Pocket listings happen to be one of the best kept secrets in the commercial real estate industry. In order to understand pocket listings and how they allow real estate professionals to have the upper hand in the industry, it is important to know what a pocket listing is compared to an open listing and how those involved in the real estate industry can use pocket listings to their advantage.
The first step in understanding what a pocket listing is has to do with understanding the purpose of the Multiple Listing System, or MLS. The MLS is a huge database of all of the properties that are for sale, as well as various information about these various properties. Once the home has been made available for sale, it is on the MLS, available for all real estate professionals to participate in and view information on, in most cases. Once the property has been sold or disposed of, the listing is removed from the MLS.
What are pocket listings? In essence, pocket listings are real estate listings or openings that never make it to the MLS (Multiple Listing System). If you think about it in laymen’s terms, it is like a listing that a broker slips in the pocket. In this case, only that particular broker or agency has rights to sell the property and is therefore the only party entitled to any portion of the commission that results from the sale of the property in question.
There are a variety of reasons that sellers and brokers use pocket listings, but there are advantages to the buyer as well. Many times, real estate professionals are allowed to get better deals on these properties as they have not had a chance to touch the open air of the real estate market as of yet. In this way, people have the opportunity to jump on a good deal before anybody else even knows the deal exists. Although it is not always the case, pocket listings normally do not make it to the regular MLS because they are such great deals and they were given a ‘heads-up’ on the listing in the first place.
How do pocket listings compare to open listings? Pocket listings are listings in which the real estate broker holds a signed contract with the seller of the property. Most times, these agreements limit the amount of advertising that can be done on the listing or the type of access that others are given to the listing.
On the flip side, open listings are listings in which the real estate broker makes the listing available to any and all prospective buyers, per the agreement that they signed with the seller in the first place. Any real estate professional that is interested in showing or buying the property is able to so and is therefore entitled to any commissions that are made off of the final sale of the property.
How can a real estate professional get access to pocket listings? Being social in your profession is one of the best ways to get in as far as pocket listings go. Look up conferences or real estate meetings or seminars in your local area. Not only does this allow you to build sold, positive relationships with other real estate brokers and professionals in the real estate industry, but it also helps to put you in the know as far as what land and property is going to be on the market, so on and so forth. In addition, economic planning committees or zoning and planning committees are a great way to get the scoop on land development, selling, planning and other things related to that. By attending these meetings, you are putting yourself at the forefront of the stakes when it comes to the more exclusive listings.
What is the purpose of having pocket listings? Pocket listings are often used greedily, but they can be the right tools for real estate professionals who have special needs clients. Some people want to sell their properties, but do not necessarily need the money to purchase another property. For this reason, they might not have the need or desire to have the listing presented for other realtors. If they do not desire multiple offers or multiple streams of advertisement or listing then they might want to consider slipping a realtor a listing. In essence, it is not the best practice for realtors to go around requesting that listings be pocketed to them. Outside of this, the most obvious and common reason for the existence of pocket listings, they also exist at the pure discretion of some of the sellers out there. Many times, if a seller has a special business relationship with a real estate professional or just prefers their services for whatever reason, pocket listings are perfectly okay.