What Is a Pocket Listing?
A pocket listing is a real estate sale offer that is handled by a single broker or salesperson and not made available to multiple listing service (MLS) members or even other colleagues in the same office.
A pocket listing may be an option for a seller who insists on privacy and a broker who has extensive connections in the community. Even if no sale is made, the seller gets a more accurate idea of the proper price for the home.
A pocket listing may also be referred to as an off-market listing or exclusive listing.
- A pocket listing is an exclusive real estate listing that is not advertised to the general public.
- A single real estate agent handles a pocket listing; it involves limited or no collaboration with other brokers.
- Sellers who ask for a pocket listing generally do so to ensure privacy.
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How a Pocket Listing Works
When a real estate agent is hired to list and sell a property, a contract is signed between the seller and the agent and the agent's company. Usually, the property is listed in the multiple listing service (MLS), the database of properties for sale that all brokers use. This is done so that real estate agents and brokers can 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 there is no agreement to work with other real estate professionals.
The pocket listing is used mainly by owners of very high-end or unusual properties who want only serious and qualified buyers to show up. The owners may be celebrities or politicians. The list of potential buyers is small, and the agent is well-connected.
At a less lofty level, the owners may choose a pocket listing to test the waters and see what price the property might bring. If no sale is made during the contract term, they can always open it up to an MLS listing.
It's important to note that some types of pocket listings are considered ethically dubious because a single agent is representing both the buyer and the seller. For this reason, some types of pocket listings are banned by the National Association of Realtors or restricted by state laws. The sale may be handled by investment brokers rather than real estate brokers.
Advantages and Disadvantages of a Pocket Listing
There are pluses and minuses for both the agent and the seller 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.
There is privacy for both seller and buyer.
There is only one agent trying to sell the property.
If the deal falls through—or no seller is found—the property has had no visibility on the market.
The likelihood of multiple offers and a bidding war is reduced.
Without a lawn sign or advertising, no walk-in traffic is generated.
Advantages of a Pocket Listing
A pocket listing may offer a considerable advantage to the real estate agent charged with selling the property, as they have the listing exclusively and are therefore entitled to the full commission. The listing agent is under no obligation to share any portion of the commission with another broker or agent unless they choose at some point to enlist some quiet help in finding a buyer.
From the perspective of the seller, a pocket listing can help determine the real market for the property. If the offers fall short, the seller can put the home on the MLS, where it will appear as a new listing and not one that has been there too long at an unreasonably high price.
The private listing also can add a little snob value.
Disadvantages of a Pocket Listing
The realtor is acting as a solo agent; no one is helping to sell the property. This is not a problem if the agent is confident that a buyer can be found, or already knows of someone interested in the property.
Pocket listings reduce the chance of multiple offers and a bidding war over the property.
There's an obvious danger in keeping the sale hush-hush. With no listing and no lawn sale, the word is unlikely to spread beyond the realtor's contact list.
Example of a Pocket Listing
Sadie is interested in selling her estate, which is worth a substantial amount of money. Sadie already has a family member, her cousin Nick, who has expressed serious interest in purchasing the home.
Because Sadie already has a buyer lined up, she contacts the real estate agent she has used in the past with an offer of a pocket listing. The listing is not put on the MLS and is handled as an exclusive listing.
Why don't Sadie and Nick just get together and make the deal? Realtors do more than show property. They also put together all of the legally-required documents that must accompany a property transaction. And even cousins can sometimes use help in negotiating the details of a property sale.
Why Would I Try to Sell My House Via a Pocket Listing?
Are you a celebrity, a politician, or just a really rich person with a massive estate? You may not want hordes of sightseers touring your house.
You may be able to find a real estate agent with a solid list of contacts who is able to identify the buyer or buyers who would be most interested in your property.
Why Would I Not Want to Sell My House Via a Pocket Listing?
Pocket listings are also called "off-market" listings for good reason. There's no lawn sign and no MLS listing. Any marketing is done through private channels or word of mouth.
The pocket listing works mostly for very high-end and unusual properties when the list of prospective buyers number in the single digits.
It may also work for people who have already identified a likely buyer.
Otherwise, it is an option for people who want to test the market for their property. That is, if the property fails to sell at the original asking price, the seller can move to an MLS listing at a more realistic price.
Are Pocket Listings Banned?
Pocket listings are legal throughout the U.S.
The National Association of Realtors (NAR), the trade association, effectively banned pocket listings in 2020 by requiring that all listings be added to the multiple listing service (MLS) within one day of the contract signing.
For this reason, pocket listings may be handled by investment brokers rather than real estate agents.
Pocket listings can look dubious because there is only one person representing both the buyer and the seller. They may invite discriminatory practices by limiting knowledge of the listing.