Pocket listings. The mere mention of them sets some real estate agents aflame, either defending or decrying their merit.
One side argues pocket listings are a blatant disservice to sellers, robbing them of full market exposure. Allegedly, pocket listings insulate a property from being subjected to outside forces, which cuts out healthy competition on the open market and can make a seller lose out on a potentially higher sales price. Some brokerages even have sellers agree to a delayed MLS posting, so that they can market the listing internally and procure their own buyers before it hits the public. They are perceived as nothing but a surreptitious tool to double end a deal & benefit no one but the agent.
The other side claims pocket listings were the method of choice in selling homes well before the concept of co-op’ing agents became mainstream. In fact, in many cities and foreign countries, pockets listings are how homes are still exclusively sold. If you have a buyer who wants to put an offer on a house that is listed by another agent. You are out of luck. That buyer must go through that listing agent to purchase that property.
The case for and against
Advocates of pocket listings also say this type of transaction protects the seller’s need for privacy. It’s true some people do not want others to know their house is on the market… This privacy argument doesn’t really hold water, unless you are a notorious celebrity. Even Candy Spelling, after trying to quietly unload her $150,000,000 56,500 square foot compound for years as a non-MLS listing, finally relented and listed it on the MLS this summer. (Although if you ask me, sellers who don’t want anyone to know their house is for sale probably isn’t very motivated to begin with.)
Whether these accusations leveled against pocket listings is true or not, I have in the past found myself slightly uneasy with the business practice of pocket listings and the agents who champion them. My main gripe is that it blunts the co-operative spirit of the agent community. When I hear the term pocket listing, I think “restricted access.”
A culture of transparency
I’m on the outside looking in….again. (flashback: a four-eyed flat chested nerd named Herman overhears the popular kids brag about their upcoming house party. They glance my way and say “No nerds allowed!”)
With the advent of technology, internet, and especially social media, the world is moving towards an open atmosphere where people expect the flow of information to be unfettered. This is function of a larger societal trend. The public increasingly expects, and will soon demand, a culture of transparency. Pocket listings strike me as secretive and anachronistic.
Furthermore, I just can’t help but feel the success of a pocket listing is limited by the listing agent‘s sphere. I mean, how many people can one agent possibly know? Compared to the thousands of eyeballs on the MLS? If I were a seller and an agent wanted to list my house as a pocket listing, my reaction would be “Just because you can bring me an offer from your own buyer, doesn’t mean that there aren’t even better offers out there for me.”
In the know
Now having said all that from the pulpit, I must disclose that I just got a tip from a real estate agent this weekend. Her client wants to discretely sell her property that my buyers have been coveting for years! (All over sudden, this outcast nerd is in the know, part of the in-crowd, invited into the inner circle! Oh joy!). Do I get off my high horse and arrange a showing for this non-MLS listing? Or do I succumb to my principles and let it slip through my fingers?
Hmmm, it‘s like junior high. When you’re not invited, you say those cool house parties are just for stuck up elitist snobs. But when they do throw you a bone and invite you, you ditch your geek friends in chess club and immediately beg your parents for a curfew extension. Yes, I suppose I have a love/hate relationship with pocket listings.
One case:
Oh while we are on the topic of pocketlistings, there has been some fanfare about a new website called pocketlistings.net launched earlier this year by a San Francisco agent and fairly successful blogger (thefrontsteps.com).
Dubbed as “The Off Market Real Estate Network,” some self-ascribed benefits to posting on pocketlistings.net include:
1. No Days on Market
2 . No Public price reductions
3. No publicized commission agreement
4. No definitive price, only price ranges
5. A place to “list” your home prior to MLS, or a place to list it if it is unsuccessful selling on MLS
I’m not sure what to make of this site yet. But is it me, or do these “benefits” resemble another little known San Francisco based website? Craigslist. (Goodness gracious, one dose of popularity and this nerd has become snarkier than the head cheerleader at the Sadie Hawkin‘s Dance!)
James Malanowski
September 20, 2010 at 3:52 pm
I know this will piss off some folks, but the broker’s job is to sell the property, not to make sure another agent gets paid. The MLS is a tool and if you can do your job and get the property sold without that tool than more power to you. Most of my listings get sold because of the internet exposure I give them and the network of agents I prefer to deal with, not the MLS.
Personally, I would much rather deal with agents that I know can get the job done with minimal hassle so therefore, my common practice is to premarket listings before they are officially “on the market” so I can stir up some interest and have some buyers in line beforehand.
I don’t want to hear anything about ethics or fairness. I would challenge you to show me anything that makes that illegal or unethical. My job is to get the property sold and that’s what I do. Every time. Usually faster than my competition. I work for the seller, not a competing brokerage. My fees are mine unless I absolutely have to pay another broker to bring in a buyer.
