Should You Consider a ‘Pocket Listing’ When Selling Your Home in This Market?

African american female real estate agent in kitchen showing gay couple around new house.
Kritchanut / Getty Images

Houses are bought and sold all year long, but spring is real estate season. The industry’s busiest few months are just heating up, and if you’re planning to sell, you’re probably scrambling to get your property in order and prettied up for the Multiple Listing Service (MLS) listing.

See: 15 Worst States To Live on Just a Social Security Check
Find: 50 Ways You’re Throwing Money Away

However, before you give your agent the green light to put your house on the market, you should know about an alternative way to handle real estate transactions that can be quick, quiet and clandestine.

“A pocket listing, often known as a silent or off-market listing, is a property that an agent maintains in their pocket,” said Corey Tyner, real estate investor and founder of Buy Yo Dirt. “The home for sale isn’t formally listed in the MLS, even if the home seller has an agreement signed with a real estate agent.”

The vast majority of homes are not sold through private channels this way because pocket listings usually only make sense in the rarest of situations. So, in today’s extraordinary seller’s market, is a pocket listing something that’s worth considering? GOBankingRates asked the experts.

Building Wealth

Discretion and the Air of Exclusivity

Pocket listings have long been associated with movie stars, athletes, politicians and other high-profile, high-income people who value the tiny slivers of privacy that they’re able to retain. That’s because it keeps their real estate transactions out of sight and off the books.

“Many years ago, pocket listings were created as a technique to promote high-profile persons or luxury residences discreetly,” said Tyner. “They were considered exclusive because they were listed under the radar of mainstream agencies, purchasers, and even the press.”

When wealthy, prominent people are in the market to sell, they or their agents might inconspicuously approach potential buyers to conduct the transaction in a stealthy fashion out of the public eye.

“Sometimes a home seller will sell their home through a private network or someone they know who has an interest in the property,” said author and realtor Jason Gelios of Community Choice Realty. “This can be advantageous if the home seller is seeking to sell privately, without the showings or publicity attached to placing a home on the market.”

Building Wealth

So, while it might make sense for J. Lo or Julia Garner, are pocket listings ever a good idea for an average Joe whose last name isn’t Pesci or Rogan, particularly in today’s hot market?

Check Out: 20 Most Affordable Places To Live That Have Great Weather, Too

A Few Attractive Pros To Consider

Regular sellers might consider a pocket listing if they know of a buyer who has their heart set on the house. Buyers who don’t want to miss out on a must-have property — or who simply don’t want to compete in today’s lopsided seller’s market — could dig deep if it means being the only game in town.

“Highly motivated buyers in this market will pay a premium to make sure that the home never hits MLS, knowing that if it does, they may be competing with 15 or more offers,” said Tim Lumnah of Berkshire Hathaway HomeServices Page Realty.

Pocket listings also let you sidestep the DOM clock, which forces down the sale price with every tick and tock.

“The notorious days-on-the-market clock starts ticking as soon as a house is listed in the MLS,” said Tyner. “The longer your house is on the market, the more stale it becomes and the less money you’ll get. When a home has been on the market for 30 or 60 days or even longer, buyers will surely make low-ball offers. As a result, a seller who desires a specific price may work with their real estate agent to create a pocket listing rather than coming on the market.”

Building Wealth

Lack of Competition is a Drawback, Because Competition Favors Sellers

The story of the pandemic housing market has been one of bidding wars and above-list offers made by desperate buyers who are facing intense competition for too few homes. Pocket listings miss out on all of that.

“A major con of selling as a pocket listing is the missed opportunity to obtain a higher price for the home,” said author and realtor Jason Gelios of Community Choice Realty. “With a pocket listing, you don’t have people competing for your home, especially in today’s market.”

By selling through a private channel, you’re blocking out the entire market except for one buyer, which means that one buyer’s offer is sure to be your best.

“Pocket listings limit the number of buyers your home will be exposed to,” said Dawn Barclay of Keller Williams Hudson Valley Realty. “By opening up your home to the entire Multiple Listing Service (MLS), you benefit from the ‘auction effect,’ where several people might be bidding on your home, therefore driving up the price.”

Advice: 20 Home Renovations That Will Hurt Your Home’s Value

In This Market, You Better Have Good Reason To Keep Your Home a Secret

If you don’t spend your days trying to dodge the paparazzi, and you don’t have a committed buyer lined up who is guaranteed to pay above market value, a pocket listing is a tough sell in today’s market.

“Doing a pocket listing in the current real estate environment is like committing financial suicide,” said Bill Gassett, founder of Maximum Real Estate Exposure. “When homes are listed for sale in many parts of the country, including mine, there are literally people fighting over them. Demand has outstripped the supply of housing by a significant margin.”

Gassett said that in today’s market, sellers risk losing tens of thousands of dollars — maybe more — by doing a pocket listing. They also forfeit the chance to command terms that sellers could have only dreamed of just a few years back.

“For example, finding a buyer who will offer cash for your home is not unusual,” said Gassett. “A buyer who will waive their home inspection is also commonplace. Some buyers will put an escalation clause, driving the price up even further.”

All of that disappears when you sell through private channels. “By forgoing putting your house into the market, you lose your leverage as a seller and the auction-like feeling that exists in the market,” Gassett said.

More From GOBankingRates

Share this article:

Building Wealth

About the Author

Andrew Lisa has been writing professionally since 2001. An award-winning writer, Andrew was formerly one of the youngest nationally distributed columnists for the largest newspaper syndicate in the country, the Gannett News Service. He worked as the business section editor for amNewYork, the most widely distributed newspaper in Manhattan, and worked as a copy editor for TheStreet.com, a financial publication in the heart of Wall Street's investment community in New York City.
Learn More