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What Is a Pocket Listing?
A pocket listing is any type of real estate listing that is retained by a listing broker or salesperson and not made available to other brokers in the office or to other multiple listing service (MLS) members.1 A pocket listing may also be referred to as an “off-market listing” or “exclusive listing.”
- A pocket listing is an exclusive real estate listing that is not available to the general public.
- A single real estate agent generally handles a pocket listing; it involves either limited or no collaboration with other brokers.
- Sellers who ask for a pocket listing generally do so for reasons of privacy or to sell to a specific individual.
How a Pocket Listing Works
When a real estate agent is hired to list and sell a property, a listing agreement is made in writing between the seller and the agent and their hiring company. Usually, the property is listed in the MLS, the official directory for all properties and land for sale. This is done so that real estate agents and brokers can cooperate with other agents and brokers and share a portion of the total commission paid by the seller.
In a pocket listing, however, a property will not be listed in the MLS, meaning there is no agreement to work with other real estate professionals. Reasons for a pocket listing include the seller’s desire for privacy or to sell to a certain individual.
Advantages and Disadvantages of a Pocket Listing
There are definite pluses and minuses in offering a property as a pocket listing.
The agent gets to keep the whole commission.
A seller can test the waters and settle on a realistic selling price before putting the home on the multiple listing service.
There is privacy for both seller and buyer.
There is only one agent trying to sell the property.
If the deal falls through—or no seller is found—the property has had no visibility on the market.
The likelihood of multiple offers and a bidding war is reduced.
Without a lawn sign, no walk-in traffic is generated.
A pocket listing may offer a considerable advantage to the real estate agent charged with selling the property, as they have the listing exclusively and are therefore entitled to the full commission. The listing agent is under no obligation to share any portion of the commission with another broker or agent unless they choose at some point to enlist some quiet help in finding a buyer. The agent may also be able to procure both the sale of the home from the individual selling and the sale to the new client.
Meanwhile, from the perspective of the seller, a pocket listing can help test the waters to find out what their property is actually worth. The offers of interested buyers can help in setting a realistic price when putting the home on the MLS and avoid being listed for too long at an unreasonably high price. Homes that stay on the list a long time and have to keep reducing their asking price can start to look like damaged goods to potential buyers.
There are also disadvantages to pocket listings. For one, the real estate agent is essentially acting as a solo agent; no one else is helping to sell the property. This is not a problem if the agent is confident in their ability to find a buyer or already has acquired one ahead of time. If the deal falls through, however—or the agent fails to produce results—the property is unlisted in the MLS and does not have as much visibility to sell.
Pocket listings reduce the chance of multiple offers and a bidding war. Moreover, in suburban and rural areas, it's unlikely that there will be any walk-in traffic without a lawn sign signaling that the house is for sale.
Example of a Pocket Listing
Jannie is interested in selling her considerable estate, which is worth a substantial amount of money. Jannie already has a family member, her cousin Tejie, who has expressed serious interest in purchasing the home.
Because Sadie already has a buyer lined up, she contacts the real estate agent she has used in the past with an offer of a pocket listing. The listing is not put on the MLS and is handled as an exclusive listing and sale from Jannie to Tejie.