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Pros and Cons of a Real Estate Pocket Listing in FSBO
In real estate, both residential and commercial, a pocket listing, or “off-market listing” is where the broker or agent representing the property does not list the property available to brokers or other multiple listing services. The property is privately marketed and sold by the broker or agent. Often in FSBO, the agent is an attorney representing a property on behalf of a client who is selling their property on their own.
One of the primary reasons for a property not being listed with other brokers or MLS services is the desire of the property owner to keep the dealing private. Another reason is that the sale of the property is already to a known buyer and there is no need for an MLS or broker to engage in the marketing and selling process.
Key Components of a Pocket Listing
- Pocket listings are exclusively represented by a single agent or broker.
- Pocket listings do not notify or market in public the sale of the property.
- Pocket listings protect the privacy of the seller and the real estate transaction.
- Pocket listings are often sold directly to a known buyer and have no need for marketplace marketing or selling.
Pocket Listing Pluses and Minuses
Pocket listing offers some strengths and weaknesses for people selling their homes. Let’s take a look…
Pluses to FSBO Pocket Listing
- The agent or broker retains either the commission or has a legal bundle to help you save substantial money on selling your home – particularly homes with high market values.
- Pocket listings provide privacy for both the buyer and seller. Many reasons privacy may be warranted from work-related changes to high-value properties that remain out of the public eye.
- The pocket listing enables the seller to look at selling prices outside of “comparable” values in the market and position the property as something that exceeds market prices for specific buyers.
- For example, a reclusive private property may be very attractive public figures, sports figures, or highly affluent executives seeking privacy and security. That can drive pricing that is outside of “comps” and focuses on the value of the property to the right buyer.
Minuses to FSBO Pocket Listing
- When you Pocket List your property, you have entrusted the sale of your property into the hands of a single individual and their knowledge of the market.
- Pocket listings are less likely to be engaged in a battle of competitive bids that can drive the price of a property up.
- Pocket listings, by default, are not listed in the market, so the selling process can take longer. This is not an issue for an FSBO seller who is looking for the right buyer.
- While Pocket Listing gets you out of marketplaces, the listing agent may be a member of a chamber, a private club, or a group where the private offering can reach the ears of the right buyers. While the market visibility is low, it should be fairly well targeted.
Example of a Pocket Listing
George has been playing a professional sport in town and has decided he wants to leave the market and move elsewhere. George approaches an attorney and creates a pocket listing for the property with the client privilege and privacy needed to get the $5MM property moving in a market with a limited number of buyers.
George’s attorney represents his client and the property and quietly works through his network of targeted customers, an ideal buying profile, and discusses the opportunity for the private sale. George’s attorney requires a mutual NDA before mentioning the location or the seller of the property. George’s attorney charges a flat 5% fee on the listing and sale of the property and has 90 days to sell the property under the agreement.
Pocket Listings can be constructed for the mutual benefit of both buyer and seller and the buyer and his or her agent or broker. Pocket Listings are not reserved for luxury homes but can be useful tools to maintain privacy while selling a piece of property.
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The information contained on this website is presented for informational and marketing purposes only and is not to be understood as legal advice. You should consult an attorney for advice respecting your individual needs. The Law Office of Matthew A. Schwartz looks forward to speaking with you about your particular needs. Please note, however, that the mere act of contacting our firm does not create an attorney-client relationship. As a result, you should never send any confidential information to our office until a Representation Agreement has been signed by both you and The Law Office of Matthew A. Schwartz.
