Real estate is a competitive game, and buyers looking to score their dream home often go to great lengths to make their dream come true. When an opportunity presents itself to gain an edge over other buyers, many will take advantage. That’s where a pocket listing can come into play. This article looks at how pocket listings work and includes tips on deciding whether to list your home this way.

To understand how a pocket listing works, you must first understand how the average home listing works. Real estate agents work with a shared system called the Multiple Listing Service (MLS), which is a database for all homes for sale across the country. When a home is listed for sale, its details are uploaded to the MLS for all agents to access. 

Third-party sites then “scrape” the MLS to list all the homes for the public to view and share. When working with a real estate agent, you might have direct access to the MLS itself. The MLS database is a notice board that publicizes these homes to reach the most potential buyers and help them find the right one. 

“A pocket listing is a listing that does not go on the multiple listing service,” says Cindy Raney, global luxury property specialist and founder of Connecticut-based Cindy Raney & Team. “The realtor representing the property can tell as few or as many people as they choose, with the seller’s direction.”

When someone opts for a pocket listing, they’re bypassing the MLS system in favor of a private sale. Rather than sharing all the details of a home that’s about to hit the market with the masses, an agent might share the details of one particular property with select colleagues and potential buyers. 

“A pocket listing is a listing that is not publicly listed on any public, consumer-facing platforms such as StreetEasy, Zillow, and Realtor.com.” says broker David Sokolowski of Coldwell Banker Warburg.

“If an agent has a pocket listing, they typically share with their colleagues or select buyers in their network, or decide to share through a targeted social media or email campaign,” Raney says.

So why would a seller choose a pocket listing? The answer is to avoid the hubbub of entering a saturated market and to maintain privacy.

“At certain price points and with certain seller backgrounds, selling privately is a strong need,” says agent Alana Lindsay of Coldwell Banker Warburg. “Pocket listings enable the seller to not have journalists, curious neighbors, and even their family know that the home is for sale, what their home looks like, and even what potential net proceeds they will receive. The sale will only be recorded post-closing in government records, with none the wiser.”

“The first and most common one is for commercial, tenant-occupied properties,” says Sokolowski. “Usually, these sellers do not want their tenants to be aware they might sell their properties. Sellers fear, whether appropriately or not, that tenants might become concerned that the property is for sale and want to withhold rent or start some other sort of issue.”

A pocket listing has an aura of secrecy and opportunity that many buyers seek. Buyers who view a pocket listing are considered more serious buyers, and they have the advantage of viewing inventory before the rest of the world does. 

Quiet pocket listing sales are often less competitive ones. “Since the property is not listed publicly, it will be seen by a smaller audience, which means a smaller pool of interested buyers will have a chance to view it,” says John Walkup, co-founder of the real estate data analytics company UrbanDigs. “With fewer buyers seeing the listing, there will be less open competition among buyers. Typically, when buyers compete, sellers win, so the price could be negatively affected with less competition.”

The right agent can get top dollar for a pocket listing through the right connections. “Agents who have the scoop on an off-market listing will usually send out e-blasts to the brokerage community, and agents who are working with buyers will then reach out and coordinate appointments to get their clients through the doors,” Sokolowski says.

Just as there are pros and cons to using a real estate agent or listing your home as for sale by owner, there are also advantages and disadvantages to listing your home using a pocket listing. 

Pros

The main perk of pocket listings is that they are private sales. Because they’re low-profile sales, they often generate unique interest. 

“Marketing a property as a pocket listing can create a sense of exclusivity, which can help create a sense of urgency,” Walkup says. 

Pocket listings can sometimes lead to a faster transaction. “With a laser-focused approach, sellers potentially could find their target buyers more quickly,” Walkup adds.

Agent David Harris of Coldwell Banker Warburg says sellers often like their control over the pricing in pocket listings. “While ultimately everything is negotiable, with pocket listings, the seller can be a bit firm with price, using the property's exclusivity as leverage, making potential buyers feel a sense of urgency and FOMO—the fear of missing out,” he says.

Cons

The biggest drawback to a pocket listing is that your home might not sell for top dollar.  

“Pocket listings typically result in the home getting less exposure,” says Raney. “Another potential downside is that fewer potential buyers coming through could lead to a lower sale price. The best way to maximize selling price is to expose the home to the widest audience possible.”

These homes can sit on the market while waiting for the right buyer to appear in this less public and inevitably smaller pool. 

Walkup suggests consulting with your real estate agent before deciding on a pocket listing. Keep in mind that you can always start with a pocket listing and later change your mind. Your agent can help you determine if the situation is right for you to go with a pocket listing.

When Pocket Listings Make Sense

Pocket listings are often ideal for homeowners looking to sell unique properties quickly and efficiently. If you own a mansion, a farm on dozens of acres, or something like a duplex or commercial building, chances are your property won’t appeal to the masses. You’re likely looking for a potential buyer as unique as the property itself. 

Using a pocket listing can efficiently target those buyers while avoiding less serious buyers who might come to an open house just to browse. 

“A seller may choose a pocket listing if they do not want a lot of traffic through their home, which can be the case particularly with a wealthy client,” Raney adds. “Many times sellers will choose to go the pocket listing route for privacy or confidentiality, especially if they don’t want pictures online, or don’t want people wandering through the house.”

When Pocket Listings Don’t Benefit Sellers

If your home has mass appeal, you might not benefit from a pocket listing. The same can be said for times throughout the year when the market is slow for sellers.

“Market conditions matter, and depending on the buyer pool and the uniqueness and exclusivity of the property, a seller should speak with their agent about current overall market conditions to consider whether a pocket listing is the best option,” Harris adds. 

A pocket listing might not attract the same kind of interest as it might when inventory is low and homes are selling like hotcakes. 

“In general, this route is not recommended unless the client is well known—a celebrity for example—and wants privacy, or the home is extremely expensive,” Raney says.

“Sellers should consider if the privacy and exclusivity gained from a pocket listing outweigh the benefits of reaching the widest possible audience,” says Walkup. “In most cases, when judged on the basis of price and time, publicly facing listings make the most sense, especially when the market is slow. Sellers should also understand what to expect and have a plan in place to pivot to a traditional listing if the pocket listing does not yield expected results within a pre-determined time frame.”

There’s another method of driving interest in listings that doesn’t limit sellers like pocket listings do. 

“An alternative to this is using the coming soon feature in the RLS (New York City’s Residential Listing Service),” says Lindsay. “The listing agent gets about two weeks to network the listing as much as possible before it goes to the open market. The drawback with this is that the agent only gets two weeks to network, whereas, with a pocket listing, they have many months, according to standard agreement language.”

Source: What Is a Pocket Listing? Here's When to Consider One Better Homes & Gardens (May 28, 2024) Kristine Gill