Is a Pocket Listing Right for Me?
Though home prices are easing up throughout the country, it’s still very much a seller’s market. Indeed, even with a new influx of inventory, demand is high enough such that the average number of days a house spends on the market dropped to only forty-five in June. This is due in part to the increase in rental rates, which makes the price of a mortgage loan look all the more appealing. However, another big factor that is defeating the greater number of available homes on the market is something realtors call “pocket listings”.
A pocket listing is not widely advertised. A realtor takes a pocket listing only to his or her own buyer clients, or only to clients within his or her company. This greatly decreases the number of homes that are made visible to individual homebuyers, virtually reducing the available inventory.
Pocket listings are not illegal, though they can be somewhat bothersome. Some realtors prefer pocket listings only because it allows them to earn both the buyer’s and seller’s commission, instead of having to share with another realtor. They are not, however, entirely without merit, and sellers should explore the concept with their realtor in order to determine whether or not a pocket listing is right for their specific circumstances.
First of all, a pocket listing is probably going to work only in a high-demand market. In a climate such as this one, you may not need to advertise to many people in order to get a seller quickly. You may lose some potential to start up a bidding war on your house, but there is also money to be saved in not having to go through the hassle or expense of advertising to and dealing with a large number of potential buyers.
If your home is in bad condition, like if it suffered a fire, flood damage, or significant mold, it may be a good idea to do a pocket listing. The property may not be the safest place to take potential buyers to before significant repairs can be done. Therefore, it is impractical to present it to a large number of people, and more favorable to focus on a small group.
Should your realtor suggest a pocket listing, be sure to ask for a reason. Though it is possible that this would be the best move for your own situation, it is also possible that you would simply be losing the benefits of transparency in favor of lining the realtor’s pockets.
