All About Pocket Listings in Real Estate

The PropertyClub Team
Jun 30th 2020
If you're selling a home and want to protect your privacy, a pocket listing might be a good option for you. So what exactly is one, and how does it differ from marketing via the MLS?

We all understand the traditional process of selling a home. First, you hire a real estate agent who will then list your home for sale, usually through the local MLS, and when other agents and brokers see the house, they bring their buyers to view it. However, there may be situations where you want to sell, but you don’t want your home to be viewed by just anyone and everyone. If you have reservations about listing your home on the MLS for everyone to see, it could be in your best interest to consider asking your agent about the benefits of a pocket listing. Whether you want to maintain your privacy, avoid unnecessary hassle, or just don’t want your home listed publicly, a pocket listing might be the right answer. 

What is a Pocket Listing?

A pocket listing is an agreement between a seller and their real estate agent that, instead of listing the home through the MLS, they will try to sell more privately, usually through the agent’s existing personal connections. With pocket listings, the listing broker or agent agrees not to publically market the home to other brokers, agents, or members of the MLS. 

When to use a pocket listing

Typically speaking, a pocket listing is utilized in one of the following scenarios:

The seller already knows the buyer

If, as the seller, you already have a buyer in mind, why go through the extra hassle of preparing a listing and putting your home on the MLS? If you’re fortunate enough to have a buyer lined up who is serious about purchasing and is ready to move forward with the sale, it might be ideal to use a pocket listing. For example, say you have a close friend who has expressed interest in buying your home on multiple different occasions, and you know they’re serious about it. It would make more sense to sell directly to them than to bother wasting time and effort listing the home on the MLS.

The seller wants privacy during the sales process

This tends to be the most common reason to choose a pocket listing. Often, this applies to high-end clients who don’t want to attract extra attention by publicly listing their home. A seller who finds it important to keep their private lives, well, private, would benefit from asking their agent to list the home as a pocket listing, only passing on information to select people within his or her network. Consider, for example, celebrities whose public listing would attract hundreds of fans and bring far too much attention, or maybe a politician who doesn’t want people to know where they live.

There is a limited market for the home

If you’re lucky enough to own a home that costs tens of millions of dollars, you may be better off staying away from listing on the MLS. There is a relatively limited market for extremely expensive homes, and publicly listing may invite buyers with big dreams but not enough cash flow to back them up. Homes that have a limited market can look out of place on the MLS, and a good agent will know how to network towards buyers who may be interested. 

In any of the above scenarios, a pocket listing is likely to be the best course of action to take. Make sure that if you decide to go this route, you choose the right real estate agent who has plenty of experience, as they will need to understand fully that they are doing and have a good network of people to market the home to. It is also advisable to choose an agent who has previous experience in pocket listings. If not handled correctly, there are potential risks. 

The Disadvantages of a Pocket Listing

If you don’t fall into one of the above categories, a pocket listing may be more of a disadvantage than an advantage when you’re trying to sell. Without the exposure that comes with the MLS, you may not see as many interested buyers as you typically would. Listing your home on the Multiple Listing Service is the best form of advertisement and exposure. Without that outlet, it could be considerably harder to find a buyer. Because of this, there’s also reduced chances of a bidding war or buyer’s putting in multiple offers and fighting over your home. 

Pocket listings also pose a danger of becoming an ethical trap for agents. Because the agent is getting 100% of the commission and is finding their own buyer, there’s a danger of dual agency. Pocket listings are absolutely legal, but be aware that the listing agent has a fiduciary responsibility to act in the seller’s best interests. This means that they can’t completely and accurately represent both a buyer and a seller. 

Pocket listings could also potentially stop you from getting the best price on your home. Sure, your agent may know somebody who wants to purchase the property, but without exposure, you might miss out on a better buyer who is willing to pay more. Without marketing the property to multiple buyers, you have much slimmer prospects, which could mean you don’t end up landing a competitive sales price. Furthermore, if there are numerous pocket listings in one area, it can throw off the sales numbers, making it even more challenging to get an accurate valuation.

For those who want to protect their privacy or avoid the hassle of unnecessarily listing their home for sale via the Multiple Listing Service, pocket listings are a great option. Just remember to choose an experienced agent who can help things run smoothly and make sure you get the best price for your home.