Herman Chan
September 21, 2010 at 12:42 am
I agree it is our jobs to sell a clients property. However, getting it sold is just the starting point. the fudicary duty we owe is to get the highest and best offer for them….and that may not always be our own client. I’m just saying…
But as vicki voiced below, if the seller is ok with that arrangement , then so be it. We’ve done our job.
Tony
April 20, 2016 at 6:48 pm
What?
“….the fudicary duty we owe is to get the highest and best offer for them….and that may not always be our own client…”
First: If the seller is NOT my client my “FIDUCIARY” duty to my client, in this case, is for the Buyer only.
Second: Hence, my duty Is to get the property for my client, for the lowest price possible…
In some cases the seller do not want to advertise the facts that their house is for sale for any of a million reason. My job , after telling them the cons and pros, is to protect that privacy and their desires.
Tony
Ruthmarie Hicks
September 20, 2010 at 4:26 pm
HOOOOO BOOOY!!!! Where does one begin…
1. The Case Against:
Unless the property is VERY unique or the agent VERY unique (I mean bordering on the ridiculous) nothing can really beat MLS exposure. I sell – because of my web presence – roughly 1 in 10 of my own listings… NOT scientific because I haven’t been an agent long enough to conclude that this is a trend. My marketing definitely does do the job in this case.
BUT – there are 7000 agents in our area. I am among the more productive of these – but there is no way on earth that I can say that “I, Ruthmarie Garcia Hicks, have a bigger net than the other 6999 agents put together.” Anyone saying something like that is an idiot for even trying to justify it. I don’t care what you do – there is not a snowball’s chance in hell that this is the case.
2. Transparency???
We have more information – more “stuff” on the web now. But I don’t think this makes us transparent. The information has been twisted into “SPIN” and everyone’s got their angle. Look at lead aggregators and sites where you can buy your way onto a web page that makes it look as if you are the listing agent. Success in this world has more to do with your ability break out the plastic than your overall ability to sell real estate – or anything else for that matter. People are more confused then ever and their decisions are being guided more by hype than by facts. I do not call this transparency.
3. In the Know:
I don’t see the conflict for you. Seriously, I don’t – and true confessions here – I too was the nerd that was never looked on as “cool.” Heck – I even hold a doctorate – so the whole world KNOWS I’m a nerd. (If you can’t beat it – own it – but that’s another story)
Point here is that your obligation is to your client. If you can secure the property that they want – then that’s what you should do. The Listing Agent is another story. But by representing your client you are doing your job.
4. One Case:
1. No Days on Market – and no real exposure to the full buying pool – in a declining market? Not a good idea.
2 . No Public price reductions – but by stifling the buyer pool you have the probability of building in bigger reductions – private though they may be.
3. No publicized commission agreement – So what? That could work for or against you when an agent shows up. If the buyer pays – they will expect the commission to worked into the pricing. I see no benefit here.
4. No definitive price, only price ranges – It all comes down to what the market and the banks will let you sell it for. Putting up vague price ranges is smoke and mirrors.
5. A place to “list” your home prior to MLS, or a place to list it if it is unsuccessful selling on MLS – and allow the price to decline further while playing games with the listing.
The prosecution rests…..
Herman Chan
September 21, 2010 at 12:49 am
Very well argued! You got me convinced. NERDS UNITE!
Vicki Lloyd
September 20, 2010 at 5:45 pm
I’ve seen pocket listings sell for more than expected, as well as less. Sometimes, the “I’m the first to know” buyer will over-pay because they don’t want to take a chance that another buyer will out bid them. I’ve also seen them “given away” because a seller just wanted to get it over with, and the listing agent knew that and took advantage by either selling it himself, or bringing in one of his friends.
Limited marketing will always leave some doubt about the true value. If the seller is willing to live with the doubt, that is his choice, but he should be informed!
Herman Chan
September 21, 2010 at 12:01 am
very well put vicky! you are right, ultimately if the seller is ok with it, then so be it. but it is their choice.
stephanie crawford
September 20, 2010 at 7:01 pm
In my market I’ve never seen anyone with a real pocket listing. Occasionally I’ll tell other agents that I have “a pocket listing in this or that neighborhood.” What I mean is that I have a hot listing that will hit the market as soon as the repairs, my photos, paperwork, are complete. I think this is what most agents mean by pocket listing now-a-days.
What I do sometimes see is an agent who will enter one or zero photos in the MLS in an attempt to secure both sides of the deal.
Herman Chan
September 21, 2010 at 12:39 am
hi stephanie! u r right, the meaning of the term pocket listing has evolved.
i think that this is a good time to point out that picket listings probably happen more than we realize. i mean that is part of the allure, it’s not publicized, so how would we know any different unless it was on our radar.
for example in my market, when a deal closes a listing agent must post who the buyer agent is. increasingly, I’m seeing ppl marking the buyers agent as “non area member” or some other vague designation. Of course it can happen that an out of town agent writes on a house, but I became very suspicious one time. An REO house hit the market my clients loved! We wrote an all CASH over asking offer, short fast close, practically no contingencies. I never got a written response/confirmation the listing agent received the offer after several emails. and it was not until I tracked him down on a phone (via a # blocked) that he finally mumbled that he got it. Anyways, I saw on the MLS it went pending in a couple days w/ another offer. But the escrow period was almost 2 months and the it was marked “non area member” on MLS , so I knew something was fishy.
