Over the past year or so, “pocket listings” have become a more mainstream option for quietly marketing a home. If you haven’t heard this real estate term before, you probably will. Here is what today’s homebuyers and sellers need to know about pocket listings. Having a great deal of experience with off market listings, I thought I would help break down the market trend that is sweeping across San Francisco. If you are interested in either buying or selling a property off market, please feel free to contact me.
A pocket listing is an unofficial, off-market listing
Also known as a “quiet” or “off-market” listing, a pocket listing is a property that an agent keeps tucked away in his or her “pocket.” Though the seller has a signed listing agreement with a real estate agent, the property for sale isn’t officially listed in the MLS. Other traditional forms of marketing may be downplayed, too.
Pocket listings started many years ago as a way for high-profile people or expensive homes to be quietly marketed. They were seen as exclusive because they were listed under the radar of mainstream agents, buyers and even the press.
Pocket listings are growing in popularity
As the real estate market has become more challenging, pocket listings have become more mainstream.
In many markets, there are few good properties and low inventories, coupled with buyers who are motivated to see more homes. You’d think that would be a perfect reason to push homes on to the market.
And yet, there are sellers who have been interested in selling but aren’t comfortable with current home values. These sellers may sit on the sidelines and will only sell if they can get the price they want.
As soon as a home is listed in the MLS, the infamous “days on market” clock starts ticking. The longer your home sits on the market, the more “stale” it becomes and the less money you’re likely to be offered. Buyers, seeing that a home has been for sale for 30 or 60 days or even longer, will inevitably make low-ball offers. And so, instead of going on the market, a seller who wants a certain price may engage their real estate agent and put the listing out there as a “pocket” listing.
Pocket listings let sellers test the market
With a pocket listing, a seller and their agent can quietly test the market without adding it to the MLS. They can gauge reaction to the price they’re asking and see what kind of traffic they get and how the market receives the property without the MLS clock ticking.
The agent can get the word out about the home using various marketing methods except the MLS — maybe even holding a small open house, doing a private broker’s tour, and stimulating word of mouth with other agents.
Sometimes, pocket listings eventually get entered into the MLS. But in other cases they’re sold without ever making it into the database.
Pocket listings have become a secondary home market
In some markets, there are entire websites devoted to pocket listings or networking opportunities with other agents about upcoming listings and properties. What started as a way to get the word out about future listings has turned into a secondary market of homes for sale for well-connected real estate agents.
While sellers may agree to a pocket listing and dictate how the information about their home is disseminated, many boards of Realtors have procedures and rules for how listings are to be input into the local MLS. Those rules include fines for agents who don’t input their listing within a certain time period.
Time will tell if pocket listings are here to stay or just a direct result of our current real estate market.
What pocket listings mean for sellers and buyers
If you’re a seller, you should consider testing the waters with a pocket listing, even if it’s just for a week or two. You’ve got nothing to lose.
For buyers, it’s important to work with a local agent who has established relationships with other agents in the community. That way, you can be certain that you’ll be made aware of all potential homes for sale.
If you are interested in either buying or selling a property off market, please feel free to contact me!