By Markian Melnyk, Realtor
When a home seller lists with a broker with instructions not to post the property on the multiple listing service (MLS), that’s a “pocket listing.” If you’re a seller, be cautious about taking that path. It will deprive you of the broadest exposure to your property and handicap your ability to obtain the highest price.
I saw a squirrel on my morning walk with Mango. It’s the second time I’ve seen it, and I know it is the same squirrel because it is missing its tail. The squirrel caused me to think about disabilities. This plump squirrel was doing fine; climbing and foraging well enough to put on weight. But how will it manage in the winter without a tail to wrap over its body for warmth? Maybe it will build a better, warmer nest than other squirrels. I’ll check back later and let you know.
Nevertheless, could there be a reason to cut off your own tail? Or, in our context, to sell your home without listing it on the MLS? A study by Bright MLS found that listing on the MLS brought sales prices approximately 17% higher than homes sold off the MLS. That means an extra $51,000 in the seller’s pocket for a $300,000 home.
Here are some reasons sellers might choose a pocket listing, or as its sometimes called, an “office exclusive listing”:
Privacy. A seller experiencing a divorce, bankruptcy or other sensitive life event may want to minimize the public attention that may accompany publicly listing their home for sale. This is more likely to be the case with a celebrity that already has a public profile.
Controlling Access. It can be intrusive to have potential buyers visiting your home. The seller needs to keep it clean, remove personal items, and make themselves absent when buyers have scheduled a viewing. Pocket listings can limit this disruption to fewer, pre-vetted and well qualified buyers.
Testing the Market. It can be hard to accurately price a unique, upper-end property. An exclusive listing allows a seller to "test" an ambitious price and then make price adjustments without exposing this information to the market. If the home doesn't sell privately, the seller can lower the price and list it on the MLS with zero "Days on Market" (DOM), avoiding the appearance of having a "stale" listing.
Less Hassle. If an agent already has a buyer lined up, the transaction can close quickly without public marketing. And the seller can avoid the hassle and expense of photography, staging, and making extensive repairs.
An agent accepting a pocket listing should be extra sensitive to avoid a federal or state fair housing violation. Fair housing law, as applied in Maryland, prohibits discrimination based on race, color, national origin, religion, sex, gender, familial status, disability, marital status, sexual orientation, gender identity, and source of income. If the agent is promising their seller that they will only show the home to a curated list of specially qualified buyers, the question becomes “what criteria will be used, and will it discriminate based on any of the prohibited categories?”
Pocket listings make it more likely that an agent can capture commissions on both sides of a deal – from the seller and the buyer. But in general, most sellers will benefit from the higher sales price that the robust MLS marketplace provides. And buyers clearly benefit from the widest possible choice.
