To some, pocket listings are a strategy reserved only for elite, luxury homes. However, this isn’t quite true! This practice is common across all price points and very common in competitive markets.
In today’s competitive housing market, where there are so many buyers and limited inventory of houses on the market to choose from, having access to off-market listings can give you a leg up in your search. The housing market is red hot! Homes are selling in days with multiple offers, so even just getting to see a house before it hits the market gives buyers extra time to decide if its right for them. It may even be as simple as being the first to make an offer that wins you the race.
Back to Basics: What Are Pocket Listings?
The term “pocket listing” was born out of the notion that this information should stay in a seller’s pocket and not be made public. These homes aren’t listed on the MLS, nor are they made public on sites such as Zillow, RedFin, Realtor.com, etc. Brokers often secure signed listings without advertising them so they can offer their clients the highest chance for a successful deal.
Are Pocket Listings Legal?
In a controversial vote at their annual conference in 2019, the National Association of Realtors (NAR) banned pocket listings—requiring licensed member realtors to list an property on the MLS within one day of marketing it publicly. This new ruling went into effect May of 2020, and states the following:
“Within one (1) business day of marketing a property to the public, the listing broker must submit the listing to the MLS for cooperation with other MLS participants. Public marketing includes, but is not limited to, flyers displayed in windows, yard signs, digital marketing on public facing websites, brokerage website displays (including IDX and VOW), digital communications marketing (email blasts), multi-brokerage listing sharing networks, and applications available to the general public.”
Some of those who were in favor of the change, such as Glenn Kelman of RedFin, has gone on record citing this move as an “appropriate step to avoid discrimination.” This may sound somewhat intimidating, however pocket listings are still legal. Real estate agents may hold exclusive listings without the use of the MLS. However, the property in question must not be “marketed.”
Further, those not apart of the NAR aren’t bound to these association rules. Investors for example are mostly exempt from this ruling.
Perks of Pocket Listings
Pocket listings can offer the perfect opportunity for celebrities or other high-profile figures to sell their private home without having it traipsed through by strangers. Pocket listings can be exclusive and personalized. There could also be homes that are so expensive or violate common standards for sale in an area, they don’t do well on the open market.
Pocket listings have been around for a long time. They’re not just used by sellers, they’re available to any agent who wants an easier and quicker sale process with buyers. Pocket listings are a quick and easy way to generate interest in your property. They can be used by agents or homeowners for pre-marketing, generating leads from potential buyers who may not have time on their hands but still want information about homes that they’re thinking of buying soon!
How To Find Pocket Listings
It’s worth your time to do some research. The goal is find agents from large offices with strong networks—we’re talking lots of connections, so you can probably expect a shoe-in for an amazing referral. They should have access to buyers, sellers, other agents, and brokers at the drop of a hat.
You can also do your own networking and attend events in the community where it’s likely agents or other investors will be. Asking your friends and family for referrals is a great way to find people selling homes. Social media sites such as Facebook, Nextdoor or LinkedIn can also help with this endeavor.
Downsides of Pocket Listings
Pocket listings are not for everyone. They may reduce your buyer pool and increase the time it takes you to sell. Removing the risk of not being able to see your property in person can be a daunting task, especially when there is limited information about it. The lack-of potential buyers and sellers may also mean that this home will never have any backup offers.
To make matters worse, pocket listings have been used as a way to discriminate against specific buyers with some in the industry raising concerns they may violate fair housing laws. Since neighborhood’s inventory is limited to publicly listed properties, that could affect how market data is reported. For agents and home buyers alike, it can be difficult to get an accurate picture of the final sales price for real estate when there are no comps. This ultimately affects property values because they don’t know how much their homes might go up or down in value before buying them.
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