Imagine you have exciting news to share, but instead of tweeting or posting about it on social media, you send a direct message to a few select people. In the real estate world, a pocket listing is a similar concept.
Typically, when a property is listed for sale, the listing agent will promote the listing on multiple listing services, or MLS, to entice prospective buyers to view the home. Pocket listings are another story entirely.
Read on to learn about what pocket listings are and the potential advantages you could experience when using this method to sell your Calabasas home.
What is a pocket listing?
In real estate, the term “pocket listing” means any listing not actively advertised in the area’s MLS. These properties are often called “off-market” listings since they are not marketed in the same fashion as traditional ones.
It is important to note that a pocket listing is not the same as a For Sale By Owner (FSBO) property. In this scenario, the sellers still work with a listing agent — they simply want their property marketed differently.
While pocket listings do hold value for sellers who prefer privacy, the National Association of Realtors® (NAR) and individual agents say they can limit transparency in transactions and restrict the potential buyer pool for sellers. While this could be true, it doesn’t mean pocket listings are without merit. To better understand pocket listings and their value, let’s first discuss how MLS listings compare to pocket listings.
MLS listings versus pocket listings
In an open market sale, a listing agent uses the local or regional MLS to distribute information about a new listing to the market, including its square footage, the number of bedrooms and bathrooms, listing photos, and a description of the property. These details are then syndicated across major real estate websites for consumers to browse through.
When it comes to pocket listings, sellers must first express to their listing agent that they do not want the listing circulated by the MLS. The agent must still file that listing with the MLS and include a signed certification from the seller indicating that they are refusing MLS services.
At this point, the listing is considered an “office exclusive.” The listing agent can share information about the listing with brokerage members through one-to-one promotion between these team members and their clients who may express interest in the pocket listing. Agents and brokers must adhere to the NAR's MLS policy or face fines.
The United States has approximately 600 MLSs, but the actual number is a moving target. According to the Real Estate Standards Organization, roughly 80% of home listings utilize MLSs. Pocket listings are rare because, without the MLS, a home isn’t likely to be seen by many people, which can hinder a home’s ability to sell. While MLSs increase the likelihood of a sale, pocket listings still have various advantages.
When pocket listings work to sell homes
Several different scenarios warrant pocket listings. Privacy is a top reason why sellers opt to pocket list their property. Since the home is not listed on the MLS, only the involved parties know the house is on the market. Other instances where a private listing is an excellent choice include:
You have built rapport with a buyer
You might not have to list your property if a friend or neighbor has already approached you with a direct offer. In this case, make sure to have a real estate attorney and a professional accountant review everything before you sign. Suppose you’re looking for a mediator between you and a loved one to avoid potential issues. In that case, a real estate agent can still serve a critical role as a transaction coordinator, likely for a reduced commission rate.
You want to test the market
Sellers who want to see what their house could sell for without putting in the MLS should consider pocket listing. If you go the traditional route and list your home on the MLS and change your home's price multiple times, it could stigmatize the listing. However, if the listing isn’t marketed publicly, the seller can experiment with different price points without facing repercussions.
A listing agent can use comparative market analysis to evaluate your home against comparable sales and adjust your listing price based on competitive differences. This is a better way to set a listing price without affecting your home’s time on the market.
A listing agent can use comparative market analysis to evaluate your home against comparable sales and adjust your listing price based on competitive differences. This is a better way to set a listing price without affecting your home’s time on the market.
Your home is in the upper pricing level for your market
Sellers of luxury homes find the privacy a pocket listing can provide quite appealing. A high price tag or high-profile seller can draw unwanted attention to the property, such as media coverage or buyers who aren’t serious about making an offer. In this case, an approach that allows the listing agent to market the property to an exclusive pool of buyers, collect feedback and find a buyer through targeted exposure can be attractive. When you decide to pocket list, you’ll spend less time sifting through buyers who can’t afford your luxury home and more time working exclusively with serious contenders.
Reduced fees
Since sellers will save on funds allocated for staging and professional photography to market the home, some agents may be willing to take a reduced commission on a pocket listing.
Pocket listings allow sellers and listing agents to sell homes that aren’t available to the general public. If you are a private person who wishes to use the same approach in selling your home, a pocket listing is perfect for you.
Are you looking to pocket list your Calabasas home and need the assistance of an esteemed real estate team? Contact The Fridman Group today for guidance when pocket listing your luxury Calabasas home for sale.
