Sellers Beware of the Pocket Listing

April 22, 2014by Deborah Kerch

Sellers, Beware of the Pocket Listing!

A controversial real estate trend, the pocket listing, is gaining popularity in various parts of the country, including Julian. A pocket listing is a slang term for a property withheld from multiple listing services (MLS) and instead marketed directly by the seller’s agent — on his or her website, for example, or through word of mouth. The seller’s agent has total control over the listing and showing process, essentially keeping all the sale information in his or her “pocket.” By doing so, agents and the clients they represent believe they create an air of exclusivity around these restricted listings.

Why Choose to Sell with a Pocket Listing?

What other reasons would motivate sellers to choose pocket listings over traditional ones? Sometimes homeowners, especially famous ones, seek privacy. Others may be attempting to test the waters; they’re not sure they really want to sell, so they see if the agent can drum up a deal without the fuss of for-sale signs and weekend showings.

Other sellers might feel coerced into doing a pocket listing. Sellers should beware that because the selling agent in a pocket listing normally handles the whole transaction in-house, he secures both the seller’s and buyer’s commission. This is called double-ending the deal. Though some agents who pocket list might reduce the overall commission from, let’s say, 6% to 4%, they still stand to gain more from the sale than if they did the traditional split and received 3%.

Listing Exposure is Key to a Good Sale

Most real estate professionals would agree that the more people who see a house, the higher the sale price will be. Listing on the MLS, which is standard practice for real estate agents, generates widespread exposure for a property. That exposure can lead to multiple offers and a higher sale price.

Real Estate Agent Code of Ethics

Agents are bound by a Code of Ethics to work in the best interest of their clients. Real estate professionals should never push a client to do a pocket listing and need to clearly explain that excluding potentially interested buyers from knowing about the listing could result in a lower sale price and longer time on the market.

Controversy Over Pocket Listings

Pocket listings are also controversial for the negative impact they may have on an area’s property values. Because pocket listings are not posted on the MLS, it is difficult (and in some cases impossible) to use them as comparable properties for other sales, appraisals or mortgage refinancing, which can paint a skewed picture of the overall market. Furthermore, if you can’t use your neighbor’s pocket-listed sale as comps for your own listing price, you might be losing dollars right off the bat.

If the time comes to put your home on the market, keep in mind that you will most likely get a much better offer on an open (rather than a restricted) market. If your goal is to pocket more money, as it should be, then steer away from private, so-called exclusive listings. Work with an agent who will put your home on the MLS and give it the widest exposure possible. You’ll be acting in the best interests of the market as well.

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This information is deemed reliable but not guaranteed. You should rely on this information only to decide whether or not to further investigate a particular property. BEFORE MAKING ANY OTHER DECISION, YOU SHOULD PERSONALLY INVESTIGATE THE FACTS (e.g. square footage and lot size) with the assistance of an appropriate professional. You may use this information only to identify properties you may be interested in investigating further. All uses except for personal, non-commercial use in accordance with the foregoing purpose are prohibited. Redistribution or copying of this information, any photographs or video tours is strictly prohibited. This information is derived from the Internet Data Exchange (IDX) service provided by San Diego MLS. Displayed property listings may be held by a brokerage firm other than the broker and/or agent responsible for this display. The information and any photographs and video tours and the compilation from which they are derived are protected by copyright. Compilation © 2024 San Diego MLS.

Deborah Kerch: CA DRE #1441209
Orchard Realty, Inc.
2526 Washington St – Julian, CA 92036
Phone: 760-765-1000

CA BRE #01441209 | CA BRE #01934854

Corporate DRE: #01950433

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