot of salespeople didn’t want strangers to stumble through their homes,” says Redfin’s chief economist Daryl Fairweather. Additionally, the incredibly high demand from homebuyers has allowed some sellers (and brokers) to have a larger group of buyers in their personal space, making pocket listings more profitable.

“Pocket deals have traditionally been used by the very wealthy or celebrities who don’t want others to know they are selling their home,” added Fairweather. “That is no longer the case.”

The benefits of a bag listing

privacy

Don’t want a lot of pedestrian traffic to come through your house? A pocket listing gives you more control over who has access to your home and protects your privacy.

“In some cases, high-end salespeople who have run into financial difficulties or prominent parishioners who are divorcing don’t want others to know they are selling their home,” says Taufen.

Some homeowners may also find constant visitors and the need to keep their homes in good working order frustrating. After all, home buyers don’t always make the most respectful home guests. (Imagine groups of people looking for mud in their newly cleaned house for ignoring your no shoes policy.)

One way to test the market

If you’re not sure if you want to sell or for how much, a pocket listing can be a market test to see if buyers are ready to buy your home – and get an idea of how much they may be willing to pay. This is great information to have when you finally put your home on the MLS and market it to the masses as it can help prevent you from mispricing your home. (Even in today’s market, overpriced homes are hard to sell.)

Lower expenses and fees

If you don’t need to market your home, there are some selling expenses you can do to cut it. You may not have to hire a professional photographer to take list photos, which Thumbtack says generally costs between $ 100 and $ 125 an hour. Additionally, some real estate agents may be willing to charge a lower commission on a pocket listing because pocket listings don’t require a public marketing campaign, which takes the strain off a broker’s shoulders. In some states there is also the option of collecting two commissions by representing the buyer as a “dual agent” in the transaction.

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The disadvantages of a bag listing

Lower sales prices

Selling your home as a pocket listing can prevent you from getting the best bucks for your home, Baptism warns. “Since you don’t have that many buyers competing for your property, chances are you’re leaving money on the table,” she says.

Matt van Winkle, agent and owner of RE / MAX Northwest Realtors in Seattle, agrees. “For most salespeople, maximum exposure will drive the best selling price,” he says.

A new study by Bright MLS found that homes listed on the MLS sell for about 17% more than homes sold on the MLS. That means an additional $ 51,000 for a $ 300,000 home.

Potential violations of fair living and discrimination

According to Kate Scott, executive director of the Equal Rights Center, pocket-size listings are controversial as fair housing advocates say they promote housing discrimination.

“The reality is that the housing market is already segregated due to decades of discriminatory practices and pocket deals are inherently discriminatory because they only show homes to an exclusive group of buyers who are typically white,” says Scott. “People with color usually don’t have access to pocket listings.”

Additionally, many real estate agents – including Van Winkles – are refusing to sell pocket listings. And some multi-listing services, like Bright MLS, which serve 95,000 real estate professionals in the Mid Atlantic, are fining brokers for non-compliance.

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