In real estate, a pocket listing is a property that receives indirect (often word-of-mouth) promotion by a broker instead of being marketed through the Multiple Listing Service (MLS).
The MLS is the primary tool that is used by Realtors to advertise their property inventories. The greater Phoenix area may have 23,000 of those active MLS listings at any one time. The sellers of MLS-listed homes benefit from having his property broadcast across thousands of real estate websites. It is potentially seen on millions of computer screens and smartphones.
But this isn’t true for pocket listings.
Why limit the marketing?
There are several reasons that a seller would consider a pocket listing. In some cases, the seller in a hot neighborhood is wanting to test the market. He would consider selling at a top-dollar price, but not for less. A move is not imminent, only conditional, and the seller’s motivation is low. The seller notifies a local real estate agent to consider their home when the agent is working with buyers in the area.
At other times, the homeowner may want to keep his move confidential. No yard sign, no MLS listing, no open houses. This is common when there is a high-profile corporate job transfer. The seller wishes not to attract unwanted attention within the company in advance of a formal announcement. The listing agent is tasked with finding a buyer privately through relationship networks.
Recently, clients of mine in the Stetson Valley area have requested a pocket listing for their Pulte home for a different reason. Their motivation stems from the desire not to make a double move. This client is building a home that will not be completed for 8 months. I will perform the pocket listing now and then input the property into the Arizona Regional Multiple Listing Service (ARMLS) in a few months when their new home is nearing completion. Most buyers desire to close on their new home within 45-60 days. Possession on this home will be unavailable for the next 6 months. This would discourage buyers and run down the DOM (Days on Market) clock for this listing.
How do I find pocket listings?
Since pocket listings do not appear in the MLS, you might network in the neighborhoods that you are interested in. If you are looking in an area like McDowell Mountain Ranch, be alert for high-profile real estate agents who live in and sell in your desired location. Who has a lot of yard signs in the area? Which brokers advertise in the HOA newsletter? Productive listing agents have an ear to the ground. They know who is planning to move soon in their markets.
It is important to note that even though there is no formal MLS exposure, there is a contractual relationship between the Realtor and the client for securing a buyer. Within my Keller Williams real estate firm in Scottsdale, a listing agreement must be completed and signed by the Realtor and seller who are engaged in a pocket listing in order to delineate the relationship and the obligations of the parties.
In my experience, pocket listings are useful only in select circumstances. They ultimately limit the pool of buyers for a prospective listing because MLS exposure is withheld. As the representative of a seller, the listing agent is obligated so seek the highest and best terms for his client.
Discuss the circumstances surrounding your move with your real estate agent to determine if a pocket listing could work for you.
I’m very proud of my gold pocket watch. My grandfather, on his deathbed, sold me this watch. – Woody Allen, American comedian, filmmaker, and actor