There is a growing number of New Yorkers that are venturing into Pocket Listing when it comes to selling their homes.
Also known as “executive listing”, “quiet listing”, or “off-market listing”, this real estate term restricts access to a house’s sale information to only a select group of clients. Usually, the broker holds a signed listing agreement (or contract) with the seller to have “Exclusive Rights to Sell” the house, and the property will not be advertised or included in the multiple listing system (MLS).
Keep in mind that using the MLS has its disadvantages. As soon as a house is posted in the MLS, the clock starts ticking fast. Buyers actually believe that the longer a house is on sale (60 days or longer), the more they can make low-ball offers to the agent. Generally, what this means is that the longer a house sits on the market, the more its value declines.
Pocket Listing can solve this problem by helping homeowners avoid that “off the market” clock ticking on the background. It also helps protect the privacy of home sellers while allowing them better control of their prospects. Often, those who prefer Pocket Listings are high profile celebrities, politicians, or athletes.
HOW IT WORKS
Pocket Listing starts when a broker is hired to sell a property. Usually, a listing agreement is done in writing, and a specific broker is given the right to sell the property or house. No other compensation offers are given to other brokers, and the property will not be placed in the MLS. However, the real estate agent can use other marketing methods to announce the sale, such as holding a small open house, talking with other agents, or doing a private broker’s tour.
ADVANTAGES AND DISADVANTAGES
What makes Pocket Listing highly-advantageous for real estate agents is that they can collect both sides of the commission instead of splitting it with another agent, particularly if they sell the property to a client of their own. Even if they sell it through a colleague in their own firm, the full commission is still with the realtor (or brokerage firm, if that is their agreement).
The advantage to the home seller and broker is that it gives them ideas about market reception. Often, they use it to test the market and see the public’s reaction to the property price. If the public’s reception is unfavorable, then the agent has the option to enter the house in the MLS.
Another advantage is privacy. Pocket listings allow homeowners to sell their property without too much intrusion. This is mostly true in a slower market, where buyers mostly attract curious prospects instead of sure buyers.
The disadvantage for home sellers is traffic. Since pocket listings have relatively small numbers of potential buyers, the agents may not fulfill their duty to get the highest possible market price for their client. Consequently, they may only sell at a fraction of the property’s potential value.
Another disadvantage may be added cost. There are some cases where pocket listings may lengthen the sales cycle due to fewer buyers who see the home. This will cost more money in home maintenance and mortgage payments.
Pocket Listing can be an appealing alternative for home owners who value their privacy and comfort. Remember that listing a home can be time-consuming, since it requires some de-cluttering, redecorating, and initiating open houses. Pocket listing helps avoid all of that, and when given the right circumstances, can help save the home owner substantial money in the long run.