What are “Pocket Listings”? Why it’s bad for Boston condo buyers and sellers
This controversial practice of not officially listing houses for sale has many questioning who is actually benefiting and is it fair to all? Joining Nick in this discussion was VP and COO of Better Homes and Gardens Real Estate Metro Brokers, Craig McClelland and Greg Robertson, General Manager of MLS/Franchisors at Lone Wolf Technologies.
“Keepin’ It Real with Nick Bailey” is a live, interactive must-see show that tackles the hottest topics affecting the real estate industry and those who work in it. The next episode is scheduled to air live on Wednesday, September 8 @ 11 am ET on the RE/MAX YouTube, Facebook and LinkedIn pages.
What is a Pocket Listing?
The phenomenon has been around for as long as Boston real estate agents. When Boston condo inventory is low and buyers aren’t finding what they’re looking for on the market, some Realtors will keep their listings in-house. The practice is known as “pocket listing”, because the seller never lists their Boston condo for sale on the public MLS. Instead, they sell to the buyer that the real estate agent has in mind, often for less than they might have if they had advertised to the entire public market.
Why is this Practice Bad?
This year, things have gone more digital than ever before, and pocket listing has caught on with the mega-national real estate sites, Zillow and large real estate chains.They call it the “coming-soon” feature, and while it doesn’t replace the MLS, it does put Boston condos for sale up on their site 30 days before they are listed on the MLS. Because of this the seller never lists their Boston condo for sale to the public MLS. Instead, they sell to the buyer that the real estate agent has in mind, often for less than they might have if they had advertised to the entire public market.
What’s wrong with that? The National Association of Realtors explains: “Some ‘coming soon’ advertisements involve unlisted properties that may or will be listed with a real estate agent in the near future, while others relate to properties that are subject to listing agreements where property is available to potential purchasers only through the listing broker and not available, temporarily or indefinitely, for showing or purchase through other MLS participants. In either case, ‘coming soon’ properties are commonly withheld from the MLS” (emphasis added).
Why This is Bad for Boston Condo Buyers
As a Boston Beacon Hill condo buyer, you want a buyer’s real estate agent working on your behalf. If the pocket listing you find on Zillow is not yet listed on the MLS, you may have to work through the listing broker instead of with your own agent. When that agent is receiving both the buyers’ and the sellers’ agent commission and setting the price (instead of the public market setting the price), how can you be sure the transaction is a fair one?
Why This is Bad for Boston Condo Sellers
As a Boston condo seller, you want the best price possible for your Boston condo for sale and believe me, that is the market price. In Downtown Boston our internet marketing program is reaching hundreds of buyers or more per day on average! When you have that sort of exposure, doesn’t it make sense that you can be confident you will receive top market dollar? It makes no sense for a Boston Midtown real estate agent not reach out to the few hundred potential buyers he or she might have access to each and every day on this Boston condos for sale website.
In certain states, pocket listings and especially the “coming-soon” feature have gained the attention of real estate regulators, and agents could face fines for using it. Massachusetts has no laws in place yet preventing use of the feature, but maybe that’s because the market is not so tight this year to bring out online-pocket listers in mass. In the Beacon Hill real estate market, while inventory may be low, there are still plenty of properties out there in other neighborhoods like Boston Midtown condos for sale
Hopefully, the “coming-soon” feature won’t catch on among all downtown Boston real estate buyers, and that real estate agents won’t pressure Boston Midtown condo owners who aren’t ready to sell into offering an “exclusive” deal to their buyer. Buyer be aware – and always have a Boston real estate agent on your side! Seller be aware – the public market will sell your home faster and for more!
All that being said, there is a potential positive place for coming soon listings. Our goal in using this feature is a little different though. Our goal is not to get an off-market offer and represent both sides – not at all! Our goal is to generate interest in the listing in advance, letting potential buyers know when the home is coming on the market so that we have the best possible opening weekend (when the home is on the multiple listing service and on thousands of public websites). Our goal in using this feature is to match our client’s goal of getting the highest and best price for their home while it is on the public market, whereas most Downtown Boston real estate agents who use pocket listings have a potentially contrary goal to “double-end” the listing and control market inventory for their own realty firm.