“Pocket Listings”, sometimes called “Hidden Listings” or “Off MLS Listings”, are properties that are for sale, but have not been listed on the MLS (Multiple Listing Service) and are therefore not available to the Realtors outside of the company listing the property.
For almost all sellers, this is not a good idea. It limits exposure to the real estate community and to the general home-buying public, almost assuring the seller of getting fewer offers and a price below what a competitive market would bring.
Sellers should expect offers from and sales through firms other than the one they listed with. Realtors owe a fiduciary duty to the seller to try to get the highest possible price for their home and that can only be assured by wide market exposure. In addition, if the firm represents both the buyer and the seller, both will have to agree to dual agency. This means that the listing agent or Agency also represents the buyer. This obviously hampers negotiating for the best price.
So, if this practice is not in the seller’s best interest, why is it done?
Sometimes a seller client may request their property not be listed and that only some Realtors be informed. Perhaps if their property is for sale over $50 million and has famous works of art, this could be a consideration. However in Greenwich, the recent sale of a home for $120 million was multiple listed – the listing firm wanted to ensure wide market exposure.
Sometimes a client wishes to be private. They may not want to be inconvenienced by open houses, Realtor previews, and people looking at their living spaces. But these clients are not likely to get their best price without exposure to the Realtor Market.
Most often “Pocket Listings” are motivated by agent/agency commissions. Hiding a listing inside an agency creates an easy opportunity to keep both the buying and selling side commissions inside that agency. Some firms regularly limit exposure for a short period of time to give their Realtors a first shot, other firms may hide the listing for much longer. “Hidden Listings” also limits or eliminates any advertising costs for the agency.
The majority of Realtors keep the best interests of their clients ahead of their own interests. But when you talk to a prospective listing Realtor, it is always a good idea to ask them if they have a policy against “Pocket Listings”.