The Pros and Cons of Pocket Ads: Should You Sell Your Home Secretly?
In today’s sizzling real estate market, some sellers are taking an unconventional approach by intentionally limiting their home’s visibility to potential buyers.
You read that right – some sellers are reducing the number of house hunters who can compete for their home. The technique is known as a pocket list and it is becoming more and more common. Pocket ads – also known as exclusive office ads or non-MLS ads – are properties that are never made available to the general public.
Normally, agents register listings with their local Multiple Listing Service (MLS), a regional database of homes for sale. Once a home is published on MLS, it is automatically shared with other agents and on aggregate ad sites like Redfin, Zillow, and Realtor.com.
Pocket lists, however, do not appear on these sites because they are never connected to MLS. Instead, agents market pocket ads to other agents in their office or to an exclusive network of buyers.
“A pocket list is basically a home sold privately,” says Amber Taufen, editor-in-chief of HomeLight’s Buyer Resource Center, a homebuyer’s advice blog. “Buyers have to have some sort of connection with the brokerage, listing agent, or seller of the house to hear about the property. “
By nature, it is difficult to determine how many homes are being sold this way, but housing market analysts say pocket ads have become more popular during the pandemic.
According to an analysis by Redfin, the number of homes listed and immediately marked as sold or ‘on hold’ increased from 1.8% in June 2019 to 2.8% in June 2021. (Considering how quickly these homes are under contract, there’s a good chance they were marketed privately before being put on MLS, which would make them pocket listings.)
One of the reasons they’ve gained traction is that “a lot of salespeople didn’t want strangers walking through their homes,” says Daryl Fairweather, chief economist at Redfin. On top of that, the incredibly high demand from home buyers has enabled some sellers’ agents (and brokerage houses) to have a larger pool of buyers in their personal sphere, making pocket listings more viable.
“Pocket lists have traditionally been used by very wealthy people or celebrities, who don’t want other people to know they are selling their home, ”adds Fairweather. ” This is no longer the case.
The benefits of a pocket ad
Don’t want a lot of foot traffic going through your house? A pocket list gives you more control over who has access to your home, while preserving your privacy.
“In some cases, high-end sellers who are experiencing financial difficulties or prominent members of the community going through a divorce don’t want others to know they are selling their home,” says Taufen.
Some homeowners may also find the constant visitors and the need to keep their home in good repair frustrating. After all, home buyers aren’t always the most respectful of guests. (Imagine groups of people stalking the mud inside your recently cleaned house because they ignored your “no shoes” policy.)
A way to test the market
If you’re not sure if you want to sell or for how much, a pocket ad allows you to test the market to see if buyers are ready to buy your home and to get an idea of how much they might be willing to pay. pay. This is great information to have when you finally put your home on the MLS and market it to the masses, as it can prevent you from mispricing your home. (Even in today’s market, overpriced homes are hard to sell.)
Reduced expenses and costs
Not having to market your home helps you reduce some selling costs. You may not need to hire a professional photographer to take ad photos, which typically cost between $ 100 and $ 125 an hour, according to Pushpin. Additionally, some real estate agents may be willing to charge a lower commission for a pocket ad because pocket ads do not require a public marketing campaign, which takes the burden off the listing agent. In some states, it is also possible to be able to earn two commissions by also representing the buyer in the transaction as a “double agent”.
The disadvantages of a pocket ad
Lower selling prices
Selling your home as a pocket ad can prevent you from getting the best price for your home, Taufen warns. “Because you won’t have so many buyers competing for your property, you may be leaving money on the table,” she says.
Matt van Winkle, broker and owner of RE / MAX Northwest Realtors in Seattle, agrees. “For most sellers, maximum exposure will get you the best selling price,” he says.
Homes listed on MLS sold about 17% more than homes sold outside of MLS, a new study from Bright MLS find. This translates to $ 51,000 more for a $ 300,000 home.
Potential Fair Housing Violations and Discrimination
Pocket lists are controversial, as fair housing advocates say they promote housing discrimination, according to Kate Scott, executive director of the Equal Rights Center.
“The reality is that the housing market is already separate due to decades of discriminatory practices, and pocket ads are inherently discriminatory because they only show homes to an exclusive group of buyers, who tend to be white. “said Scott. “People of color generally don’t have access to pocket ads.”
Additionally, many real estate brokerages, including van Winkle’s, refuse to sell pocket ads. And, some multiple listing services, such as Bright MLS, which serves 95,000 real estate professionals in the Mid-Atlantic, impose fines on brokers for non-compliance.
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