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Pros and Cons of a Pocket Listing

By Colleen Colkitt

A pocket listing in real estate is when a seller wishes to avoid open houses or public advertising of their property, and doesn't list their house with a broker under the standard Exclusive Right to Sell contract. The broker and seller don't enter into a formal contract, just an agreement.

When a broker finds a buyer for the property at a price the seller agrees upon, the broker receives commission once the deal goes through. The property in a pocket deal is not entered into the MLS (Multiple Listing Service) which can be accessed by other real estate agents or brokers.

Pros of Pocket Listings

For sellers with special needs for privacy, this is exactly the route to go. An open house for a celebrity property is not realistic, so putting trust in a broker who can handle the deal with discretion is important. Celebrities or famous judges or prosecutors tend to favor this type of deal when selling their home. Another advantage for brokers is with a high priority client, such as a celebrity, there is an increased potential for higher commission rates.

These deals are done quickly and efficiently. Usually the seller wants the buyer to be able to act fast, and preferably find a buyer paying with cash who is able to meet their asking price. Pocket listings are especially successful with brokers who can act in a timely matter, and sell the house in a short amount of time to make it easier on the seller they're working with.

This way, the property won't sit on the market and put the seller through the energy of showing the home, scheduling open houses, or being talked down on the price. The seller gets their privacy, and the broker has their work cut out to find buyers in the market for the property. Though the broker and seller don't sign a contract, the verbal agreement usually works best with a broker and seller who have worked together in the past and had real estate success with previous transactions.

Another reason a pocket listing is a great deal, is because the seller only has to work with one agent, which means they only have to pay one commission rate.

Pocket Listing Cons

There is a downside to pocket listings, however. The cons to this method of selling your home include not being officially for sale on the market, which might exclude qualified buyers. Not being on the MLS significantly limits the amount of people who know about the listing, and this might lead to a higher number of Days on the Market (DOM) for the home.

Another disadvantage of this type of sale is that some real estate brokers or agents won't even touch a pocket listing. Some professionals don't take this type of listing, or lack of listing, seriously, and won't bother with them at all. It is a difficult task for a broker to make a sale for a property in a pocket listing because they can't advertise it or show the property in most cases. This puts the broker in a tricky situation, but for those real estate professionals who are networked in, a pocket listing might be exactly the type of deal for you!

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