Pocket listings, aka “off-market” listings, are becoming more & more common in the South Bay market.
- Seller: One advantage of a pocket listing is that the seller can negotiate a more favorable commission because there are fewer agents involved in the transaction. Another advantage of a pocket listing for a seller is that their property will be sold privately without the inconvenience of an open listing. During slower market conditions, there are many curious people that simply browse properties but do not actually intend to buy. Pocket listings eliminate this issue because the listing broker can qualify a potential buyer on their willingness and ability to purchase before showing the property.
- Broker: The main benefit for the broker involved in a pocket listing is that they can earn a larger commission than with a public listing. Even with a lower negotiated commission, a broker can earn more through a pocket listing than in a regular 50/50 split. For example, a broker can agree to list a property for only a 4% listing fee, yet this would still be higher than the standard 2.5% commission that would otherwise be earned if the listing agent had to split a 5% listing fee with another broker. The broker earns a higher commission while their client pays lower selling costs. Truly a win-win situation!
- Buyer: The primary benefit for buyers is that they have exclusive access to a listing otherwise unavailable to the general public. Some estimates are that nearly 1 out of 3 real estate transactions take place without being openly listed in an MLS. There are incentives for both the seller and the listing broker to sell a property as a ‘pocket listing’. When buyers are informed about these pocket listings, they are able to compete for properties that are otherwise unavailable to most people.