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What Is A Pocket Listing?

By Elizabeth R. Elstien

Posting a property on the Multiple Listing Service (MLS) is a sure-fire way to obtain interested buyers. But posting a home for sale on the MLS is not the only way to sell property. When a real estate agent has a listing and refrains from posting it on the MLS, it becomes what's known as a "pocket listing." Not all pocket listings are contractual; some are only verbal.

Maybe a seller already has a qualified buyer in mind to purchase the property, but the seller has no intention of dealing with the sale by her/himself. Therefore, they bring the buyer to the table of the same agent who writes a contract and sells the home. A home sold before the agent has had time to get the listing into the MLS is a type of pocket listing. Or maybe another agent within the company knew of the new listing and had a ready buyer.

Perhaps a seller has a multimillion-dollar home. Due to its exclusivity and the seller's need for privacy, the seller lists the home with an agent who is asked not to place the property on the MLS, thereby creating a pocket listing. The agent, who specializes in homes of this caliber and price, must then market the property to select buyers in their extended network in hopes of finding just the right purchaser. Spreading word of the property to only specified buyers ensures the right high-end buying market is tapped into without making the home available to those buying masses on the MLS who are unable to afford this particular property.

There are many who say this is unfair to the seller, as not all buyers are reached and the listing agent has a duty to the seller to get the highest price. The more people who view the home, the more interested buyers there are to bid up the property. Although a pocket listing often means a lower commission percentage for the seller to pay, it also means a potentially lower selling price than had it been offered on the open MLS market.

Some say pocket listings are unethical, as they give one agent control over buyer and seller. Without going on the MLS, the listing agent of a pocket-listed home must also find the buyer. Other agents will not know of the home's existence to bring their buyer's to view it. The seller has to depend solely on the marketing strategy of their agent.

Are pocket listings a gimmick or a real marketing strategy? It can be both. Without a written contract detailing selling terms and commission and lack of a marketing plan, selling a pocket-listed home is a gimmick for the agent to reap all the benefits of the commission if sold. Even the National Association of Realtors objects to some of the way pocket listings are used by agents. On the flip side, a pocket listing can also be a very real marketing strategy for certain homes, but must be contractual with a sound sales strategy to reach the most buyers.

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About The Author

Elizabeth R. Elstien has worked in real estate for over 15 years as a real estate...

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