The real estate market is extremely hot right now with homes selling quickly and with multiple offers. While this is great for sellers, it can leave buyers feeling like they can’t catch a break. For those who have become disenchanted with being outbid or who just want to purchase a home before it hits the market, finding a pocket listing may seem like the best option. Here’s what you need to know about these off-market homes.
What is a Pocket Listing?
A pocket listing is a home that has not yet been listed on the MLS platform. That means that it is not yet visible to other realtors or the general public. Sellers’ agents show the home to their network in hopes of securing an offer before listing it on MLS.
Some sellers like this approach since it limits the prep they need to do to sell their home. They may be able to sell their home more quickly and with less investment. Buyers like this route because it gives them quick access to homes that are available for sale without the competition of many other area buyers.
With pluses on both sides, you may be wondering why these types of deals are not happening all the time.
In 2019, the National Association of Realtors (NAR) voted to ban these listings. The reason? The NAR wanted to ensure that sellers were getting a fair price and that real estate agents were not trying to increase their commissions at the expense of their clients. The new rules set forth by NAR require that Realtors submit their listings to MLS within a day of beginning marketing activities for a property.
Now that does not mean that pocket listings no longer exist. Realtors have 24 hours to get their listings up on MLS, creating a short window of opportunity for individuals looking to purchase a home before a listing goes live. One legal option according to NAR’s Clear Cooperation Policy allows for an “office exclusive listing.” This type of listing requires that agents submit a signed form to the MLS or the use of the online exclusion feature in lieu of a traditional MLS listing. Because the Realtor then has exclusive access outside of the MLS, an office exclusive listing requires a strategic marketing plan to get the listing information in front of potential buyers.
The other window of opportunity is during the “coming soon” period. Realtors sometimes advertise that a home will be on the market soon. This helps generate some buzz, though they are not able to show the home until they have submitted a signed form to the MLS. Just because a home cannot be legally shown before it is filed with the MLS, it does not mean that a Realtor can’t accept offers on coming soon listings. If the current market has taught us anything, it is that there are plenty of individuals ready to make an offer on a home they have not yet seen!
How to Find Pocket Listings
If you are hoping to buy a home before it hits the market, your best bet is to connect with a knowledgeable listing agent specializing in the types of homes you are interested in. For example, I tend to focus on specific areas of the Tampa Bay region that include South Tampa, Westchase, and Odessa. I have a portfolio of homes that I am preparing to list, as well as live listings. The same is the case for Realtors with other specialties.
If you keep your agent up to date on what you want in a home, she can alert you to any possible opportunities that check off many of your boxes. For example, if she knows her clients are likely to appreciate an off-market sale to help their home sell more quickly, your Realtor can help you secure a private viewing of the home in question to see if it is something that you would be interested in.
However, keep in mind that any Realtor will want to provide a competitive offer to her clients. In the current market, pocket listings are not an opportunity to get a property for less. Rather, she provides the ability for sellers and buyers to move into the contract phase quickly and without having to go through open houses or a slew of viewings.
Making An Offer on a Pocket Listing
If your Realtor has homes that are not yet live on MLS and can show them to you, you can make an offer on one before the competition gets fierce. Keep in mind the current state of the market, and be sure to look at comps in the area so you can submit an offer that will be more likely to be accepted.
While putting in an offer on a pocket listing can feel like a less contentious way to purchase a home right now, it does not mean it will be any less expensive. If you are interested in a pocket listing, you still need to come with your best offer to have a chance at having your offer accepted. To help ensure the process is smooth, you should secure pre-approval from your preferred mortgage lender and be prepared to place part of your down payment in escrow. This will help show sellers that you are serious about making a deal.
You will also want to consider any concessions you are willing to make. For example, if the roof needs repair, are you willing to take on those costs rather than pass them on to the seller? Are you willing to skip any inspections or make a cash-only offer? All of these things can make your offer more appealing, so consider what kinds of risk you are willing to take so you can make an offer that you are happy and comfortable with.
Because of the regulations, Realtors must comply with, you probably should not place all of your hopes on finding and buying a pocket listing or off-market home right now. Inventory remains low, and sellers have plenty of incentive to list their homes rather than sell off-market.
Instead, stay open to different possibilities. Let your Realtor know what you are looking for, continue browsing listings and going to open houses, and tell your friends and family about what you want in a home in case they know someone who is thinking of selling. By involving your Realtor in the process and being open to different possibilities, you can increase your chances of Real Estate success!