"Pocket Listings" - Benefit or Cost to Sellers?

April 2, 2018

A pocket listing is a listing that is not ‘marketed’ through the normal ‘Multiple Listing Service’ (MLS) and usually not through the main real estate websites such as Zillow® and Trulia®.  These are listings that agents and brokers have ‘in their pocket’ for their clientele that might be looking for such a property.

 

If you are a Seller, and belong to a subset of the market such as a celebrity or a person in need of extreme privacy, then this possibly could be an option for you, but do not be encouraged to go this route and still plan on maximizing your selling price, as there is definitely a trade-off.

 

In any selling situation, in order to maximize your ‘price’ you want to expose your product to the largest audience as possible.  If you offer your product to ten people, there’s a chance you might find a buyer, but if you offer your product to one-thousand people there is an immensely greater opportunity to find a buyer – or even multiple buyers!

 

Most states frown on pocket listings because they raise ‘fairness’ issues concerning exclusivity as these properties are not ‘available’ or ‘known’ to all in the market – just those “in the know”.  States discourage the practice to such an extent that in many states – including Rhode Island – the Seller is asked to sign a one-page Listing Exemption Form that spells out all the benefits of an MLS listing (Marketing, Visibility, Results, etc.) that will be forfeited via a ‘pocket listing’.

 

So if there are so many questions surrounding the legitimacy and benefit of this practice, why do certain agents and firms push pocket listings to Sellers outside the ‘celebrity’ niche?  In my opinion it is mainly for the agent’s, or firm’s gain, not their clients. If the client truly wants to sell – and they are not a celebrity or someone seeking extreme privacy – then why not market to the largest possible audience? Why are you hiding what you are trying to sell?  Remember, there’s a reason Super Bowl advertisements are so expensive, ‘exposure’ gets results!

 

Agents and Firms gain when they can control the whole transaction, or both ‘sides’ of the transaction.  Every real estate transaction has two sides, the Selling side and the Buying side.  If the agent or firm can represent both of these sides then they are entitled to the entire commission.  Please keep in mind that inherently there is nothing wrong, and it is quite common, that successful agents/firms represent both sides in a transaction but these are for regular MLS listings that everyone knew about and everyone could compete for.  If you control a pocket listing you have a much better chance of also finding the Buyer – because the circle of people that actually know the property is for sale is much smaller – but is that really to the Seller’s advantage?

 

To summarize, in my opinion pocket listings should be used in only rare occasions and only when you do NOT care about maximizing your selling price.  If you want to sell your property for the highest price, in the shortest amount of time, then you need to utilize every marketing source you can and expose your property to the largest audience possible.  Find an agent/firm that is willing to work for your best interests and is not afraid to spend some money to market your property.

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