Pocket Listings Out of the Pocket

There's been a lot of whispering among agents, particularly in Marin, about pocket listings (see previous post). Everyone seems to have one.

The sales pitch seems to be two-fold. First, a certain exclusivity -- here's an opportunity that a lot of other people don't know about -- a chance to snag a property you might not otherwise have a chance to get. Second, the agents who have one or more pocket listings are "in the know" and agents who are aware of pocket listings are part of an exclusive club of agents who are somehow better and more knowledgeable than other agents.

But just how effective are pocket listings at achieving the primary goal of selling a property?

A quick look at tax records for the first two months of this year shows 125 properties that changed hands in Marin. Of those, five were intra-family sales. Of the remaining 120, only 8 were not listed on the MLS.

We don't know the actual story behind the 8 but it's reasonable to assume they weren't all pocket listings. For two of these sales, an agent did enter the information into the MLS after the fact for "comp purposes" so we can assume these were pocket listings.

One agent with a pocket listing was very frank about his and his client's reasoning for keeping it off the MLS: they didn't really expect the property to sell in the current market and near the current price but thought they would give it a try. If it didn't sell, they could always put it on the MLS later without the baggage of extra "days on market". The agent mass e-mailed electronic flyers back in November to most agents (so much for it being exclusive) and it apparently attracted some attention from buyers agents. But the property didn't sell and has now been listed on the MLS priced $100K below the pocket listing price.

Draw your own conclusions, but pocket listings don't seem to be an effective way of selling property. They seem more about fluffing up an agent's reputation and a tacit acknowledgement that the property isn't properly priced for the current market and/or that the seller isn't particularly motivated.