You have a question about pocket listings? We’ll do our best to answer it!
Q: I saw a foreclosure ad for a property, only after an offer was accepted . I never saw any ads including a listing anywhere on any site or on foreclosures sites. This house had an accepted offer in 2 days. Can agents do that?
A: Agents can sell a bank owned property (REO or foreclosures) as a pocket listing; as long as they get the bank the price they want, they can use multiple channels or methods to sell it. When there is a “good deal” in hot markets buyers will submit offers without even seeing homes in many cases.
Q: Are pocket listings legal?
A: A listing gets the name “pocket listing” or “pocket deal,” as well as an “off-MLS listing” because the broker figuratively keeps the property in his or her pocket and does not list it for sale on the multiple listing service (MLS). A broker has a fiduciary duty to make sure he or she sells a home for the best price, no matter how the broker lists the home.
“Much marketing is done via email, word-of-mouth, phone calls to shoppers in the price range. Sometimes they do web sites for them and create virtual tours. It’s just not on the MLS,” said Brenda Miller a real estate agent with Alain Pinel Realtors in Saratoga. “In Silicon Valley, this is happening in the northern area, the 650 area code (the stomping ground of technology-made multi-billionaires), more than in the 408 area code,” said Miller.
Q: Why are pocket listings becoming more popular with sellers?
A: There are sellers who have been interested in selling but aren’t comfortable with current home values. These sellers may sit on the sidelines and will only sell if they can get the price they want. Additionally, as soon as a home is listed in the MLS, the infamous “days on market” clock starts ticking. The longer your home sits on the market, the more “stale” it becomes and the less money you’re likely to be offered. Buyers, seeing that a home has been for sale for 30 or 60 days or even longer, will inevitably make low-ball offers. And so, instead of going on the market, a seller who wants a certain price may engage their real estate professional and put the listing out there as a “pocket” listing.
Q: Are pocket listings a trend or here to stay?
A: In some markets, there are entire websites devoted to pocket listings or networking opportunities with other agents about upcoming listings and properties. What started as a way to get the word out about future listings has turned into a secondary market of homes for sale for well-connected real estate agents.
Source: Realtor.com, Fox News, Deadlinenews.com
We set out to create a community where agents could share off market listings and buyer needs (privately or publicly), and a site that will give buyers and sellers an alternative to their local MLSs. We knew a long time ago that there is more opportunity out there than MLS will allow, and that the way the current system is run is not entirely broken, but getting pretty darn close.
The argument for skipping MLS is always the same, “You gotta expose your property to MLS to get the best price.” We’ve heard it a thousand times over. It’s simply not true. That is the old way of thinking. The new way of thinking is that a good price is what a buyer is willing to pay, and what a seller is willing to accept, and exposure can come from any number of online or offline channels (Facebook, Twitter, LinkedIn, Instagram, Pinterest, email, etc.) None of these companies or “social networks” existed when MLS was created…neither did the Internet! MLS was designed prior to the internet and the free and open exchange of information…and WAY before social networking.
We envision an age where licensed real estate professionals are connecting through multiple channels and creating relationships with colleagues and clients alike that foster transactions from one person to another regardless of whether it’s “on” or “off” the market. If your home or property is for sale, it’s “on” the market. It’s as simple as that. And if you get the price you want, the rest is irrelevant.
Perhaps the very location that is changing the world with their technology (Silicon Valley) should be a lesson in what we have in store:
Gautam Nadella, who works in management at Cisco Systems, Inc., said he and his wife bought their five-bedroom Menlo Park home before it went back on the market, after their agent told them it would be available.
“There is something to be said of taking uncertainty out of the selling process and the buying process,” Nadella said. “We were able to move quickly, calmly, with 100 percent confidence that the deal would get done, and as a result we did not have to go through the bidding process.”
We aren’t simply creating an environment to share “off market” real estate, we’re creating an alternative to the current system. Don’t fight technology and advances in our industry. Embrace, encourage, and promote change. You will do more deals. You will have more happy clients.