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Do Pocket Listings Benefit Sellers in Any Way?

By Bill Gassett | January 29, 2023
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When buying or selling a house, you may hear real estate terms you're unfamiliar with.

One such term could be a "pocket listing." When hearing this for the first time, it is not uncommon for consumers to ask what is a pocket listing in real estate and how they work.

If you sell your home, you'll likely want to sell for the most money possible.

For that to happen, you need an exceptional real estate agent who will price your home correctly and provide outstanding marketing.

Unfortunately, a pocket listing does not accomplish maximum exposure. Quite the opposite.

Let's take an in-depth look at everything you need to know about pocket listings.

What is a Pocket Listing in Real Estate
What is a Pocket Listing?

What is a Pocket Listing?

Most real estate listings are entered into the Multiple Listing Service (MLS). The MLS is a database of homes for sale across the United States. It allows real estate agents to cooperate on properties being sold.

Agents can scan listings and make their clients aware of a property that matches their needs.

A pocket listing is any property not listed on the MLS. By utilizing various marketing strategies, like word-of-mouth publicity and placement on private networks, the seller can restrict access to potential buyers while only entertaining offers from specific individuals.

So essentially, a home seller who allows a pocket listing will get limited exposure. All the buyer's agents would not even know the property was for sale.

A pocket listing is not the way to go when you want to maximize your profits and sell for the most money.

How Do Pocket Listings Work?

For a standard real estate transaction, the path is straightforward. The seller approaches a real estate agent and signs a listing agreement stipulating that they will sell their property.

Usually, a seller will sign an exclusive right-to-sell listing agreement.

Typically, buyers can see homes on their favorite home-buying websites once this property has been successfully marketed via MLS. The MLS transfers the data via a feed to sites such as Zillow.com and Realtor.com

The information provides buyers, sellers, and real estate agents with significant advantages – the seller can more easily find a buyer while the purchaser may gain access to additional information on neighborhoods and properties in their ideal location.

The seller can pique the curiosity of potential customers, driving up the price of their property when several buyers are interested. The odds of a bidding war increase dramatically, especially in robust seller's real estate markets.

Buyers can browse numerous properties, selecting those that best suits their needs.

On the other hand, a pocket listing is not listed in MLS. The seller lacks exposure because thousands of real estate agents have no idea the property is for sale.

Pocket listings create considerable downsides for sellers.

Are Pocket Listings Legal?

Yes, they are legal. However, there are some restrictions placed on pocket listings.

The National Association of Realtors has placed guidelines for Realtors with pocket listings. It is essential to note that not all real estate agents are Realtors.

The guidelines from NAR are referred to as the Clear Cooperation Policy. The initiative increases the odds of cooperation among real estate brokerages.

The regulations went into effect at the beginning of January 2020. Real Estate brokers must submit listings to the MLS within one business day of marketing the property to the public under the Clear Cooperation Policy.

Why Would a Home Seller Ever Want a Pocket Listing?

There are limited circumstances where a seller would want a pocket listing. They may need to keep the sale private for some reason.

If the seller is a public figure such as a politician or an actor, that could motivate them to keep the sale hush-hush.

Home Sellers Need to Be Leery of Dual Agency With Pocket Listings

When only your listing agent is searching for a buyer, the chances of dual agency increase dramatically.

If you are unfamiliar with the term, dual agency is when a real estate agent represents both the buyer and seller.

If you are thinking how can a real estate agent "represent" both parties, you are not alone. They can't! Dual agency is a conflict of interest.

What unethical real estate agents who practice dual agency will never tell you is by law, they cannot give you advice. The agent must remain a completely neutral party.

So you kiss all the services of why you would hire a real estate agent goodbye. You can't rely on them for any expertise or guidance.

The only party who benefits from dual agency is the real estate agent.

Final Thoughts on Pocket Listings

When selling a home, it is essential to understand the pros and cons of a pocket listing.

The pros of a pocket listing are that the seller can keep the sale private. Fewer people may visit the home, which could be desirable for a small percentage of sellers. In some circumstances, the agent may offer to discount the Realtor's commission.

The cons are that the seller has limited exposure. With less exposure, the home will be harder to sell, take longer, and likely sell for less money.

There also is an increased risk of dual agency, where the real estate agent represents both the buyer and seller.

For most sellers, pocket listings are not the way to go.

Bill Gassett is an authority in the real estate industry with 38 years of experience. Bill is well respected for his informative articles for buyers, sellers, and fellow real estate agents to make sound decisions. His work has been featured on RIS Media, the National Association of Realtors, Inman News, Newsbreak, Credit Sesame, Realty Biz News, and his own authoritative resource, Maximum Real Estate Exposure. He has been on of the top RE/MAX agents in New England over the last two decades.
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