Pocket Listings: Out of Sight, Out of Mind

| | Comments (0)

Every so often, you will see references to a "pocket" listing. These are usually bad for owners, and usually bad for buyers, but good for agents.

A "pocket listing" is one where there agent keeps the listing "in his pocket" rather than advertising it on MLS. This keeps it out of sight to nearly every potential buyer! If it's not known to be available, how many people are going to want to see it or decide to make offers?

But if not on MLS, how do people find out about it? Why agent advertising to buyers that there is this wonderful property available that they can only see through this agent. In order to see it, of course, they want an exclusive buyer's agency agreement. This gives them a means to lock up the buyer's business as well as the sellers. Of course, limiting the potential market is a violation of the duty owed to the seller because it also lowers the sales price.

It also gives the agent a lock on both halves of the sales commission, as they're pretty much by definition the procuring cause.

There is also a very high danger to the seller: If the agent does not have your property on the MLS, their buddy the property flipper may be the only one that the property gets shown to. This person then puts in the only offer - and even if other offers get put in, the agent plays gatekeeper by tossing them in the trash unbeknownst to the their client. The flipper offers a low-ball, owner takes it because it's the only offer, flipper turns around and sells at profit. Not that this doesn't happen with properties on MLS, but it's a higher danger if the property isn't on MLS.

There is one situation I can think of where a pocket listing is acceptable: if it is temporary, in order to deal with an issue that will make it difficult to market the property for what it's worth. The owner wants the property available, but it isn't really in their best interest to put it on MLS now.

If I take a listing in December, it's usually better to keep it in my pocket until people are done with the whole Christmas holiday thing and ready to get back to business - usually the second week in January. That way the "days on market" counter isn't 30 or more the first time any potential buyers really consider it. People really do refuse to look at property that isn't fresh on the market - it's dumb, but they do it. The San Diego market usually doesn't return to the usual level of activity until mid to late February, but I can guarantee that your potential market in December is a fraction of the interest the same property would generate at any other time of year, and the lowest ebb continues until everyone is back from New Year's. This period is the best time of year to be a buyer, but the worst to be a seller - and it's completely predictable.

If the property is undergoing work to make it more salable, that is also a potentially good reason to keep it in my pocket. This gives me a chance to explain what's going on before the prospective buyers see the current state - to frame the issue, so they know what's going on, and what's being done to fix it, before they see it. Especially since most people are visually oriented, if they understand it's going to look good eventually before they see the current mess, that's a much better chance of a good offer and a sale that my client the owner is happy with. Because I properly manage their expectations, they are better able to consider the property than if they see the mess made by construction cold. That's why there's a sign in the yard, but no entry in MLS yet. People who want to live in that neighborhood will see it as they drive around, and I will happily show it to them - with or without their agent - once they understand why it's not on MLS yet.

(I also do not do dual agency - ever. If I'm showing one of my own listings, the people seeing it sign a piece of paper that says I am not their agent, and that they understand I am doing this purely because I owe the sellers my best efforts to get the property sold.)

Temporary is the only thing that can make a pocket listing acceptable. There is a reason - whose end is marked by some definite date or event - that both the owners and the agent understand and agree means it will likely generate a higher sales price if this property doesn't go onto the MLS until it's over. Once it hits MLS, the Days on Market ticker starts going and I lose my ability to frame prospective buyer's expectations, because any listing good agent wants potential buyers to be able to see that property any time with only their agent for company.

Putting a property on MLS means that everybody can see that it's available, and (if the agent has explained the owner's financial interests to them property) that the ability to come see the property is as wide open as the owners can possibly make it. This maximizes the abilities of potential buyers to know the property is available and to come and see it, thereby generating the maximum possible interest and therefore, the maximum probability of highest sales price. Sales is always a numbers game, and you get the best results by pre-loading the odds in your favor. The only possible exception to wanting the widest possible exposure are if there is a temporary reason why people might not like it as much now as they will in a few days.

Caveat Emptor

Original article here

Delicious Bookmark this on Delicious StumbleUpon Toolbar Stumble It!
Please be civil. Avoid profanity - I will delete the vast majority of it, usually by deleting the entire comment. To avoid comment spam, a comments account is required. They are freely available, and you can post comments immediately. Alternatively, you may use your Type Key registration, or sign up for one (They work at most Movable Type sites) All comments made are licensed to the site, but the fact that a comment has been allowed to remain should not be taken as an endorsement from me or the site. There is no point in attempting to foster discussion if only my own viewpoint is to be permitted. If you believe you see something damaging to you or some third party, I will most likely delete it upon request.
Logical failures (straw man, ad hominem, red herring, etcetera) will be pointed out - and I hope you'll point out any such errors I make as well. If there's something you don't understand, ask.
Nonetheless, the idea of comments should be constructive. Aim them at the issue, not the individual. Consider it a challenge to make your criticism constructive. Try to be respectful. Those who make a habit of trollish behavior will be banned.

Leave a comment

Copyright 2005-2014 Dan Melson All Rights Reserved

Search my sites or the web!
 
Web www.searchlightcrusade.net
www.danmelson.com


Buy My Science Fiction Novels!
Dan Melson Author Page

The Man From Empire
Man From Empire Cover

A Guardian From Earth
Guardian From Earth Cover

Empire and Earth
Empire and Earth Cover

--Blogads--

blog advertising
--Blogads--

blog advertising --Blogads--
**********


C'mon! I need to pay for this website! If you want to buy or sell Real Estate in San Diego County, or get a loan anywhere in California, contact me! I cover San Diego County in person and all of California via internet, phone, fax, and overnight mail. If you want a loan or need a real estate agent
Professional Contact Information

Questions regarding this website:
Contact me!
dm (at) searchlight crusade (dot) net

(Eliminate the spaces and change parentheticals to the symbols, of course)

Essay Requests

Yes, I do topic requests and questions!

If you don't see an answer to your question, please consider asking me via email. I'll bet money you're not the only one who wants to know!

Requests for reprint rights, same email: dm (at) searchlight crusade (dot) net!
-----------------
Learn something that will save you money?
Want to motivate me to write more articles?
Just want to say "Thank You"?

Aggregators

Add this site to Technorati Favorites
Blogroll Me!
Subscribe with Bloglines



Powered by FeedBlitz


Most Recent Posts
Subscribe to Searchlight Crusade
http://www.wikio.com

About this Entry

This page contains a single entry by Dan Melson published on April 18, 2013 7:00 AM.

Fixed rate, Balloon, ARM and Hybrid Loans was the previous entry in this blog.

Negotiations After the Purchase Contract: Seller's Allowances and Fixing Problems is the next entry in this blog.

Find recent content on the main index or look in the archives to find all content.

-----------------
Advertisement
-----------------

My Links