After it closed, I saw the new owners in the driveway, and it turned out they were represented by the listing agent (that’s why he marked it as “non area member” on MLS so no one would know) and I also found out they were not all cash at all AND sales price was lower than our. I seriously doubt this listing agent even forwarded my offer to the bank. Ugh.
BawldGuy
September 21, 2010 at 3:00 pm
Taking a so-called pocket listing, regardless of definition, is not a moral issue any more than double ending. It’s PC at its best, or more honestly put, worst. Same with transparency, with precious few exceptions. All false issues from where I stand. They’re used primarily as marketing ploys, and secondarily as weapons to control others.
Sellers, again with hen’s teeth exceptions, know exactly what they’re doing when they insist on this approach. It almost always begins with, “Bring me a buyer and I’ll pay you X% commission.” Fair enough. I’m not your mother. I told you the pros/cons. You’re an adult.
They’re no different than other sellers in that they want results. Sure, most times it’s better using a traditional approach — they may or may not believe this, regardless of what we advise. As long as they’re not woefully undervaluing the property, it’s their choice. I almost always tell clients they can opt for something less than ideal, and I’ll only refuse to execute it if it’ll cause them damage. If they still want to do it, I make it clear I’ll not be assisting them in its execution. That almost always causes them to pause and reflect.
Bottom line? Most of this is a non-issue, and PC based.
What I wanna know, is what do you guys think of the designated hitter rule? 🙂
Homes In Pasadena
October 6, 2010 at 9:18 am
Excellent article! You can really make several points for both sides. I believe that it is our duty to negotiate the best deal for our sellers – sometimes that might not be the highest price.
If I can sell a house by word of mouth great. However, casting the widest net possible will most likely bring the best options for my sellers.
Part of my job is to make sure my clients understand the process and their options. Every client’s situation is different and what might be acceptable for one might not be for the other.
Bottom line, if I look out for my client’s best interest, I’ll sleep well.
Thanks for the food for thought – Steven
Alex Clark
April 11, 2011 at 10:29 pm
Herman,
Great article, and you make great points. I think it is fair to point out that since launching we are now in 34 States, have almost 1000 members, and have close to 500 posts. We’ve been live for 9 months, do not do any marketing at this point, and what you see is a very bare bones beta version. We’ve had TONS of feedback, and our next version is coming soon. If agents aren’t joining, they’re going to miss out on opportunities for their sellers and buyers (you failed to mention you can post “buyer needs” on our site).
What I read in these comments and what I read and hear everywhere is the same, “Don’t pocket list, because you don’t get exposure for your clients”. That’s old school thinking. We’re not only going to change that argument, but we’re also going to change the way agents think about “listing”. Listings are not about agents, they’re about sellers and selling their homes at a highest and best price that is acceptable to them. That’s what we’re going to help you do.
As far as transparency goes, our site is public. Anybody can browse it.
If anyone has any questions, feel free to contact me directly aclark at pocketlistings dot net.
Herman Chan
April 12, 2011 at 12:49 am
hi alex
took ya about 6 months but thanks for joining our little conversation here! 🙂
i think it would really help your site if you had some success stories. i mean 1000 members doesnt say much. it’s like 1000 who signed up for a facebook fanpage. ppl sign up for anything nowadays.
as for transparency, there are not addresses. and to get more details you have to pay for info. isn’t that veering towards what an MLS board does already?
looking forward to the new version of the site!
H
Alex Clark
April 13, 2011 at 11:05 am
Herman,
Been a bit busy keeping track of the articles. 😉
You make good points and as agents share success stories, we will share them. https://blog.pocketlistings.net/2010/09/20/the-first-success-story-is-confirmed-in-san-francisco-on-pocketlistings-net/
We put all marketing on hold until this next version is done.
On transparency, we leave it up to the agent to share what they want to share. Our current version doesn't allow addresses to display, or contact info, or photos. All of which is changing. We took the feedback from our users, and will again leave it up to the agent to decide how much or little information they'd like to share, including contact info, photos,and webpages.
The fact is, just like your article states, whether you love or hate pocket listings, they exist and are an integral part of our industry. I can bet that every single agent out there won't hesitate to do a deal if their client contacts them and says, "Hey, I found this house on PocketListings.net, I'd like to write an offer on it."
We're just streamlining and consolidating something that already exists and will continue to exist and thrive in our industry.
I'm looking forward to the new version too!