What are Pocket Listings, and How Should I Talk About Them With Clients?

As a new real estate agent, you might have wondered what pocket listings are. These off-market listings, kept “in the pocket” of real estate agents, offer a level of exclusivity and discretion not found on the traditional Multiple Listing Service (MLS). While the concept may seem shrouded in mystery to some, understanding pocket listings is crucial for buyers, sellers, and real estate professionals alike. In this article, we explore the pocket listing advantages, potential drawbacks, and how they fit into the broader landscape of real estate transactions. Whether you’re a seasoned investor, a hopeful homeowner, or a real estate agent looking to navigate these waters, the insights provided here will shed light on the nuanced world of pocket listings and their place in today’s market. Read on to learn more!

What is a Pocket Listing?

A pocket listing is a real estate term for a property that is for sale but is not listed on multiple listing services (MLS). Instead, the listing is kept “in the pocket” of real estate agents or real estate brokers representing the seller.

This off market listing approach might be chosen by the listing agent and seller for various reasons, including privacy concerns of the seller, testing the market, or targeting a specific group of potential buyers. While a private listing can offer exclusivity and privacy, it may also limit the exposure of the property to potential buyers.

Potential Benefits for Both the Buyer and the Seller

When talking about pocket listings with potential buyers, real estate agents often emphasize the fact that office exclusive listings can offer access to unique properties that are not available to the general public. This can appeal to buyers looking for exclusive deals or unique homes.

Since the property is not listed on the MLS, there may be fewer buyers aware of the listing, potentially reducing competition for this exclusive real estate investing opportunity. For buyers and sellers who value privacy when navigating the real estate industry, pocket listings can be attractive because the sale process is more discreet.

Answering All Your FAQs About Pocket Listings

How Do Real Estate Agents Benefit from Pocket Listings?

Pocket listings can benefit real estate agents by offering them exclusive access to sell a property, which can lead to both increased control over the sales process and potentially higher commissions. Since the agent typically represents both the buyer and the seller in these transactions, they might not have to split the commission with another agent. This exclusivity also allows agents to market the property directly to a select group of potential buyers, enhancing their reputation as a source of unique or premium listings.

Furthermore, managing a pocket listing provides an opportunity for the agent to strengthen relationships with both buyers and sellers through personalized service and discretion, thereby enhancing their professional network and standing within the community. This can lead to more business referrals and a stronger portfolio of unique properties, setting the agent apart in a competitive market.

Are Pocket Listings Legal in Every State?

The legality and regulation of off-market listings can vary by state and even by local real estate boards within the United States. Generally, pocket listings are not illegal, but there are regulations and guidelines set forth by the National Association of Realtors (NAR) and other regulatory bodies that govern how they can be used.

In November 2019, the NAR passed the Clear Cooperation Policy, which mandates that within one business day of marketing a property to the public, the listing must be entered into the local MLS by a real estate agent. This policy aims to ensure transparency and fairness by making sure all potential buyers have access to new listings and to prevent any discriminatory practices. Real estate agents associated with the NAR must follow all of the trade association’s rules. Other real estate professionals are not necessarily bound by these rules. Regardless, pocket listings can still exist within certain guidelines, such as when a seller seeks privacy or when a property is marketed directly to a select group without broader public advertising.

States may have their own additional regulations that real estate agents and brokers must follow. These rules can influence how pocket listings are managed and disclosed. For instance, some states may require written consent from the seller acknowledging the potential disadvantages of not listing on the MLS (Multiple Listing Service), such as reduced market exposure.

Because regulations can be specific to local areas and are subject to change, it’s essential for real estate professionals and their clients to be aware of the current rules and guidelines governing pocket listings in their specific state and local jurisdiction. It’s also a good practice for agents to discuss the implications of pocket listings with their clients, including any legal considerations and market impacts, to ensure informed decision-making.

How Should Real Estate Agents Talk to Prospective Buyers About Pocket Listings?

Make sure buyers understand that because the property is not listed on the MLS, it may not have been exposed to the full market, potentially affecting its price and how quickly it sells. Without the competitive environment of the MLS, there might be different dynamics in price negotiation for this type of real estate transaction. Buyers should be prepared for a potentially different negotiation process when considering an exclusive real estate listing.

Discuss the ethical considerations surrounding pocket listings, including the importance of ensuring that the seller is fully informed of the potential implications of not listing their property on the MLS. Transparency with both buyers and sellers about the process, potential benefits, and drawbacks is crucial. Encourage buyers to conduct thorough due diligence. Since the property is not listed publicly, it’s crucial to ensure all aspects of the property and transaction are carefully examined.

Advise buyers to communicate their specific interests and requirements to their agent so they can be matched with appropriate pocket listings. Real estate agents must also make it clear to buyers who are interested in pocket listings that they should have their financing in order or be ready to move quickly, as these opportunities can arise and be acted upon swiftly.

How Can A Real Estate Agent Find Pocket Listings?

Finding pocket listings as a realtor involves a combination of networking, leveraging professional relationships, keeping up to date on local market data, and being actively involved in your local real estate community. By employing the following strategies and being patient, you can increase your chances of finding pocket listings as a real estate agent.

#1 Networking with Other Agents

Develop strong relationships with other real estate agents and brokers in your area. Often, agents with pocket listings will share them with realtors they trust or have worked with successfully in the past. Real estate conferences, seminars, and local association meetings are excellent places to network and learn about off-market listings.

#2 Making Direct Contact with Sellers

Contact homeowners you’ve worked with before. They might be considering selling their home off-market or know someone who is. While traditional, this method can sometimes yield direct leads from homeowners interested in selling privately. Sending out mailers to homeowners in your target areas can help you find those interested in selling off-market.

#3 Utilizing Social Media and Online Platforms Thoughtfully

Use social media platforms like LinkedIn, Facebook, and Instagram to connect with other real estate professionals and potential sellers. Participate in online forums and groups where real estate discussions happen. Sometimes, pocket listings are shared in these groups.

#4 Joining Professional Real Estate Organizations

Join professional organizations and clubs related to real estate in your area. Memberships in such organizations can provide access to a network of realtors who might share pocket listings.

#5 Marketing Yourself

Make it known among your colleagues, clients, and through your marketing materials that you are interested in pocket listings. Sometimes, opportunities come from unexpected sources. Agents known for specializing in a particular type of property (luxury homes, historic properties, etc.) are more likely to be approached with pocket listings in that niche.

#6 Staying Active in Your Community

Participate in community events, serve on local boards, or engage in volunteer work. Being active in your community can increase your visibility and chances of coming across pocket listings through personal connections.

#7 Leveraging Technology

Some real estate technology platforms and apps are designed to facilitate the sharing of off-market listings among agents. Explore and use these tools to stay informed about potential pocket listings.

#8 Consistently Following Up

Regularly check in with your network and potential sellers you’ve contacted in the past. Situations change, and someone who wasn’t ready to sell before might be considering a pocket listing now.