Pocket Listings Becoming More Popular
- posted 11.20.2015
- Courtney Lynch
- Real Estate Business
Selling a home can be tricky. First, there's the matter of getting it cleaned up and ready for viewing. This alone can create stress, plus take time and money, especially if there are repairs to be made or walls to be painted.
Then, many sellers go through the process of finding an agent, listing the home and hosting open houses where parades of potential buyers look, but often don't buy. Listing the home and inviting groups of people into their house are two things many sellers wish they could forego. In fact, more people are deciding not to find an agent or host open houses.
According to The Wall Street Journal, pocket listings, or homes that aren't publicly listed, are becoming more popular. Since they're rarely listed, there isn't much data on such sales.
However, 8.5 percent of District of Columbia home sales on the main listings database for mid-Atlantic states were sold after one day. In Denver, 15 percent of homes sold in the area last year were never even listed on their database. Silicon Valley saw 17 percent of home sales that were never listed. These are all indications that, across the country, pocket sales are becoming more popular.
Listing a home on the Multiple Listings Service, which many real estate agents and websites use to find homes for sale, is generally a good practice for sellers. For some people, it's not always the best option, though.
When Keeping a Secret Makes Sense
According to Top Agent Network, there are many cases when a pocket listing makes the most sense. If a seller wants to maintain privacy or control over who enters the house, keeping it unlisted will help. This is a popular choice among celebrities and other public figures.
This was a good option for the Kims, an elderly couple who sold their Washington, D.C., home through a pocket listing, The Wall Street Journal reported. Mr. Kim is disabled, so fixing up the house before showing it to people would have been difficult. By not listing the home, they were able to find a buyer quickly without going through much of the work that goes into preparing a home for sale.
According to RISMedia, some sellers like to test out a price through pocket listings. They are able to show a select number of serious buyers the house, tell them the price and get a reaction. If they have priced the house too high, the seller can readjust without losing additional value by having the house listed for a long time.
Others like to use pocket listings if they think they might want to sell, but only for a certain price, Julia Bernardini, a real estate agent at Bradley Real Estate in California, explained to SFGate. They can offer the house to several potential buyers. If the buyers aren't interested, the seller doesn't lose out on anything.
Letting Buyers in on the Secret
According to SFGate, pocket listings are usually shared with agents or a small group of people. The house is marketed through word of mouth. This can be beneficial to buyers, according to Fox News.
Since the house is only being looked at by a small number of people, potential buyers have less competition. The price is likely to stay low, and the buying process can be faster.
Betsy A. Linder, a real estate agent for Pacific Union and Christie's International Real Estate, explained to SFGate that some buyers like pocket listings because the sale seems more exclusive - they're getting something special by looking at a house few people know is for sale.
Opponents of the Pocket Listing
While pocket listings can benefit both the seller and the buyer, there are other people who disagree with the practice. They argue that there are numerous consequences to pocket listings.
According to Fox News, pocket listings are a set up for conflicts of interest. When a buyer finds out about a house for sale that isn't listed yet, it's usually because the buyer's and seller's agents are the same person or are working together. In this case, a dishonest agent might not work in the best interest of either client.
Another argument against pocket listings is the lack of exposure. According to SFGate, since pocket listings mean the house is presented to a select group of people, the seller might not get the best price for the house. It can also disadvantage buyers looking for specific traits in a house. If they aren't connected to the right agents, they won't see the unlisted home.
The Wall Street Journal reported that, technically, pocket listings aren't against any state laws. Written consent from the client to go forward with a pocket listing is usually required, though. Real estate agents are responsible for getting the best deal for their clients. Since a pocket listing might not result in the best deal, agents should be disclosing the risks that go along with neglecting to list the property.