Sam Debord, the managing broker of Seattle Homes Group with Coldwell Banker Danforth, made a guest blog post on Realtor.com yesterday. We thought it had some great information that we'd like to share with you.
Have you ever heard of pocket listing? According to Debord, a pocket listing is a strategy for selling a home that limits the exposure of the listing "to just a small pool of potential buyers and to not publish it on the local MLS for all buyers to see."
Debord had this to say about it:
Home sellers today are often approached with a variety of marketing strategies from potential listing agents. They offer a wide range of options to get exposure for the homeowner’s property.
The local MLS has listings that feed out to every brokerage and agent website in your area, and even nationwide in many cases. Since nine out of ten buyers are searching online, it’s the MLS that is real estate agents’ #1 tool for generating buyer exposure for their listings.
There are also some agents who propose different kinds of listings, known as “pocket listings”. The strategy for pocket listings is to limit the exposure of the home to just a small pool of potential buyers and to not publish it on the local MLS for all buyers to see.
Homeowners considered pocket listings for many reasons in the past, including privacy and simplicity. With today’s cutting-edge MLS technologies, however, the reasons for limiting a home’s exposure with pocket listings have almost all gone away.
Concern #1: “I need privacy. I don’t want everyone to know I’m trying to sell my home, know my address, or see pictures of the inside of my home.”
MLS listings today have the ability to cover for all of these concerns. A homeowner can list their property with an agent on the MLS, but restrict the listing information so as to totally preserve their privacy. A photo of the view away from the home could be the only image in the listing. The address can be undisclosed, as well as the owner’s name.
The listing could simply state a five-bedroom home in a certain neighborhood is available for sale at a particular price. All inquiries would go through the listing agent, who could screen the buyers and only allow showings to serious, pre-qualified candidates.
Concern #2: “I don’t want lots of people walking through my house every day. I’ll tell my agent a price, and if they can find the buyer, we won’t need to put it on the market.”
First, a homeowner can always limit showings. They can be as limited as one hour/week. The rest of the week no one is allowed through the home. Although this is somewhat limiting for potential buyers, it still allows the entire buying public to see the home is on the market and to schedule an appointment.
Second, and more importantly, homeowners often underestimate the value of their homes. Selling your home at a pre-defined price, without testing the market to see if there are higher bidders, can leave a lot of money on the table. With the number of bidding wars and homes selling above list price we’ve seen recently, homeowners risk a significant loss of profit when selling their home without exposing it to the full market of buyers.
Concern #3: “If my house doesn’t sell right now, I don’t want there to be a record of it on the MLS being an unsellable property.”
This is a reasonable concern for a homeowner but also one weakening their ability to attain their true goals. If a homeowner truly wants to sell their home, the most likely place for success is on the MLS where the most potential buyers are shopping online. We see homes every month sitting on the market until one perfect buyer falls in love.
Some homes only get one offer after months on the open market. If they had been exposed only to a small number of buyers in a pocket listing, the chance they would have been sold would be significantly lower. By trying to limit negative exposure, the home seller in this case would also be limiting the most important factor, positive exposure.
If you’re not a celebrity or in a very unique situation, pocket listings are rarely the best choice.
Realtors and real estate organizations nationwide agree getting the maximum exposure for your home from an MLS listing is essential to achieving top dollar on your sale. While there are some rare situations where home sellers are more concerned about keeping their sale quiet than what price they can get for their home, the vast majority of homeowners are best served by an MLS-listed property.
Whether it’s a simple listing with little information, or a fully-marketed listing with 25 photos, the exposure to potential home buyers with an MLS listing is invaluable to the process of getting a home seller the greatest return on their investment possible.
Sam DeBord is managing broker of Seattle Homes Group with Coldwell Banker Danforth, and a state director for Washington Realtors. You can find his team at SeattleHome.com and SeattleCondo.com.