Pocket listings are making a comeback in the media recently. From the industry's moves to ban the practice to its controversial status with both buyers and sellers, are off-market listings still a thing, and should you know more about them?
The answer is: yes, and yes. Pocket listings are very much still a thing – in fact, there's some evidence that they're becoming more popular in the overheated Covid-era housing market. You absolutely don't have to know about them or try to access them, but they can be advantageous. Here's what you need to know about finding pocket listings in 2021.
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What are pocket listings?
A pocket listing is defined by Investopedia as home lsitings 'retained by a listing broker or salesperson who does not make the listing available to other brokers in the office or to other multiple listing service (MLS) members.' Every state has its own multiple listing services – there are over 800 of them in the country. Off-market homes also don't appear on online search engines like Zillow. There are all sorts of reasons why a seller may not wish to market their home publicly yet.
Although traditionally pocket listings have been associated with wealthy sellers wishing to keep a low profile, ordinary homes by ordinary sellers are also often sold this way. Perhaps the sellers is going through a messy divorce and doesn't want the neighborhood to know; they might be running late on completing a home renovation and aren't ready to show the home; some sellers just don't want the trouble of multiple showings and just want to find a serious buyer quickly.
Wait, aren't pocket listings illegal?
In November 2019, the National Association of Realtors (opens in new tab) moved to make pocket listings illegal, and as of 1 May 2020, realtors are required to submit listings within one business day of marketing the property to the public. In practice, this move hasn't ended the practice of realtors keeping lists of properties that aren't available on an MLS. They're just now known as 'coming soon' listings, where the seller hasn't yet signed the contract for a listing (so it doesn't need to go public).
Housing market hotspots like Austin, Texas, are reporting that the practice is growing amid an incredibly competitive market where properties are often sold the same day they go on the market. Ethical concerns aside, it is obvious that a home buyer who is aware that a home will go on sale sooner has a better chance of getting in with an offer before it's too late. So, should you look for pocket listings and how do you go about it?
Ways to find pocket listings in your area
By far the easiest thing to do is to ask your local real estate agent about 'coming soon' listings. Even if they don't have anything, just asking the question can signal to a realtor that you are a savvy buyer determined to get a home in the area. As Texas realtors at HomeCity (opens in new tab)point out, 'Choosing the right realtor, with a large pool of peers to share pocket listings with can be incredibly advantageous. If a buyer chooses a well-connected Realtor, they can view the home pre-MLS, then put in an offer the very first day it goes on the market.'
Note that because the whole point of this practice is often for realtors to find reliable buyers for a specific seller, you'll need to prove that you are serious. You'll need to be pre-approved for a mortgage and, in many cases, be flexible either on price, the moving dates, or other contingencies, depending on the seller's situation.
The good news, however, is that getting in touch with a seller early doesn't always mean that they'll expect you to pay more. In fact, sometimes buyers end up with a better deal because the seller just wants the certainty of a sale without the exhausting process of showing a home.