Dwayne “The Rock” Johnson recently acquired a stunning Beverly Park show home through a pocket listing, paying close to $28 million. While this may seem like a strategy exclusive to luxury homes, pocket listings are actually prevalent across all price points in the hyper-competitive real estate market. In today's article, we will dive into the world of pocket listings and explore the advantages and challenges they present.
What is a Pocket Listing?
The term "pocket listing" was coined to describe properties that are intentionally kept private and not made available to the general market. Often known as "off-market listings" or "hip pocket listings," these properties are not listed on Multiple Listing Services (MLS) or popular websites like Zillow or Realtor.com. Essentially, a pocket listing refers to a property where a broker has a signed listing agreement with the seller but chooses not to advertise it publicly.
Are Pocket Listings Illegal?
In 2019, the National Association of Realtors (NAR) controversially banned pocket listings, requiring licensed realtors to list a property on the MLS within one day of marketing it publicly. The objective of this rule was to prevent discrimination and ensure equal access to property listings. However, it is important to note that pocket listings themselves are not illegal. Realtors can still hold private, exclusive listings and keep them off the MLS as long as they do not actively market these properties.
Advantages of Pocket Listings
Pocket listings offer unique advantages for both sellers and buyers. For sellers, these listings provide privacy, ensuring that only serious and qualified buyers have access to their property. It allows them to maintain more control over the sales process, potentially wait for the highest price, and even test the waters before fully committing. On the other hand, buyers can benefit from pocket listings by having the opportunity to secure a great deal, encountering less competition, and experiencing a more flexible sales process.
How to Find Pocket Listings
Finding pocket listings requires some effort and a well-connected network. It is essential to work with real estate agents who have extensive connections and access to a pool of buyers, sellers, and other industry professionals. Networking through community events, reaching out to agents in your area, and leveraging social media platforms and specialized services can also help uncover these hidden opportunities.
Issues with Pocket Listings
While pocket listings offer exclusivity, they are not without their drawbacks. By not being listed on MLS, the buyer pool is significantly reduced, potentially leading to a lower sales price and a longer selling process. Lack of available information and photos can deter online buyers who rely on virtual viewings. Additionally, pocket listings have raised concerns about fair housing laws, as they can be used to discriminate against certain groups. Moreover, if a large portion of a neighborhood's inventory remains off the market, it can skew local market data and impact property values.
Regional Impact
The use of pocket listings has seen a surge in cities like New York, Chicago, Orlando, and Las Vegas since 2018. However, this openness of the housing market is starting to crumble as real estate agents opt for off-market deals. The West Village, for example, has seen a significant number of off-market transactions. While public listings are generally recommended, privacy concerns often drive clients to choose pocket listings.
Finding the Right Opportunity
At New Western, we understand the importance of finding the right investment opportunity. As the nation's largest source of distressed properties, we provide investors with a steady supply of off-market homes that offer substantial value. Our experienced agents do the work for you, sourcing the best deals and ensuring a seamless closing process. Contact us today and discover how we can help you find the perfect property.
Disclaimer: The images used in this article were sourced from the original content.
