What Is A Pocket Listing?

For many home sellers, getting their house in front of as many eyes as possible is everything. But for some sellers, exclusivity and privacy are more important – and one way for these sellers to achieve that is through what’s known as a pocket listing, which is an alternative to listing a property on the multiple listing service (MLS).

Pocket listings also offer buyers the prospect of less competition and a shot at a property that might be more on the unique side.

Let’s examine what sellers and buyers should know about pocket listings, including how pocket listings work, their pros, their cons, why sellers use them and how potential buyers can find them.

The Meaning Of Pocket Listing

A pocket listing is an off-market listing, or a property marketed to potential buyers through private channels or word of mouth rather than on the MLS. The name comes from real estate agents keeping non-public listings in their pocket, metaphorically speaking.

You might also hear pocket listings referred to as “office exclusives” or “exclusive listings,” though some real estate experts consider exclusive listings a different and more ethical way to keep the identity of their clients confidential. 

You won’t find any “for sale” signs on a pocket listing, and you also won’t find it listed online. The real estate agent must also be on board by only sharing the listing with a small number of preferred clients or fellow agents who represent this exclusive clientele. Not a lot of pocket listings exist – they represent a very small percentage of all real estate listings posted in the United States.

How Pocket Listings Work

A seller can choose a pocket listing to sell their home if they want to keep the sale mostly private. In this case, only certain people will find out about it, and the general public won’t find the home on the MLS database (which would otherwise allow buyers of all kinds to find it). Typically, a single listing agent who isn’t a member of the National Association of REALTORS® (NAR) handles a pocket listing sale.

Pocket listings may be marketed internally at a brokerage firm, through private agent networks, or in select groups. There’s no agreement for the seller or the agent to work with other real estate professionals, so the agent can typically keep the whole commission for themselves.

Have Pocket Listings Been Banned?

The NAR banned pocket listings as part of its Clear Cooperation Policy, in an effort to prevent dual agency issues and promote fairness in the housing market. But not all pocket listings violate MLS rules or state laws.

The Ethics Of Pocket Listings

The Clear Cooperation Policy requires agents to add listings to the MLS within a business day of public marketing. Not sharing on the MLS can make it hard to research real estate comps. The absence of a listing on the MLS also reduces buyers’ choices and skews local market data, and it may not be in the seller’s best interests.

Generally, real estate brokers need to be transparent with sellers about why they’re suggesting a pocket listing. The seller might even have to agree to opt out of having their property listed on the MLS and express their wishes in writing.

Alternatives To Pocket Listings

A few options are similar to pocket listings and can serve as viable alternatives. For example:

• The previously mentioned office exclusives, which help ensure seller privacy, are listing agreements in which the seller asks that the listing only be marketed within the broker’s firm or among the brokers and licensees affiliated with the listing brokerage.
• An informal “coming soon” notice allows sellers and their agents to market a home before it’s officially on the open market. This type of listing will eventually go on the MLS, but it’s possible it will sell before that happens – which can reduce public knowledge of the real estate transaction.
• Private listings put the home in the Private Listing Network (PLN) section on the MLS. Only licensed agents can access the information, and it won’t appear on your favorite real estate listing websites.

Why Sellers Might Use Pocket Listings

A property seller may choose a pocket listing real estate option to:

• Market to a more exclusive or limited clientele
• Keep their home sale relatively private, particularly if they’re a celebrity or public figure
• Test out an asking price or gauge the public’s interest in the home
• Sell to a buyer they know, possibly leading to a quick sale
• Avoid the hassles of bidding wars
• Avoid advertising on the MLS the number of reductions in sale price, which can raise red flags among potential home buyers
• Negotiate a reduced commission with a real estate agent, who may not have to spend a lot of time marketing the home
• Limit the amount of traffic to the home for showings and open houses

Ultimately, if the goal is to keep a listing on the downlow, avoid placing it on the MLS or keep it limited to a small audience, a pocket listing may be the way to go.

Pocket Listing Pros And Cons

Let’s walk through some potential pros and cons of pocket listings for home buyers, sellers and real estate agents.

Pros

Here are some of the positives associated with pocket listings:

• Sellers can have more privacy when selling their home.
• Sellers can test their asking price and gauge interest in the home.
• Buyers may experience less competition for a house.
• A real estate agent can keep their whole commission rather than sharing it.

Cons

Now for the downsides often linked with pocket listings:

• A seller may receive fewer offers on their home because it gets less exposure.
• The chances of multiple offers or bidding wars go down.
• Prospective buyers have less data to research comps.
• A seller may not get the best price for their home.

How To Find Pocket Listings

The best way for home buyers to find out about pocket listings is to work with a real estate agent not affiliated with the NAR. Agents who are hyper-focused on a certain area will likely have the necessary network and connections to stay informed about pocket listings in that real estate market.

You also have the option to discuss the office-exclusive option and private listings with a NAR agent.

FAQs: Pocket Listings In Real Estate

Here are the answers to a few questions that home buyers and sellers often ask about pocket listings.

How can I protect my privacy when selling a home?

If you’d like to keep your home sale private or want to sell to a specific person, you have choices beyond pocket listings. You could talk with your agent about an office-exclusive listing, a private listing or a “coming soon” notice and see if any of these alternatives meet your needs.

Where are pocket listings illegal?

No state laws prevent pocket listings. The National Association of REALTORS® (NAR) banned REALTORS® from using pocket listings, but non-NAR members can still do so.

What’s the difference between a pocket listing and private listing?

Unlike a pocket listing, a private listing is still entered on the MLS. As a private listing, though, it won’t appear on mass-market home-search websites.

Why would sellers want to avoid listing their home on the MLS?

High-profile sellers and people in sensitive legal situations might want to avoid having their listing shown to the general public. Sellers in these circumstances have several options to protect their privacy, including pocket listings and office exclusives.

The Bottom Line: Pocket Listings Can Be Useful, But They’re Not For Everyone

For the right seller and the right buyer, a pocket listing with a real estate agent might just be the right path. However, a public MLS listing will best serve the majority of homeowners looking to sell. The public MLS listing will provide more exposure, which usually means more offers.

Have you found the right home for you? Take action and start your mortgage application with the Home Loan Experts at Rocket Mortgage^®.