Dear Silicon Valley readers:
Back to blogging after a very busy Spring and Summer in San Jose. Today, I thought I would entertain you about pocket listings.
For the record, a "pocket listing" is commonly referred to as a
listing agreement in which the seller asks specifically the listing
agent not to market his home for sale to any third parties, including real
estate professionals. Literally. the listing will stay in the listing
agent’s pocket until he/she finds a suitable buyer.
I must confess that I recently stopped tracking the number of phone calls I received in the past few months from home buyers asking me if I might have a pocket listing and if I'd be willing to sell it to them before it becomes public on popular real estate search engines such as MLS or Zillow.
My answer has been, is and always will be the same: Sorry, but I cannot help you...
By now, you probably guessed that selling a home as a pocket listing is not really in favor of any seller:
- the seller is losing a chance to get multiple offers and motivate interested buyers to bid at a higher price;
- the seller has no mean to determine what has been done and how the agent found the buyer(s);
- a pocket listing can create a very tricky ethical and legal situation if the listing agent also represents the buyer(s). On this particular topic, please be aware that when a Realtor represents both buyers and sellers, he/she can only do so if he/she does not know the actual amount of the offer(s) presented. All the offers must be sent in a sealed envelope to the agent's broker.
Nonetheless, some sellers opt for a pocket listing and here are a few valid reasons: sellers do not want anyone to come into their home at all or at least for some time ;
they do not want their neighbors, friends, family to know they are selling their home or they just want to keep their belongings far from the sight of the multitude to prevent any kind of vandalism, especially if they are wealthy or famous.
Here are a few tips to overcome any concerns you may have with pocket listings:
As a listing agent, you can request that potential buyers and their Real Estate Agent write an offer contingent to them accessing the property within a certain number of days after acceptance and/or make an offer subject to inspections. Not the best scenario to sell a home quickly but doable. With modern technology, the lock box that allows real estate professionals to access any given property can be set up to release the keys at certain times only.
The property can be shown by appointment only in presence of the listing agent.
A "For Sale" post in front of the property is not mandatory. In fact, most of my clients refuse to have a post installed in front of their home. To my knowledge, it has never prevented a sale from going through.
A pocket listing may be a good opportunity in a seller's market (with low housing inventory). It may give the buyers the advantage of not having to compete with other potential buyers. It may also be a good deal if sellers need cash urgently and need to close escrow in a timely manner (usually less than 15 days with cash buyers).
At the end of the day, always balance the condition of the house with your interest in the property and market prices for comparable homes to ensure that you are really getting a home that fits your means, needs and dreams.
© Sophia Delacotte CDPE, SFR, CHS
San Jose Realtor
Cell: (408) 717-2575