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What Is A Pocket Listing

By Tabitha Naylor

Although the National Association of realtors has not defined what actually constitutes a pocket listing, the term is used quite frequently in real estate to refer to properties that are not on the MLS.

Realtors use the term "pocket listing" somewhat freely but the most common use of the term refers to clients requesting to sell their homes privately. Pocket listing came about because these are listings that a realtor may "keep in their pocket" that are not on the multi list, or a property that is not formally listed on the open market for sale.

Have you ever wondered how some houses sell without ever having a for sale sign up in the yard? Usually, these quick sales are pocket sales.

How do pocket listing actually work? Oftentimes realtors meet potential sellers through an acquaintance, open houses, seminars or even community meetings. Some people are thinking about selling but not really sure if they want to sell. Pocket listings are most common in the high-end luxury home market because some people just want to maintain privacy like athletes, celebrities or high-income executives.

The realtor restricts access to information about the house to colleagues and to potential buyers unless the realtor sees an opportunity to sell the property immediately for full price or better. The property does not appear on the MLS listing. Often times the realtor commission will be 50% lower than listed properties because in this case the agent receives the full commission. In general, pocket listings don't last long. Because the sale is private, a realtor can really target the right buyer and turn the sale quickly.

The California Association of Realtors chief economist estimates that as much as 30 per cent of housing inventory in all price ranges are held off the market as pocket listings in parts of California and that the overall state rate of pocket listings is currently around 15 per cent.

When the market is hot and competition fierce for properties, pocket listings can lead to lawsuits. Buyers desperate to find a property end up knocking on seller doors or contacting by mail saying they would have offered more or wondering why their offer wasn't presented to the seller. In a stable or cold market the chances are less likely of having a legal issue arise over a pocket listing. Even so, both realtors and sellers should think carefully about entering into a pocket sale.

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