I reach out to hundreds of home owners, each week, who have, at one point in the last 3 years, tried unsuccessfully to sell their home. As I build relationships with these folks, many ask me to keep their contact info and their home stats in mind for the occasion that I run into a buyer that their home would be a fit for...
I'll tell you, it is always easier to find homes that are listed in the MLS; however, on three occasions in the last twelve months, I have had to dip into my database of "potential sellers" to find the perfect home for a buyer client.
When it's what's known in the real estate business as a "pocket listing," a house that may be marketed by an agent, though it's not to be found among other homes for sale in a multiple listing service -- it's in the agent's "pocket," instead.
1. Homeowners try them out for various reasons, but mostly they're motivated either for reasons of privacy or because they're not terribly serious about selling.
"Some of the sellers are what I call 'fear of commitment' people, They're not quite ready to sign a listing agreement and go official. They say, 'Before I sign a listing, let's date.' "
Others are concerned about their privacy, he said.
"Sometimes, if they have a certain amount of notoriety, maybe a recent, very public divorce or have had a recent tragic accident, or if they're just a famous person and they feel like part of the traffic (of potential buyers) they're going to get are really just curiosity seekers, they'll want a pocket listing,maybe they just don't want their ex-wife to know the house is for sale."
2. A true pocket listing is when a homeowner and an agent have a casual agreement that if the agent comes across someone who might be a candidate to buy, the agent will bring that person to see the house.
"You might have a seller who says to the agent, 'For the right price, I would sell, but I don't want 800 people coming through on a Sunday or to deal with somebody who offers me a lowball offer because he thinks I have to sell,' ".
"They say, 'If I got the pie-in-the-sky great offer, I'll move, so if you know anyone who wants to pay, say $3 million for this house, then we'll show it and I'll pay you a commission.' "
It's probably wise in those cases, that if the agent does produce just such a candidate, the agent and the homeowner sign a "single-client" agreement that covers just that instance. Not only does it entitle the agent to an agreed-upon commission should a deal transpire from the showing, but the homeowner also would know, upfront, the agent's expectations.
3. Some sellers are more intent than those "maybe, someday" pocket listings, but they're still not ready for all of the commitments of being listed, he said. They want the agent to engage in at least some marketing of the house -- but to keep it out of the local multiple listing service.
In such a case, the agent might put the word out to other agents that the house is available, or maybe even advertise it (in general terms) online, but still without the agreement. Again, the "single-client" agreement would be in order for these cases, he said.
4. Then there are the cases where there's a signed listing agreement and the homeowner wants active marketing but still doesn't want to be in an MLS. Such listings aren't true pocket listings, but they're listings that are "exempt" from MLS rules.
Most multiple listing services have agreements with participating agents that require every listing to go into the MLS data base, so in exempt listings, the agent will need to obtain a letter from the seller that formally asks the house to be left out.
5. Pocket listings can have their advantages, but generally they're not the best tactic for most sellers -- or for most agents.
The negatives for the agent are the aforementioned misunderstandings that might occur with sellers when the terms of what, exactly, the agent will do and how he or she will be compensated aren't spelled out.
It's also frustrating when the agent has done some work to find a buyer but there's nothing in writing to induce the homeowner to stick to the plan -- and he ends up going with another agent.
"Some agents go along with a pocket listing to 'train' a seller to be a seller," he said. In those cases, the homeowner has more time to get the house ready for the broader market and to get used to the idea of people coming into their home.
"And if you (as a seller) think you're going to keep it a secret that you want to sell your house" by going with a pocket or exempt listing, forget it.
"All you have to do is tell just one person," "It will be out there. In reality, in two seconds, they'll find out."
If an agent contacts you about your sale, you can tell them you would pay a commission, and then they can add a form that would make that part of their client's offer.