Power of Pocket Listings
Pocket listings are always a hot topic, known for their exclusiveness, and can sometimes have a negative connotation. So what are pocket listings? Pocket listings are simply houses that are for sale through a Realtor but are not advertised on the public market and the MLS. Pocket listings have increased dramatically as the housing market recovered this year.
Advantages for Pocket Listings
- It allows Realtors to make double commissions in many cases since they would represent the seller and the buyer.
- The Realtor has an opportunity to make 3-4 commissions on one house if the house is distressed and the person buying it is an investor. Most investors will relist the property with the Realtor that brought them the pocket listing.
- It allows the Realtor with the pocket listing to be in control of the entire transaction since other Realtors do not get involved. The buyer typically has been screened personally by the Realtor so the Realtor knows if the buyer will be able to close the transaction smoothly.
- It allows the sellers to keep their privacy.
- Some affluent sellers and/or famous individuals do not like strangers going through their homes so a pocket listing is preferred in these scenarios by the seller.
- Many people in foreclosure and/or financial hardship are not proud of their situation and prefer to keep it private.
- Some sellers do not want anyone to know that their house is for sale
- Some people that have homes that are severely distressed are ashamed of their home and do not want strangers picking apart their property. They prefer to allow a select number of individuals to see the house that have been pre-screened by the Realtor. Investors are usually the best buyer for these homes since they purchase as-is and additional commissions can be earned when they relist it for the investor.
- The Realtor can still make the home public and put it on the MLS if a buyer cannot be found from their own private network.
Disadvantages for Pocket Listings
- The Realtor must have an investor that can purchase properties as-is and perform when pocket listings arise that need work
- The Realtor must be in the right network to sell high end pocket listings
- The Realtor must have a large network to sell regular pocket listings
- Sometimes pocket listings do not allow the highest price to be achieved since it is a smaller pool of buyers
In Conclusion
When used correctly, pocket listing can be extremely powerful and beneficial for Realtors and sellers. Understand your clients’ needs and wants to determine if a pocket listing is the right fit for them.
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