Imagine wanting to share something to say on social media. But instead of sending a tweet or other social media post to everyone, one will send a direct message to a few people. In real estate, a pocket listing is similar in concept. A pocket listing is an option for homeowners who want to keep their property sales private. They may also choose to open it up to only a select people. But, there are still several limitations to a pocket listing. Below are the facts about pocket listings, how they work, the benefits, and their drawbacks. Continue reading to learn more.
What are Pocket Listings?
A pocket listing is a property marketed to potential buyers. Agents show pocket listings through private channels rather than the usual MLSs. These non-public listings are only available inside a metaphorical "pocket." So, many will not notice any "for sale" signs or find advertising online for a pocket listing. Additionally, the real estate agent must be on board by being selective. They should only be sharing the listing with a select group of preferred clients. Moreover, they can also share it with fellow agents representing this elite clientele.
Process
A seller can opt for a pocket listing to sell their home in private. Only a select few would be aware, and their home will not be on the MLS database. These clients prefer not to allow general buyers of all kinds to find their listings. A single listing agent who is not a member of the NAR handles a pocket listing deal. The trade group has prohibited pocket listings. But, it is crucial to note that not all pocket listings violate the realtor code of ethics. Agents will market pocket listings within their own real estate business. They also introduce pocket listings through private agent networks or exclusive groups. There is usually no commitment for the seller or the agent to work with other real estate agents. So, the agent is generally able to keep the entire commission.
Advantage and Disadvantage
A pocket listing provides many significant benefits for buyers and sellers. Real estate agents in charge have an advantage because they control the listing. Thus, they will get the full commission after a sale. A listing agent is not under any duty to split a commission percentage with another agent. But, when they seek some quiet aid in finding a buyer, they may have to give up a little bit of their commission. A pocket listing might also help the seller identify the actual market value of the property. If the offers fall short, the seller can advertise the home on an MLS as a new listing. A new listing is better rather than keeping one that has been there for too long at an unreasonable price.
The realtor is working alone, and no one is assisting in the sale of the property. This situation is not a problem if the realtor can find a buyer or know someone interested in the home. Pocket listings lower the likelihood of many offers and a bidding war for the property. There is an obvious risk in keeping the sale under wraps. The word is unlikely to go beyond the realtor's contact list because there is no listing and no lawn sale. Pocket listings do not get the same exposure as open market listings. So, house sellers may have to wait longer to find a buyer ready to pay their asking price. In general, most real estate professionals agree that putting a home on the MLS. MLS platforms are the best way for most home sellers to optimize a sale.
Pocket Listings in the Real Estate Market
When it comes to industry and ethical problems, pocket listings can impact the market. As a result, the NAR's Clear Cooperation Policy has prohibited pocket listings. Before the policy, more pocket listings in the market meant more agents using the MLS. Usually, they will post with a casual "coming soon" notification with these listings. But, these real estate agents will refuse to share the listings and even keep the full commission. According to the same policy, all listings must be in the MLS within one business day of public marketing. Not sharing on the MLS makes it tough to research real estate comps and limits buyers' options. Additionally, it skews market data and may not be in sellers' best interests.
Final Thoughts
A pocket listing may appeal to many sellers or buyers. But, be sure to understand the benefits and drawbacks of pocket listings. A pocket listing with a real estate agent may be the best option for the right seller and buyer. Still, keep in mind that a public MLS or "coming soon" listing is the best option for the vast majority of homes. Every client should be aware of the pros and cons of every real estate marketing strategy. A pocket listing may not always produce the best results for a vendor. By now, many should better understand what a pocket listing is and why many avoid one. In real estate, pocket listings often serve the interests of the agent more than anyone else.
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