To List or Not to List…That is the Question!
If you are buying or selling a house, you’ve likely heard the term “pocket listing” or “sold before sent” but what does this mean? We’ll explain what these terms mean and, in our opinion, the pros and cons of selling this way.
A pocket listing is when a seller chooses to not enter their house on the market via the MLS (Multiple Listing Service) and to instead work with a Realtor to try and sell their house without going on the market. Similarly, sold before sent means that the house sold before being sent to the MLS. Essentially, pocket listings and sold before sent are the same thing.
- Convenience: In some cases, preparing your home for the market can seem overwhelming. It can seem much easier to casually show your home to a few people your Realtor has networked with and work to get a contract without having to do as much preparation.
- Privacy and Exclusivity: Pocket listings are often used by sellers who value their privacy and want to keep the sale of their property discreet. By not advertising the listing on the MLS, the property can be marketed exclusively to a select group of potential buyers, providing a sense of exclusivity. Additionally, if the home isn’t listed on the MLS until it is pending or sold and the sale falls through, the public doesn’t know.
- Control over the process: Sellers can choose who sees the home, when it’s shown and how it’s marketed. As a seller, you also have some negotiating power to say, “we are not going to do that (i.e., reduce the price, negotiate this inspection item), because we have not fully exposed ourselves to the market yet.” A Buyer would then have to decide how badly they want to move forward with the purchase of the home.
- Limited exposure: We are in a market with extremely low inventory. Some neighborhoods have even lower inventory than others. By not going on the MLS and fully exposing your home to the market, you could be missing a large pool of Buyers. For example, if you are listing a home in a neighborhood that only has one other home for sale, our recommendation would be to list your home.
- Less favorable terms: With a large pool of Buyers comes the opportunity for multiple offers. Multiple offers often yield more aggressive terms (e.g., higher listing price, aggressive inspection and appraisal terms and more). Ultimately, you could get a much better offer by going on the market rather than selling it as a pocket listing.
- Lack of Transparency: Pocket listings are not subject to the same level of scrutiny as MLS listings, which can lead to concerns about transparency in the selling process. Buyers may wonder if they are getting a fair deal, or if the seller is getting a better price than they would on the open market.
- Potential for Conflict of Interest: When a property is listed as a pocket listing, the selling agent may be representing both the buyer and the seller. This can create a potential conflict of interest, as the agent may be more focused on getting the deal done quickly than on getting the best possible price for the seller.
Ultimately, it is important to have a conversation with your Realtor to weigh the pros and cons carefully. Working with a trusted and experienced real estate agent can help you navigate the process and make the best decision for your needs.
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