A pocket listing refers to an agreement between the seller and a real estate agent not to list the house on the MLS (Multiple Listing Service) but instead try selling the home through his private network. Even though pocket listings are not an underground practice, you need to approach them with a lot of caution. Pocket listings will work to sell your home if:
The Seller Already Knows the Buyer
Since you moved in ten years ago, your neighbor has been admiring your property. He desires to get to the next door and get a convenient place to store his boat. If he has told you several times, if you are ready to sell the property, he is ready to purchase.
There is no need to go through the process of staging, preparing, and listing if you are already having a suitor who is willing to pay the price you are asking. Unless you feel like you are underpricing the home, such a situation is like selling the home with a head start. The most important thing is to make sure that you are having good representation. Read more.
You Need Additional Privacy in the Sales Process
If you have a prestigious house for sale and list it, you will attract some uninterested people who just want to take selfies in the home. For instance, celebrities cannot treat real estate listings like any other person. However, it is not only the famous and rich who need privacy during the process of house listing. You can also include judges and prosecutors who handle tough cases in this category. You can also include the controversial politicians who prefer their personal lives to remain anonymous.
These are some of the situations where sellers opt to go for pocket listing. The real estate agent who is handling such a sale has to keep the listing fairly private. They should only allow a few people who are within their network to know about the sale. The agents can also reach out to particular individuals that they know they want to buy such property to see if they have any interest. The seller will be able to maintain a particular level of privacy while still being able to list on MLS. Realtors could censor particular info on the listing and screen the viability of the hunters before viewing.
The Market at Home is Limited
There are some houses in the region that are too expensive and only a small clique of individuals can afford it. The house can either be too large or too expensive. When you have such a limited market for the house, it will find itself out of place on the MLS. It is more advisable to sell such a house through the MSL.
Pocket Listings are Not the Best Option for:
1. Less Exposure for the House
The pocket listing will imply that your house has less exposure. Can you launch a product with zero adverts and expect to get customers? It is a similar case with pocket listings. It is not a situation of ‘build it and they will come.’ MSL remains to be the most effective and easiest way of sharing with everyone that you have a house for sale. Even the most popular real estate websites aggregate their info from MLS.
We have sellers who think that it is better not to list as their house will not sit on the market. Even though you will not have your home racking on the market, that challenge is that it will not also get the desired exposure. It isn’t the right time to sell, it is wise to wait a bit. It is not advisable to sell your house without listing.
2. Pocket Listing Brings House Comps Down
By design, comps attempt comparing like houses in an area. Comps are a great metric to compare the prices of homes but they aren’t an exact science. Pocket listing can throw away the market value of the neighborhood.
Pocket listings have an industry-wide effect on listings. In most cases, houses that are offered as pocket listings are not entered into the MSL after being sold. It limits the amount of information that is in the market and makes it hard for the other sellers, buyers, and agents to determine the value of the neighboring properties. Appraisers will also find it hard to determine the prevailing market value of a specific property.
3. Pocket Listings Will Not Give Your Home the Best Prices
A pocket listing is like a CEO who asks around to see if there is a person who is interested in a position instead of advertising the role on a job website. You can be lucky to get a connection in this manner but you can miss out on more qualified and better applicants. The same case applies when you are dealing with pocket listings.
Your property will not be marketed widely meaning you will get a slim number of prospects and hence you will not approach competitive pricing for your home. It is hard to guarantee accurate pricing when using pocket listings. Pocket listings make your property a secret and hence there will be no competition to drive up the competition. Besides, you will not have any leverage for negotiating.
4. Pocket Listing Can Lead to Murky Ethics
When a realtor sells a big apartment, his name will be all over the city. Such a realtor can openly show you some of the upcoming projects in the market even if they have not yet hit the market. However, you have to proceed with a lot of caution in case there is a double representation.
When the real estate agent gets a license, he vows to keep the interest of the customer first. Therefore, in case of a pocket listing, he has to make sure that he gets the best price for the seller. Therefore, it does not translate to getting the best price for the buyer even if he is also representing his interests.
Pocket listings are legally a fair game. However, the process is ethically a complicated labyrinth. The agents should disclose the benefits and disadvantages to the buyer while acting in the best interests of the customer. It is something that is impossible and difficult to accomplish if you are representing both the seller and the buyer.
This article explains when you can use pocket listing and when you should avoid it completely. The process has its own pros and cons. Therefore, you have to make sure that you are treading carefully as you consider using a pocket listing to sell your home.