Real Estate can often feel like a different world or language when considering to buy or sell a house. Here at Dwell Urban Real Estate, our goal is to help you understand the market and everything that goes into the transaction so you feel confident when working with one of our agents. A term that can be used is "Pocket Listing" when thinking about selling your home. Realtor.com has helped when it comes to explaining the term as well as considering the benefits and downsides.
What is a pocket listing? When the time comes to sell a home, most people contact a real estate agent and get their place listed online on sites like realtor.com and Zillow—which will hopefully bring droves of interested buyers to their door. Yet there is another way, and it's called a pocket listing. So what is this type of listing, anyway?
This is a property that is technically for sale, but agents won't find it listed on the multiple listing services (MLS), the database they use to peruse local options for clients. Likewise, home buyers won't find pocket listings online or by a "For Sale" sign in the front yard, either. Instead, the real estate agent who's been hired for a pocket listing keeps it in his metaphorical pocket (along with photos possibly) and shares it only with a smattering of agents he knows and trusts can turn him on to the right clientele.
Pocket listings constitute only a slim percentage of total listings, by most estimates under 10% of the national total. Why would anyone choose this hush-hush approach? Here's why it appeals to certain sellers, and how to decide if it's right for you.
Benefits of a Pocket Listing
Certain homeowners prefer selling their home as a pocket listing for a variety of reasons:
- To maintain privacy: First and foremost, "Some people don't want the general public to know they're selling or don't want to have pictures of the insides of their homes all over the internet. These sellers also get to sidestep having a bunch of random looky-loos traipsing through their house just to ogle how the richer half-lives; all those who come to see the home are pre-qualified and have been vetted as serious buyers.
- To test the market: You can get an idea of what interested buyers are willing to pay for your home before you make the listing public on the MLS. That way, you may be less likely to have to reduce the price if and when you finally do post your property on the MLS (more on why that's bad next).
- To spend less time on the MLS: People start to wonder what's wrong with a property if it's been on the MLS for weeks and hasn't sold. "Listing a property privately is an attractive option to avoid the gaze of the public eye and to protect the property from the stigma that can develop if it remains on MLS longer than the market average," says U.S. News & World Report real estate columnist Devon Thorsby.
- To give them the push they need to sell: Some people don't want to list their homes but would consider selling if they could fetch a certain price. A pocket listing would give a Realtor the leeway to find a motivated buyer who is looking for that exact type of property. In essence, it could be a very easy transaction without any marketing expense or the hassle of showings.
The downsides of pocket listings
While pocket listings have privacy going for them, this secrecy does come with some obvious drawbacks:
- Limited exposure: A property listed on the MLS has the potential to be seen by millions of people, which means odds are good you'll find a buyer fast.
- Lack of walk-in traffic: Sure, many people shop homes online, but it’s also common for people to cruise neighborhoods they like to see if any "For Sale" signs are up. Also, neighbors might be looking for a nearby home for friends and family.
- A lower price: You'll never know what price the market will bear if you never actually put your home on the market. Less interested home seekers mean fewer, and possibly lower, bids.
Due to these downsides, most real estate experts agree that the majority of home sellers are best served listing their home the traditional way on the MLS.
Still, though, home sellers should know that pocket listings aren't just for the rich and famous but have benefits for regular home sellers too. So be sure to weigh the pros and cons of both approaches before you start spreading the word.