Question Details

John Souerbry, Real Estate Pro in Palo Alto, CA

Why would a seller expect higher offers or a buyer expect to pay less for a pocket listing?

Asked by John Souerbry, Palo Alto, CA Sun Jul 21, 2013

This is just nuts. I'm getting 3 or 4 calls a week lately from homeowners who want me to sell their property as a pocket listing with the expectation that they will get higher offers if they keep it off the MLS. I'm getting about the same number of buyers calling looking for pocket listings with the expectation that they'll pay less if the property is not listed on the MLS.
Who is creating these expectations among the populace? No seller sane enough to sign a contract would take less than market value for their property, listed on the MLS or not. Any ideas?

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People are creating these expectations themselves based on their hopes and desires, rather than taking the reality of market value into account.

It reminds me of people who think a seller who has paid off their home will accept lower than market value for it. They won't.

I understand that people want to find a way to get a great deal, but the best deal is probably finding the home they love and buying it at a price that is acceptable to both buyer and seller.
2 votes Thank Flag Link Sun Jul 21, 2013
Here in Texas pocket listings are not allowed by our local MLSs. A broker will be kicked out out if this practice is followed. It defeats the goals of the MLS which is serves all Realtors and the general population.

I haven't had such a call and I don't hear it discussed in any of the network groups I belong to. You might read your MLS rules again to see what they say about pocket listings.
0 votes Thank Flag Link Tue Jul 23, 2013
Jill - I think you've got it right for a large number of buyers, it's wishful thinking...

Ron - I've released myself from the bonds of believing in a "market." That concept needs to be filed away with Santa Claus, the Magic Pumpkin and Honest Politicians. There are no markets, only properties. For the most part, all properties are unique and so is the demand for them. It's much easier to talk to a client about the value of a subject property, whether it's being bought or sold, than it is to talk about an obscure, intangible thing like a "market." Part of the reason some clients don't listen to us is because we start talking statistics, rumors and fairy tales about "the market" when they want us to skip the economics lesson and focus on their needs. 90% of statistics published about real estate have no direct use in specific transactions. They are just something that talking heads in the media use to make them sound like they know what's going on, but they don't. When agents start spouting statistics to clients, it makes them look just as ignorant and the client stops listening. No homeowner or buyer has ever asked me "how's the market?" They always ask, "what's my home worth" or "what will it cost me to buy a ....." But don't get me started...

Ann - I've asked every would-be pocket listing seller who has contacted me why they expect to get a higher price with a pocket listing than with an MLS sale and they usually sink their hands into their pockets, stare at the ground, kick the dirt, and say quietly, "I dunno." Maybe that's the answer.

Chandra - it is funny how half-stories seem to grow into urban legends... and how much agents contribute to development of those stories.

Jeanne - great points! Some buyers and sellers do expect that a pocket listing will be a dual agency transaction and that the broker will cut their commission in half. I'm supporting the fight to make dual agency illegal in California and just won't do that type of deal.

Annette - I understand that buyers and sellers can have their acceptable price point moved by any number of marketing or negotiating tactics, but those tactics can apply to either a pocket listing or an MLS sale. A broker with a pocket listing told me earlier this year, "your buyer better pay the inflated price my seller wants or we're going to put this property on the MLS, and then your buyer will REALLY have to fight for it!" What a friggin' moron. If he could get more on the MLS, he should have done it and fulfilled his fiduciary obligation to his seller. Epilogue: my buyer moved on to another (better) property and the pocket listing property eventually went on the MLS, where it sat for over 100 days until someone bought it for about 70% of what my buyer was willing to pay.
0 votes Thank Flag Link Mon Jul 22, 2013
It has been my experience that pocket listing DO sell for more than expected.
This outcome is based on so many seeking to circumvent a tried and proven system of marketing real estate using the MLS. This is an unexpected byproduct of the disillusoinment created by aggregate websites and solidified when frustration compels action.
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What creates the exceptional results are the intangibles associated with such a marketing strategy.
Yes, a seller can and does expect more.
Yes, a buyer can and willl pay more......NOT LESS!
The rest are trade secrets.
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Change your thinking and ADD value through this process. Both buyers and sellers are telling you...right here on Trulia, why they will pay MORE and expect MORE. As professionals we are able to match the able to the willing. Do not underestimate the match function.
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It is not insane...it is ingenious.
And it makes that intital meet up at the office GOLDEN!
I understand, this is not for everyone.
If you don't have the vision, you can't see the outcome. That does not make one right or wrong....just different.
.


Best of success,
Annette Lawrence, Broker/Associate
Remax Realtec Group
Plam Harbor, FL
727.420.4041
http://RealEstateMadeEZ.us
0 votes Thank Flag Link Mon Jul 22, 2013
I could not agree more - this spring with demand outpacing supply has caused some real behavior quirks and in my experience some agents have contributed to the storm rather than trying to maintain some calm in the changing market.

Exclusives/pocket listings contribute to the sense that one broker/agent may have a connection to a untapped inventory pool. And in my experience that heightens the likelihood of buyer disloyalty in a time when it is more than a small issue to contend with.

Bottom line - a seller does better with more exposure. Exclusive/pocket arrangements minimizes exposure. Sellers should not expect to get more than the market will bear and if the market is lessened either by home features or market forces or by design by limiting listing exposure, the price will be negatively impacted.

Buyers do best when they have their own representation and should expect to pay a market price regardless of how a property is listed. The commission is paid by seller and is not part of the negotiation with buyer.

I try to educate my buyers and sellers at first meeting. But even with that, market conditions, the connection of social media, and I'm sorry to say, the behavior of some agent can make it very tough.

Best,
Jeanne Feenick
Unwavering Commitment to Service, Unsurpassed Results
0 votes Thank Flag Link Mon Jul 22, 2013
Sellers and buyers are starting to hear things from their 'friends' that had the same thing happen to them and this is what 'they' did. Usually, they are not getting the full story. Hopefully as agents we can all stick together and work through this ever changing market helping our clients separate fact from fiction.
0 votes Thank Flag Link Sun Jul 21, 2013
1) Nothing about the current market is sane/normal.

2) I can see some sellers actually signing contracts for less, but it's a 1 in 100 or 1000 situation.

3) If sellers want more money than the current market would normally accept, than a pocket listing may be an option. Either they'll adjust their price expectations, or they'll wait long enough and maybe the market will accept their price.

4) Buyers are desperate. I think they're more likely to pay more rather than less for a pocket listing, but if they can actually find a decent house to buy, it may not be a bad option.
0 votes Thank Flag Link Sun Jul 21, 2013
John,
Remember when the Market was on the way DOWN;
Sellers were Chasing the Curve; expecting it to platteau or even go back UP.
And they wouldn't listen to us then, either!
0 votes Thank Flag Link Sun Jul 21, 2013
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