A pocket listing is a property that has not yet been listed on the market. It allows buyers to see homes before they are available to the public. The seller will often agree to sell the home for less than its original asking price if he or she knows that a buyer is committed and willing to act quickly.

Sometimes, the seller also has to pay the realtor's commission. The agent who sells the home gets 100% commission. There's no cooperation or sharing of fees like in an open listing situation.

How Pocket Listings Work?

When you hire a realtor to help sell your property the traditional way, they enter into an agreement with the owner. The listing will then be put on MLS and made available for other agents/brokers as well.

But what if those weren't enough options? In a pocket listing, an agent markets the home by word-of-mouth or via private platform. That limits who can see details about properties so only qualified buyers know about them first hand.

Legality

Pocket listings are commonplace in the real estate industry but can be detrimental to all parties involved. They are legal nonetheless.

Since these privately marketed homes lack transparency and information on their respective neighborhoods, professionals cannot easily tell if fair housing laws have been violated with this practice.

Since much information is private, it does make it difficult for other real estate professionals to estimate values of properties in a given neighborhood. Moreover, it is challenging to discern if any fair housing laws are being violated.

The National Association of Realtors (NAR) created a policy to enforce cooperation between real estate agents. The Clear Cooperation Policy requires that all listings be on the Multiple Listing Service within one business day in order for them to qualify as being advertised publicly. However, these rules do not apply to non-members.

Seller advantages

• There’s more privacy about the house

• The seller can test the market for demand

• The home may spend less time on the market (only if there is a committed buyer)

Seller disadvantages

• There will be fewer offers

• The may spend more time on the market (if there is not a committed buyer)

Buyer advantages

• Less competition

Buyer disadvantages

• Less room for negotiation

• Limited photos and information about the property

As you can see, pocket listings have their time and place in real estate. It does boil down to who you know. Though the practice is legal, any buyer and seller still should abide to ethical sales practices. Nonetheless, pocket listings can be a great find for buyers.

For more information on this strategy, book your consultation today!