Boston Real Estate – Pocket Listings

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Boston Real Estate – Pocket Listings

This is the first neutral economics study (not backed by an MLS, a portal or a brokerage) on the impact of private listings on sale price.

The paper is called “Pocket Sales in the Housing Market: Selection, Outcomes, and Policy” by Darren Hayunga, a finance professor at the University of Georgia.

Key findings below.

Finding #1: Pocket Sales Command a Price Premium

Standard economic theory says that if you show your house to fewer people, you should get a lower price. We found the opposite: pocket sales actually sell for about 1.7% more.

To make sure we were comparing fairly, we matched each pocket sale to similar homes in the same neighborhood that sold the same month through the normal MLS process — same size, same age, same features. Even after all that matching, the premium held up.

We looked at home sales where the seller found a buyer privately before putting the listing on the MLS. These show up as “zero days on market.” Most economists would predict that sellers who skip the open market should get a lower price because fewer buyers are competing.

We found the opposite: sellers who did private deals got about 1.7% more than sellers who listed normally.

This isn’t because agents were gaming the system or double-dipping on commissions. It’s because selling privately lets the seller avoid two things that cost money on the open market: visible price cuts (which make buyers think something’s wrong) and the back-and-forth negotiation where buyers talk the price down. Private sellers basically got their asking price. Normal sellers didn’t.

The advantage was biggest for expensive homes, where it jumped to over 8%.

The basic logic of a competitive auction says that more bidders means higher prices. The MLS exists to maximize the pool of bidders. Therefore, any seller who voluntarily restricts exposure to a smaller pool should get a lower price. That’s the theoretical prediction.

Hayunga finds the opposite. After controlling for property characteristics, precise geographic location, and the month of sale, he finds that pocket sales command a premium of approximately 1.7% over comparable properties sold through the standard MLS process…. That 1.7% number holds up when he adds agent fixed effects, meaning he’s comparing the same agent’s pocket sales to that same agent’s MLS sales. The premium doesn’t come from superstar agents gaming the system. The same agent does better when they do a private sale than when they go through the normal MLS process.

For luxury properties, the premium quadruples to over 8%.

Finding #2: Negotiation Leverage, Not Agency Conflict

This is where the paper gets genuinely interesting, because Hayunga explains how this price advantage occurs.

First, the pocket listing channel acts as a pre-market filter. In a normal MLS listing, the list price is a public commitment. If the market doesn’t respond and you have to cut the price, that’s a visible signal of either overpricing or a defect. Hayunga finds that pocket sales are about 20 percentage points less likely to undergo a price cut, dropping from 25.5% down to just 5.6%. The private channel lets sellers test the market quietly. If the price doesn’t work, nobody knows.

This is precisely what Reffkin and others have been claiming for years now. Now it’s backed up by academic research.

Second, and this is the bigger finding: pocket sellers bypass what Hayunga calls the “negotiation discount.” In a standard MLS transaction, the list price functions as a ceiling unless you’re in an incredibly hot seller’s market. Buyers negotiate down from it. That’s how the open market works. But pocket sales short-circuit this. The sale-to-list price ratio for pocket sales is 1.6% higher than for comparable MLS transactions. Sellers are essentially capturing the full list price instead of giving back the “negotiation discount.”

The near-perfect alignment between that 1.6% sale-to-list surplus and the overall 1.7% premium is the paper’s strongest piece of internal evidence. It tells you where the premium comes from: not from inflated listing prices, but from the seller’s ability to hold the line in negotiations.

Hayunga argues that buyers willingly pay this premium because it functions as a call option: the buyers are paying a premium to lock down the property before it hits the open market where they’d face competition.

The paper explicitly tests whether this result is driven by agency conflicts, meaning the listing agent double-ends the deal or steers a buyer from within their own office to capture both sides of the commission. Hayunga tests this directly by looking at dual agency transactions, same-office transactions, and arm’s-length transactions separately.

The result? The premium is actually larger in arm’s-length transactions (2.3%) than in dual agency deals (1.7%). The premium is larger when the buyer comes from a different brokerage (2.2%) than from the same office (1.9%). Agent tenure doesn’t matter either — short-tenure agents get the same premium as veterans.

If the above is true, then private listings are not only justified, but required. You cannot be a fiduciary of the seller and leave between 1.7% and 2.3% of the price on the table because you don’t like private listings.

Link to Study on Off-Market Listings

Boston Real Estate – Pocket Listings

What is a pocket listing? According to Wikipedia a pocket listing is:

A pocket listing is a real estate industry term used in United States which denotes a property where a broker holds a signed listing agreement (or contract) with the seller, whether that be an “Exclusive Right to Sell” or “Exclusive Agency” agreement or contract, but where it is never advertised nor entered into a multiple listing system (MLS) or where advertising is limited for an agreed-upon period of time.

Do pocket listings help or hurt a seller?  There are two thoughts on this.

Some feel, if the seller and broker agree to have a lower commission charged by eliminating the buyers agent. Does this not help the seller?

Others think, that a pocket listing rarely benefits the seller — at least not an informed seller.

• It fails to provide the full market to the seller’s disposal to receive the best possible price, meaning the largest bottom line.
• Pocket listings rarely create multiple contract offers. 
• Pocket listings close out true competition for the property through open bidding.

My thought is this. Like it or not, we are a country built on competition. Competition creates opportunity and opportunity creates advantage. I have to wonder does a pocket listings help the seller or do they just help the broker.

What are your thoughts?

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One more note about the off-market listings. Every large brokerage firm is doing it – and it is the future of residential real estate sales, unless the DOJ stops it.

The war of private listings among residential players has largely played out through public statements by their CEOs.

Compass’ Robert Reffkin has been an outspoken critic of requirements to put homes on the MLS and Zillow, while listing services like Zillow and Redfin, and brokerages like Brown Harris Stevens and eXp Realty have touted the rules as a means of transparency.

Coldwell Banker CEO Kamini Lane has been in the latter camp, penning a number of op-eds stressing the importance of publicly marketed listings.

“Certain large real estate brokerages are pushing sellers to begin listing their properties privately, claiming that it’s advantageous to the marketing strategy — despite what the basic logic of supply and demand might tell us,” she wrote in Inman in July.

But in an email to Coldwell Banker agents sent last week, she wrote about the firm’s “exciting updates” to its Exclusive Look platform that will give agents “more flexibility in marketing properties.”

Launched in 2020, Coldwell Banker’s Exclusive Look program allowed agents to share listings as office exclusives with other agents within the local brokerage firm, or as a Sneak Peek for 24 hours before the listing his the MLS, which could be sent to all Coldwell Banker agents.

In the email, Lane said that the company’s Sneak Peek feature would be expanded to allow agents to share listings with all agents in the Anywhere Real Estate network for 24 hours before being added to the MLS.

Anywhere Real Estate is the holding company for Coldwell Banker, as well as other national brands like Corcoran and Sotheby’s International Realty.

Exclusive Look allows agents “to leverage the power of our network for those limited instances in which an agent and their client choose to pursue a more private marketing effort,” Lane said in a statement. “This decision should be a strategic conversation between agents and their clients, and there has always been a small segment of sellers who prefer different approaches in marketing their properties.”

https://therealdeal.com/national/2025/08/28/coldwell-banker-expands-exclusive-look-program/

Peace be with you

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