What is a “Pocket” Listing?
When a homeowner signs a Listing Agreement with a real estate agent, the agent posts the listing on the local Multiple Listing Service (MLS). The property and all its detailed information is then exposed throughout the internet on dozens of other sites such as Realtor.com, Zillow, Truilia, Redfin, etc. A sign on the front lawn is an “old fashioned” but still useful way to expose the house to buyers. The agent will also post ads in local newspapers, circulate fliers and send out email blasts. Also, the agent holds Open Houses on Sunday for the public and during the week for other agents (Los Angeles tradition is Tuesdays 11 am – 2 pm).
When sellers don’t want their house widely advertised, they may opt for a “Pocket” Listing. In this case, the agent keeps this listing in his/her “pocket”, seeking buyers without the benefit of full exposure. The agent may send an email to clients giving a general description of the house, or “pitch” the pocket listing to other agents during an office meeting or where agents tend to gather, such as at Broker‘s Caravan. No MLS, no sign, no ads, no Open House; just some word-of-mouth marketing.
Smart marketing – no matter what the product – is about exposure. If you want to get the highest price for your home, it usually makes sense to market the property to all potential buyers; that’s one of the benefits an experienced real estate agent brings to the table. If getting the best price is important to you, it’s risky business to sell your house off market. In fact, Colorado regulators say off market deals can pose risks for sellers. One Colorado Realtor estimates that sellers risk losing up to 25% of their homes’ value by selling as a Pocket. (Marcia Cotlar, 8z Real Estate, Boulder, Colo.)
What type of seller takes the “Pocket” listing route?
Certain sellers opt for Pocket Listings for some important reasons. In neighborhoods such as Beverly Hills, Bel Air and Hollywood Hills, celebrities concerned about privacy sometimes prefer to sell this way. They may not like the idea of having their home placed on the internet with photos, videos and descriptions.
You don’t have to be a celebrity to consider a Pocket Listing. Some sellers may want to test their price without going on the MLS. They’ll try a higher price for two weeks as a “pocket” listing to gauge public response. This way, they don’t waste days on market on the MLS, which can hurt a listing by making the house look “stale” and buyers wonder if something’s wrong with the house because it’s on the market so long.
If the agent finds an interested buyer or another agent representing an interested buyer, the seller signs a “Single Party Compensation Agreement” prior to showing the house. California Association of Realtors form, other states may have different forms or rules regarding “pocket listings”.
Sellers should remember that typically the best way to sell at the best price is to fully expose the home to all potential buyers. For more information call Tony or email him and arrange for having a meeting. Tony buys the coffee.
Los Angeles Area Pocket Listings