From CNN Money:
The housing rebound has given new life to an old, but little-known sales practice called “pocket listings,” where agents reserve homes for serious buyers only. Most homes that are put up for sale are posted on databases called multiple listing services, on which agents share information with one another in order to find buyers. There are open houses on Sunday afternoons and MLS listings posted on real estate websites.
But with pocket listings, properties are kept under wraps and brokers only show them to people they expect will put money down if the property and the price are right, said Richard Smith, CEO of Realogy, the parent company of Coldwell Banker, Century 21, Better Homes & Gardens and other real estate brokerages. Ideally, the buyer has deep pockets and is willing to pay in cash, fast.
“High-end sellers often don’t want to have the world coming to their property,” said Michael Izquierdo, a Los Angeles-based real estate agent and acquisitions manager for LAPocketListings.com. “When it’s put on the MLS, sometimes the next morning you see people standing outside the property, hoping to talk to the sellers.”
When Izquierdo gets a pocket listing, he combs his client list for good fits. If he can’t find one, he contacts colleagues to see if they have potential buyers. If the home is overpriced, the seller and agent will find out quickly, said Alex Clark, founder of pocketlistings.net. “I put in the email, ‘Not listed on the MLS,'” he said. “If it’s priced right, there’s a really good chance you can sell it as a pocket listing.”
If it doesn’t sell, then Clark tries to convince the seller to readjust the price and list it publicly on the MLS. Some sellers, however, aren’t interested in going public. They are purely using the pocket listing to fish for a “make-me-move” deal. “These are not motivated sellers. They’re saying, ‘Get me a good price,'” said Manhattan real estate agent Wei Min Tan.
In some cases, agents may try to convince sellers to use pocket listings in order to double their commissions by acting as agent for both the buyer and the seller. “That’s where it starts to get into the gray area,” said Garfinkel. “If an agent is putting their own economic interest ahead of the seller’s, it’s a violation of state law.”
The National Association of Realtors does not have an official policy on pocket listings, according to spokesman Walt Molony. But most agents, like Graham, profess that sellers are almost always better off getting as many bids from as many potential buyers as possible.