Pocket Listings - The Pros and Cons

The practice should MOST CERTAINLY be frowned upon by all professionals...  I think it does not allow for highest price, and one of the unintended consequences is that it is keeping some values low in certain neighborhoods, by having a lower comp.  It is then picked up by Zillow and others on their automated valuations, which are generally way off anyhow, but it is NOT allowing those hearty homeowners who have waited so long for the market to come back so they can refinance!  Now, I am fully awaree that somebody refinancing does not help fill Realtor's pockets, but I'm sure a lot of Realtors would like to refinance.  It is greedy brokerages and agents who do this, and from the numbers I've seen of recent sales of pocket listings, they truly hurt neighborhoods.  Usually happening with short sales, it seems, and the lack of higher prices means the taxpayers who back stop the lenders are getting screwed as well.

It should also be noted that many Brokerages have been sued because of the Seller not being aware that their listing was not placed on the MLS...  These are often settled, as many cases have been, so there is no record of it, but I have heard of a few brokerages that basically forfeited their commission.

I think there is a place for pocket listings.  Fellow associated Realtors perceive the advantage of having an early shot at a property.

DeeDee, 

I don't think pocket listings make sense in this market.  We had an owner we lease and property manage for tell me his friend was going to pocket list the house earlier in the year and would I work with them to do showings.  Pricelessly, not one showing in two months.  

The best news is that we got the OFFICIAL in the MLS listing and are moving it forward for the owner's best interest.  

All the best, Michelle

Well said - if a seller wants to maximize their price they need exposure - plain and simple. Regards Dave

I can't see how a seller would feel this kind of listing would benefit them at all, That's why they need to choose a skilled agent like DeeDee to give her skilled advice. 

Most professionals in my markets frown on these and one MLS mandates a listing within 48 hours if you belong to thier MLS and association.  It's a slippery slope.

Great topic..thanks for sharing with us in ActiveRain Land.

I get the pros and cons. I have had sellers tell me NO MLS exposure, just sell it in house. I tell them the cons and many times we don't sell it. But ... in some cases this does work in the seller's favor. It is all about what the seller wants, not what I want.

There ARE those sellers who don't want anyone to know their house is for sale. It makes no sense financially, but perhaps they have some kind of valid reason. (Like somone who would enforce a monetary claim on them if the sale became public.)

Some interesting comments about this issue, yet the seller usually decides the ultimate marketing plan and most agents will accept the sellers terms and conditions to secure the listing, so if the agent isn't listing the property in the public venue, it's probably because the seller instructed him to do so.

DeeDee, some of the pocket listings that go pending are For Sale by Owners - that was the case with me on a property now under contract. We are dealing with it here as well. Not sure what the answer is, as there just aren't enough listings and some sell by word of mouth before they can hit the market. Sharon

To find an agent who is going to do what is best for the seller is absurd. Realtors care only about themselves although advertise so differently. They have to advertise that they are honest & sincere just like politicians do only to sell out the people. How long can this last.

DeeDee, A very informative post.  I think it is important to let postential sellers know the pros and cons of pocket listings.  I think you presented this information in a very objective way.

Our MLS likes to keep track of "unlisted" sales and we are required to input them upon sale, if a member was involved in the sale.  I think a seller should just get the home listed and get the most exposure possible.

Hi DeeDee.....Congratulations on your feature. Wow your market is now a Sellers Market, great news for home sellers. So True Pocket listings do not get a home exposed to all home Buyers, resulting in not giving the Sellers a chance to maximize on a Top selling Price.

Go get those Listings :O))

Interesting article with good and valid points from the perspective of the Realtor as seen from all the replies, however all miss the much larger picture and the many opportunities that pocket listings represent to Realtors.

I really think a pocket listing is a dis service to the seller.  We need to get them the most exposures and the highest and best offer.