A Home Seller's Guide to Pocket Listings

This unconventional approach may help sell your home faster, but be sure it's the right move for you.

U.S. News & World Report

A Home Seller's Guide to Pocket Listings

(Getty Images)

How do you want to market your home when it comes time to sell? It’s probably not a question you’re ready to answer, even if you’re planning to sell soon.

A good real estate agent will have a marketing plan for your property. But as the seller, you’re going to be the one most affected by how it's marketed, and not every tactic works for every home.

While most sellers choose the traditional route of marketing their home on the local multiple listing service, pocket listings – or private listings – are becoming a bigger part of the conversation. Here’s what you need to know about the option of a pocket listing, and how to determine if it will better serve the sale of your home.

What Is a Pocket Listing?

A pocket listing is a property for sale that is not marketed on the MLS, which is a system local real estate agents use to market their listings, contact other agents and begin negotiations toward a transaction.

The property may be advertised elsewhere – including on the listing agent’s website or other real estate listing sites – but because it is not on the MLS, the listing is considered private.

Since they are not marketed to other agents through the MLS, pocket listings are often advertised to a network of potential buyers or agents that the listing agent or firm knows may be interested.

Pocket listings can serve as a great private option for selling your home, as it limits the pool of buyers to those potentially willing to pay a premium for the ability to bid on the home before it reaches a broader market.

If a buyer without an agent places a bid, the listing agent can potentially close the deal as dual agency, where the agent technically represents both parties in the deal. While this means a little more money for the agent and a little less money paid by the seller, it also leaves room for an unethical agent to take advantage of either party by not ensuring the best deal possible for them.

But when not being used for nefarious purposes, pocket listings can be a great way for agents and sellers to achieve a fair deal with less interruption in the seller’s life, which is a point worth making, says Alex Ianos, CEO of Pocket Deed, a real estate listing site for properties not listed in the MLS.

“As a broker, personally, I feel that should be our responsibility to at least present that option [of listing privately],” Ianos says.

Why Would You Want to Sell Your Home With a Pocket Listing?

Certain circumstances make listing a property privately an attractive option, to both avoid the gaze of the public eye and to protect the property from the stigma a home can develop if it remains on the MLS even slightly longer than market average. Here are four reasons a pocket listing may be a good idea for you.

You want to maintain privacy. Marketing your home for sale and allowing strangers to tour your residence can be a difficult hurdle for some homeowners.

“It might be security purposes, it might be business purposes,” says Walt Danley, president of Walt Danley Realty, Christie’s International Real Estate in Paradise Valley, Arizona.

You may be a public figure who doesn’t want your (literal) dirty laundry in the open, or you may have a tenant on your property you haven’t told about the sale. With a private listing, you reduce the chance of inquiring strangers driving by and causing problems.

You live elsewhere for part of the year. It can be difficult to keep your home show-ready when it’s shuttered for part of the year.

Danley says many properties he lists privately are owned by people who aren’t in town during the hot summer months, which makes it a good time to list the home privately while the owners – and often the most likely buyers – are away.

You want to test out the market. If you’re not sure what buyers would be willing to pay for your home, a brief stint as a pocket listing could help to test out a higher price.

“Maybe reserve a week to say, ‘Let’s try it as a pocket listing, see if we can find a buyer directly.’ … If that doesn’t work out, then we can take it public,” Ianos says. Then if your agent does put the listing on the MLS, your home can begin at a lower price without having to endure a public price drop, which can wreak havoc on future offers.

You’re still preparing your home for the market. If your home needs some updates and maintenance before it hits the market, it can take several months before you can hold an open house.

Your agent could list the property privately while you complete the updates “in the hopes that someone would come along and pay the seller’s price. And the seller wouldn’t have to go through the time and energy and money of making it perfect for the market launch,” says Thomas Henthorne, a real estate agent at Decker Bullock Sotheby’s International Realty in the San Francisco Bay Area.

When Is Standard Marketing a Better Option?

Most homes will benefit from reaching the widest range of buyers possible – about 90 percent of the time, according to Danley. “We want to do what’s in the best interest of the clients. And most times – the overwhelming majority of times – that is to expose the property to the broadest audience and the largest pool of buyers possible, and that is through the MLS,” he says.

There are also good reasons not to market your home as a pocket listing. If any of the following are true, stick to a standard marketing strategy.

It’s a hot seller’s market. If homes are selling fast and for more than their asking price, you might as well take advantage of what could easily become a bidding war for your home.

You’ll always ask “what if?” Be honest with yourself – if you’re the type of person who will wonder what you could have gotten had your home been marketed publicly, there’s no point in listing your property privately. “You have to have a price in mind that you’re happy with getting with a limited-exposure strategy,” Henthorne says.

Your agent is pushing a pocket listing when you’re unsure. You should only have your home marketed as a pocket listing if it’s best for you. If your agent tries to push the option on you, he or she likely don’t have your best interests in mind.

Wealth of Knowledge Podcast

Wealth of Knowledge is a weekly podcast featuring tips and expert insight on all things money: personal finance, careers, investing, real estate and more.

Wealth of Knowledge logo