What is a pocket listing?

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When you’re selling a home, getting as much exposure as possible is often a good thing. In some cases, though, sellers might be interested in what’s called a pocket listing, which means the home isn’t advertised through the Multiple Listing Service (MLS), a database of for-sale and for-rent properties.

Here’s what to know about pocket listings, and why you should think twice before arranging one.

What is a pocket listing?

A pocket listing, sometimes referred to as an exclusive listing or an off-market listing, is a type of real estate listing that isn’t included in the MLS, which is standard for most home sales. Instead, the listing is marketed privately.

Pocket listings are legal, but can fall into a grey area among real estate agents and brokers. In recent years, the National Association of Realtors (NAR) implemented a policy requiring its members (Realtors) to share listings with the MLS within one business day of marketing them to the public. Not all real estate agents are Realtors and are bound by the NAR’s rules, but the trade group consists of a large portion of real estate professionals.

How a pocket listing works

When you hire a real estate agent to help sell your home, you typically enter into a listing agreement with that agent. The agent then puts the real estate listing on the MLS for other brokers and agents to see. The information on the MLS is also aggregated by real estate listing portals like Zillow, so it’s accessible to the general public, too.

With a pocket listing, the agent might market the home via word of mouth or on private networks that limit who can view the property, instead of on the MLS. The reasons for this can vary, and sometimes have to do with protecting the privacy of the seller.

When a pocket listing makes sense

While pocket listings aren’t always a good idea, there are a few situations where it might make sense for a seller to consider one, such as:

You already have a buyer

Let’s say you’re thinking of selling your home and a family member or friend has expressed interest in buying it. In this scenario, you already have a buyer lined up, and you just need an agent to handle the transaction. So, it might not make sense to list your home on the MLS and go through the hassle of fielding inquiries from other buyers. A pocket listing here simplifies the process and allows you to make the sale happen as planned.

You want privacy

Once a home is listed on the MLS, that listing is available for anyone to see. If you prefer anonymity, a pocket listing provides that.

“In my experience, most sellers use pocket listings because they don’t want everyone knowing they are selling,” explains Michelle Goetzinger, a real estate agent with Berkshire Hathaway HomeServices The Preferred Realty in Pittsburgh. “They want a fairly private transaction.”

You want to test the waters

Another reason someone might choose a pocket listing is to get an idea of how much buyers are willing to pay for the home.

“They can test the market without really setting a final price and not have to ‘open’ their home for every stranger on the MLS who wants to see it,” Goetzinger says.

Plus, if you start out on the MLS with an asking price that’s too high, you might be forced to reduce it one or more times. The problem with this is that buyers can see each of these changes, and seeing several price drops could make them wonder if there’s something wrong with the property, and deter offers.

When you’re better off listing the traditional way

Although there can be some benefits to pocket listings, overall, they limit exposure to your home. Here’s when to go the traditional route instead:

  • You’re in a seller’s market – A seller’s market can make for bidding wars among buyers, so if you cast the widest net, you might be able to get more than asking price, and can really maximize your profit on the sale.
  • You don’t have a buyer in mind – If you don’t already have a buyer lined up, it can be difficult to find one without the platform of the MLS. In addition, if you do find a buyer but the deal falls through, you’re back at square one. With the MLS, you could have several other interested parties to turn to instead.
  • You don’t have a lot of time – Pocket listings can take much longer to sell than MLS listings, especially if you don’t already know who’s going to buy the home. If you’ve already purchased your next home or need to sell quickly for other reasons, a pocket listing isn’t the best move.

Pocket listing pros and cons

As with any decision related to your selling your home, it’s important to consider both the benefits and drawbacks of a pocket listing.

Pros 

  • Provides privacy for both parties in the transaction
  • Allows for an uncomplicated sale if you have someone ready to buy
  • Can give you a better idea of a reasonable asking price to include on your MLS listing later

Cons 

  • Limits competition between potential buyers, which could cause you to get less money than what you’d get with more exposure
  • Can be difficult to market
  • Likely won’t have other interested buyers to fall back on

Bottom line 

Pocket listings do have a place in the real estate market, but for most sellers, it makes more sense to go the typical route of listing their home on the MLS.

If you’re considering a pocket listing for privacy reasons or because you have a buyer, it might be worth the potential risks involved with the process. The same goes for sellers who want to gauge price before putting their home on the MLS.

That said, the process could result in a longer sale timeline, and fewer interested parties could result in a lower offer price.

“You could be leaving substantial money on the table by not doing a traditional listing,” Goetzinger says.

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