What Is a Pocket Listing?
A pocket listing is any type of real estate listing that is retained by a listing broker or salesperson who does not make the listing available to other brokers in the office or to other multiple listing service (MLS) members. A pocket listing may also be referred to as an “exclusive listing.”
- A pocket listing is an exclusive real estate listing that is not available to the general public.
- A single real estate agent generally handles a pocket listing; there is limited to no collaboration with other brokers.
- Sellers who ask for a pocket listing generally do so for reasons of privacy or to sell to a specific individual.
How a Pocket Listing Works
When a real estate professional is hired to list and sell a property, a listing agreement is made in writing between the seller and the real estate agent and his or her hiring company. Usually, the property is listed in the MLS, the official directory for all properties and land for sale. This is because real estate agents and brokers often agree to cooperate with other agents and brokers and share a portion of the total commission paid by the seller.
In a pocket listing, however, a property will not be listed in the MLS, and therefore there is no agreement to work with other real estate professionals. Reasons for a pocket listing include the seller’s desire for privacy or to sell to a certain individual.
Advantages and Disadvantages of a Pocket Listing
There are definite pluses and minuses to offering a property as a pocket listing.
The agent gets to keep the whole commission.
A seller can test the waters and settle on a realistic selling price before putting the home on the Multiple Listing Service. Less chance of needing to reduce the selling price.
Privacy for both seller and buyer.
Only one agent is trying to sell the property.
If the deal falls through—or no seller is found—the property has had no visibility on the market.
Less chance of multiple offers and a bidding war.
For country or suburban properties: No walk-in traffic generated by a lawn sign.
A pocket listing may offer a considerable advantage to the real estate agent charged with selling the property, as she or he has the listing exclusively and, thus, full reign of the commission. The listing agent is under no obligation to share any portion of the commission with another broker or agent unless he or she chooses at some point to enlist some quiet help in finding a buyer. The agent may also be able to procure both the sale of the home from the individual selling and the sale to the new client.
A pocket listing can also help a seller test the waters to find out what his or her property is actually worth. The offers of interested buyers can help in setting a realistic price when putting the home on the MLS and avoid being listed for too long at an unreasonably high price. Homes that stay on the list a long time and have to keep reducing their asking prices start to look like damaged goods to potential buyers.
There are also disadvantages to a pocket listing. For one, the real estate agent is essentially acting as a solo agent; no one else is helping to sell the property. This is not a problem if the agent is confident in his or her ability to find a buyer or already has acquired one ahead of time. If the deal falls through, however—or the agent fails to produce results—the property is unlisted in the MLS and does not have as much visibility to sell. There may also be a reduced chance of multiple offers and a bidding war. Also, in suburban and rural areas: There is no walk-in traffic generated by a lawn sign signaling that the house is for sale.
Example of a Pocket Listing
Consider Client A, who is interested in selling her considerable estate, which is worth quite a bit of money. Client A already has a family member who has expressed serious interest in purchasing the home. Because Client A already has a buyer set up, she contacts the real estate agent she has used in the past with a pocket listing. The listing is not put on the MLS and is handled as an exclusive listing and sale from Client A to Client A’s family member.