While not a new concept for veteran real estate agents, the term “pocket” listing may be an unfamiliar phrase to many consumers and some newer agents. Home sellers and agents should be aware that the practice can adversely affect their goal of getting the best price for their homes.
If you’re considering selling your home it’s a good idea to consider the advantages and disadvantages of pocket listings.
What is a pocket listing? Simply stated it’s a property that is marketed without the benefit of being listed for sale on the Multiple Listing Service (MLS). In other words it’s “hidden” in an agent’s pocket.
Pocket listings appear in many different shades. Sometimes, a listing is merely referred to as a “pocket listing” in the short time between when it is secured by the sellers’ agent and the time it appears on the MLS. A listing can sell before the broker completes MLS paperwork, which would mean the listing sold to someone who knew about the listing outside of the MLS. Sometimes, this happens with an offer made during a prelisting period. However, there still may be office exclusive MLS rules with which the broker will need to comply.
Off-MLS listings sometimes are requested by celebrities, judges, prosecutors, or others who wish to maintain their privacy and/or limit viewing of their property to a select individual or individuals with the financial wherewithal to purchase.
Other times, homeowners may seek to sell their homes privately. They might ask that their agent refrain from listing the property on the MLS to keep news of the sale quiet. In any of these instances, sellers are selecting a pocket listing as a marketing choice.
Are off-MLS listings illegal? It depends. They are not illegal if the listing agent fully discloses the pros and cons to the home seller and follows rules that are designed to protect consumers. Many real estate professionals believe that off-MLS listings may not be in the best interest of the property owner – particularly if a client does not know about the benefits of marketing his or her property through the MLS. To keep a listing off the MLS, a listing agent who is a participant of an MLS is required to obtain a standard seller exclusion form. Be sure you fully understand what you are signing and the adverse consequences outlined in the form of not listing your property on the MLS.
Off-MLS listings also may impact real estate values on a larger scale. Property price evaluations completed on behalf of mortgage lenders – more commonly known as appraisals– may be affected in communities where there are a significant number of home are offered as off-MLS listings. That’s because not all off-MLS listings are entered into the MLS database once a property is sold. Without this critical information, it is more difficult for real estate agents and their sellers to determine a listing price, for agents and their buyers to decide how much to offer for a property, and for appraisers to determine the current market value of a property for lenders.
What should you do if an agent approaches you with an offer to sell my home as a pocket listing? Ask your agent about the pros and cons of selling your home off-MLS. One advantage is that your listing remains private if you wish to maintain privacy. However, a disadvantage is your home may not be exposed to the full population of available buyers and which could limit your homes profitability.
Sheri Aguilar is the president of the Lodi Association of Realtors and can be reached at Sheri@YourLocalAOR.com.