When you pair up with a real estate agent to sell to your home, you sign a listing agreement, which allows your agent to put the property on the multiple listing service. However, there are times when you or your real estate professional may decide to make your home available but not put it on the MLS. When this occurs, your property becomes what is commonly referred to as a pocket or exclusive listing.
At times, pocket listings can occur because your home sells prior to the agent's completion of the MLS paperwork. If, for instance, you tell a friend that you're selling your home and he or she purchases the property before it's on the MLS, the house was pocketed. Agents often use this strategy if they want to limit offers to a certain group buyers or colleagues - the absence of a listing agreement means they don't have to work and split commission with the cooperating agent.
Why should you use a pocket listing?
There are many reasons you could want to sell your home without putting it on the MLS. Here are a few:
- Testing the market: Although you're ready to sell your property, that doesn't necessarily mean home values are moving in the most advantageous direction. Whether prices are going down or haven't risen to the point you'd like, you may want to wait and see before making your home available to the widest audience. As such, using a pocket listing allows you to watch market trends while only receiving offers you want through your agent.
- Ensuring privacy: The home selling process requires openness regarding your home. From the home inspection to the showings, you'll have many strangers wandering through your personal space. If you're concerned about too many unfamiliar eyes getting a peek at your property, a pocket listing may be the way to go. All the details of your current home won't be visible on the Internet, and you can limit the number of potential buyers who see your house.
- Holding value: When your home is put on the MLS, interested parties can not only see how many bedrooms you're offering, but they are also able to see how long it has been on the market. This means that they have another bargaining chip during negotiations. If your house has been listed for eight months, for instance, they may attempt to get a lower sale price because the property appears unsellable. With a pocket listing, only you, your agent and anyone you inform knows how long the property has been available.
Are pocket listings beneficial?
As with many decisions that come with selling a home, you're taking a gamble if you choose to exclude your property from the MLS. You could get an offer that meets your expectations. On the other hand, you could miss out on a higher sale price that results from a few potential buyers attempting to outbid each other.
Furthermore, the success of this strategy is reliant upon your selling agent's relationships with other real estate professionals in the area. If he or she doesn't have any colleagues with potential buyers or who can drum up interest in your home, it could be some time before someone makes an offer. Depending on where you're located, agents who are Realtors may be under specific local guidelines for how much time they're allotted to put your home on the MLS. If these rules are at play, your timeline for selling the home off the grid could be shorter than expected.