It’s easy to see how homebuyers today might feel defeated after scouring online listings and getting lost in the crowd at every open house.
While the housing market right now — characterized by record low inventory and soaring prices — can be demoralizing for sure, there’s another option available to buyers and sellers: Pocket listings. These off-market home listings give sellers privacy, while allowing buyers to access a new set of home options, with less competition.
“Off market, pocket listings are very big now, very popular,” said Andrea Wernick, a real estate agent at Coldwell Banker Warburg in New York City.
There are 20% to 30% more homes being sold right now than what is reported publicly, said Christian Ross, managing broker at Atlanta-based real estate brokerage, Engel & Völkers. “That means there’s a lot of inventory that’s not hitting the market,” she said.
Here’s what you need to know to decide if a pocket listing is right for you.
What Is a Pocket Listing and How Do They Work?
A pocket listing can go by many names — “off-market listing” or “whisper listing” among them — but they all refer to the same thing: A real estate listing that is being shared exclusively with a small group of potential buyers and brokers, but that hasn’t been advertised publicly.
“A pocket listing is really a listing that is in someone’s pocket. That agent knows about the listing, and they have been advised that they can share with other brokers or potential buyers, but really has not been introduced to the market,” said Ross.
Here’s how it works: A homeowner can approach a real estate agent with the desire to sell their home, while at the same time avoiding the frenzy of putting it on the open market. The real estate agent will create an essentially “private” listing that they share only with other agents in their office, for example, or only with specific buyers who are interested in that type of property.
“A lot of people will do it either to maintain privacy, or they just are not ready to physically take their home on the market,” Ross said.
There are some rules governing pocket listings. The National Association of Realtors (NAR) has a “Clear Cooperation Policy” that requires homes to be publicly listed if they are being publicly advertised for sale in some other way (such as flyers, lawn signs, or digital marketing). The policy does, however, allow for exclusive listings, and does not consider one-to-one promotion to be “public advertising.”
Pocket listings come with some amount of risk. Make sure you proceed with caution, and don’t be surprised if a deal falls through.
Why Homesellers Use Pocket Listings
Sellers might be motivated to use a pocket listing for a few reasons. Privacy is the most common one, Ross said. A seller might not want the neighbors to know they’re moving, or might be navigating a divorce that requires them to sell the home.
Sometimes, sellers also use pocket listings if they’re not sure that they want to sell, said Wernick. A pocket listing allows them to “test the waters” without officially listing the property.
These are the pros and cons of using pocket listings, according to the experts:
Advantages: Selling a House as Pocket Listing:
- Maintaining privacy: “You’re able to not have people come through your home,” Ross said, meaning you could potentially sell your home without doing open houses or tons of showings. You would also avoid the home going onto Zillow and similar sites, meaning you could keep the sale discreet.
- Setting the price: “The benefit is that the owner has a price in mind and that’s the price he’s going to get,” said Wernick. Because the property is not on the open market, and therefore not subject to competition, a seller can set a price and only accept potential buyers who can pay it.
Disadvantages: Selling a House as a Pocket Listing:
- Missing out on buyer competition: When you avoid the open market, you also don’t allow the price of your property to increase in bidding wars or with buyer competition. “To me, the cons definitely outweigh the pros, because you’re not understanding the full market that you’d be able to access,” Ross said.
- Limiting the pool of potential buyers: Because a pocket listing is only shared within your real estate agent’s network, it limits the amount of people who might buy your home. That could mean it takes longer to sell.
How Pocket Listings Impact Buyers
Today’s ultra-competitive market gives buyers a lot of reasons to pursue pocket listings. Chief among them: Avoiding the bidding frenzy that comes with a majority of home listings these days.
Buyers might also be drawn to off-market listings if they’ve already exhausted their options on the open market. “For buyers, it’s nice because it definitely takes away a lot of competition,” Ross said.
Advantages: Buying a House as a Pocket Listing:
- Avoiding the competition: It’s not uncommon for buyers to attend open houses with dozens of other potential bidders. Not only is that a stressful way to tour a potential home, but it means buyers are likely going to have to outbid others to secure the property — driving up the price in the process. Pocket listings allow buyers to avoid this competition all together. “If you’re the only person looking at the listing, you get it if you want it,” Wernick said.
- Increasing your options: Inventory on the open market is at a historic low right now. That leaves few options for buyers, and only increases competition. Pursuing pocket listings can open up a whole new set of homes for buyers to consider.
Disadvantages: Buying a House as a Pocket Listing:
- Dealing with uncertainty: Some sellers who use pocket listings are unsure if they want to sell at all. That means potential deals can easily fall through if the seller changes their mind, Ross said. For buyers, that could mean losing the house of their dreams — but also losing money spent on an inspection or appraisal, depending on how far along the process is.
- Lack of negotiation: Pocket listings are usually not subject to a lot of flexibility on the price. A seller often avoids the open market because they have a specific price in mind that they want to get for their home. Wernick said that can be bad news for buyers: “You’re going to have to pay the price the owner wants.”
Is a Pocket Listing Right for You?
There are lots of reasons why a pocket listing might be the right move for you, but experts warn to consider the drawbacks carefully. Here’s what you should consider:
Buyers most often turn to pocket listings when they’ve exhausted their other options, said Wernick. She often gets emails from buyers’ agents asking if she has anything off-market, because there’s nothing else out there that works for them.
Pocket listings can be a good option in that scenario, Wernick and Ross said. But they both advised that this process is not for the faint of heart: You need to be prepared to pay full price, and should be comfortable with the risk and uncertainty of an off-market deal.
Pocket listings are really best suited for sellers who want privacy above all else, says Ross. Sometimes big life changes — like a job relocation or divorce — are forcing a seller to leave their home, and they want to keep the process as discreet as possible.
It’s also important to keep in mind that pocket listings can be temporary. Ross often works with clients who list off-market at first, and then later decide to list publicly when their circumstances change.
If you’re going to go with a pocket listing, Ross said to make sure you know your numbers so you’re not wasting the time of buyers who are already fatigued.
“Just be aware, if you really really want to sell, make sure that you understand that that buyer on the other side wants to make sure that you really want to sell,” said Ross.