When selling your home, there are several different avenues you can take. Many people opt for the traditional manner, and list their property with an agent on the MLS (Multiple Listing Service). A small percentage of sellers, however, are choosing to go the route of a "Pocket Listing."
A pocket listing consists of any property that an agent markets, and sometimes even sells, outside of the MLS. The reasons for pocket listing your home can vary -- from a need for privacy to a quick sale. Pocket listings can be beneficial in terms of a selling period, but also detrimental to your buyer pool. The following will examine the pros and cons of such a listing, to help you determine the best method to selling your home.
The Pros to Selling as a Pocket Listing
Once only common in the high end market, pocket listings are being used across the board for several advantageous reasons. Privacy is one common theme around pocket listings. Many sellers do not wish to have just anyone traipsing through their home for a peek. Other times, it is circumstantial events like a divorce or a death in the family, that people wish to keep private. Whatever the case, they seek to sell in a quiet way and pocket listings allow for that.
In the wake of such a life changing event, you may wish to sell as quickly as possible, and keep it under wraps. A pocket listing can do just that, as your agent can set up a sale, and have loan paperwork in hand, prior to your property being listed on the MLS. These type of listings usually get full price as well, as you are selling to a limited, yet extremely focused, market. Properties that languish on the MLS with little activity, are often stigmatized. Pocket listings can give you a jump start.
People selling their home are also able to negotiate lower agent commissions when deals occur away from the MLS, which in turn, can help the buyer. A listing will generally hit the Multiple Listing Service with such velocity, many determined home buyers already have pre-approval letters from lenders.
The Cons to Selling as a Pocket Listing
Pocket listings can also hurt a seller if it is not suitable in the circumstance. If you don't know your local market, then listing your property pre-MLS may not be a good idea. It will severely limit your group of buyers, and in some cases, even cause a longer sale if priced wrong. There may be more buyers willing to spend from the MLS as well. You will have less of an ability to gauge a fair price when keeping your sale under wraps and less offers in general.
Pocket listings can also lead to what is known as "dual agency." A highly debated practice, dual agency occurs when the agent represents both the seller and the buyer simultaneously. This can pose a conflict of interest to you, as the seller, during the negotiation process. Some agents may persuade a sale based upon their desired commission. You want someone to go to bat for you, not someone playing for both teams.
Deciding on a Pocket Listing
Pocket listings are still in debate as to what advantages or disadvantages it poses to a seller. It can save financial turmoil in a life changing event, through a quick sale. A pocket listing can also cause financial issues if you limit your buyers, and/or have to lower your price. It is a wise decision to initiate a conversation with your trusted agent, and study your market. Knowing the risks and rewards of pocket listing your home will help you make the most profitable decision possible.