Understanding Pocket Listings

It's the ultimate inside scoop of the real estate world – the pocket listing.

The elusive pocket listing is a home sale managed privately by the seller and their real estate agent. This unconventional approach allows sellers to test the market, but with no public listing or for sale sign on the front lawn, pocket listings are only visible to the agent’s private network of buyers.

A pocket listing is easier to navigate than you might think, but it’s important to understand how they compare to a traditional home sale.

A pocket listing, also known as an “off-market listing,” all comes down to word of mouth or private listing networks. This occurs when a listing agent sells a home through their connections with other real estate agents and private listing service, rather than on the open market or through listings in the multiple listing service (MLS).

A pocket listing is a real estate agreement that allows sellers to be more selective about who can view the property and the kind of buyer they wish to attract. A pocket listing is also not marketed the way a traditional real estate listing is - therefore there is no staging or professional photographs to scroll through online.

According to MLS, as many as 10 – 15% of homes offered for sale on the real estate market today are off-MLS listings.

In a standard home sale, the seller signs a contract with a listing agent to help market their property and show it off to prospective buyers. A pocket listing is not publicly marketed or listed on the MLS. Instead, information about the property is kept within the brokerage.

A seller contacts a well-connected real estate agent to set up private showings. Interested buyers can hunt for pocket listings with the help of trusted real estate professionals or by looking online at sites that feature off-market listings.

However, the National Association of REALTORS^® (NAR) officially prohibits pocket or exclusive listings. This was put in place after a 729-70 majority vote on November 11, 2019.

The new regulations state that the listing broker must submit their listing to an MLS within one business day of marketing a property to the public. Previously, pocket listings were used frequently, often by unethical real estate agents, to line their pockets with a better commission without having their clients’ best interest in mind.

The ban gives buyers 24 hours to secure a deal before it’s officially on the real estate market. This means if you see a “coming soon” sign on a property you absolutely love, don’t wait on making your move.

There may be a pocket listing ban from the NAR, however, don’t write off your hope of finding one. Savvy real estate agents can use the window of time as a “coming soon” property to make an off-market sale. This still complies with the guidelines of the ban. NAR agents must post the listing to their MLS within one business day of signing the listing agreement. Until then, the agent can share the pocket listing within their personal and brokerage network.

To do this, you need to find a real estate agent you trust to serve as your guide on navigating this process.

Find A Well-Connected Real Estate Agent

Not only do you need to find an agent you trust, but you also need to find one who clearly has the connections for the inside scoop on pocket listings.

If there is an area that you desire to live in, find a hyper-focused agent in your local real estate market. They should have an extensive network that they can visit and see if any of their contacts are considering selling their home. This especially comes in handy in markets where inventory is low.

An agent from a larger office can reach out to fellow agents to get the inside scoop and let them know they have a potential buyer for a particular home or area. There is also a private listserv called Top Agent Network that agents can join by invitation only.

It also comes down to a good reputation. Ask around and see if you have any glowing recommendations for a professional real estate agent who is a pleasure to work with in the area. You will also want to find a go-getter, as some agents may reach out to the homeowners of a dream home to see if they would consider selling their home for the right price.

Look Online For Pocket Listings

While on the hunt for an off-market listing, you can open your laptop and do some investigative work. You can log on and find a plethora of information in an online search on potential pocket listings in your area. You may even have luck with sites that feature off-market listings, and online marketplaces like Craigslist often feature for sale by owner homes. It’s important to note that if you’ve found off-market houses online, others will likely have found them, too.

While pocket listings may seem like a great way to find your dream home, there are both benefits and drawbacks to using this method in real estate. It’s important to note all aspects of an off-market listing and see which one outweighs the other in your book. Your outlook on pocket listings also depends on whether you are a buyer or seller.

For The Buyer

When buying a home off-market, one thing is clear: there’s less competition and you don’t have to anticipate anyone coming in and putting your offer to shame. The fewer people who know about the pocket listing, the better for you and your offer. This takes the stress out of buying a home.

Pros

• There is a greater chance of your offer being accepted
• Less stress with the home buying process
• Closing may happen sooner
• There is more privacy to a pocket listing
• There is a chance of finding a home below market value

Cons

• Sometimes, the listing agent is working with the seller by listing the house and helping the buyer – creating a dual agency situation
• Some states have made dual agency transactions illegal
• Because there is no public information on the property, prospective buyers will need to visit the home in-person
• There may be less room for negotiation on the price of the home

For The Seller

As a seller, if you decide to go this route you will need to consider the pros and cons of an off-market home sale.

Pros

• There is less traffic through your home and no worries about having to leave your home at any moment for an open house
• You won’t have to go through the hassle of sprucing up your landscaping, repairing your roof, or staging - buyers will proceed with the home as-is
• No staging or professional photos keeps more money in your pocket
• Your potential buyer means business, and not the lookie-loos that open houses may bring in
• Pocket listings offer a more private home sale and nobody will know the house was for sale until the moving trucks show up
• Without an official listing, buyers can get a feel for the listing price and can make changes without the negative impact of announcing it on an MLS
• The seller has the upper hand and the buyer will likely need to meet the asking price

Cons

• Less traffic when a home is for sale means less opportunity for more offers to come in and the likelihood of a bidding war is nonexistent
• As mentioned above, many pocket listings are dual agency and the same agent may be facilitating for both the buyer and seller. This may leave you wondering, “do they have my best interest in mind?”
• It may take longer to find a buyer willing to pay the asking price

A coming soon listing is often confused with a pocket listing, but they couldn’t be more different.

A pocket listing is an off-market listing, which means that it does not appear on the multiple listing service. Rather, it’s marketed by word of mouth or private networks. A coming soon listing refers to a property that is not available until a later date, however, this type of listing can be included on the MLS. Coming soon listings can be used as a marketing tool to build interest in a home before the property is officially on the market.

While true pocket listings are limited, there are short periods of time where you can make an offer on a home that is coming soon. These off-market listing opportunities might be your path to the house and neighborhood of your dreams.

Find a well-connected, trusted, and knowledgeable real estate agent and set the groundwork for finding the right fit for you. If you are ready to make that step, make the first move and buy with an agent to start the home buying process.