Does the Pocket Listing Exist in NYC?
Yes, pocket listings do exist in NYC although they are far less prevalent than on the West Coast, where the real estate market is overly heated and has been for a very long time. In NYC, the overwhelming majority of listings are traditionally marketed, even when it comes to celebrities and mega homes.
While you may see the occasional pocket listing or MLS only listing in NYC for a privacy conscious seller, most celebrities and the very wealthy don’t seem to mind publicly marketing their grand homes just like everyone else.
Does the Pocket Listing Exist in NYC?
A pocket listing is a property for sale where an agent has an exclusive listing agreement signed with the seller, but the owner has instructed the listing agent not to list the property on the MLS nor any public websites.
The listing agent must instead privately market the home through their personal and professional network, typically though channels such as email newsletters and social media.
Sometimes, an owner will only want their property to be a pocket listing for a brief period of time, known as pre-marketing, before intending to put it on the MLS and public search websites. This can be effective because buyers’ agents will be eager to demonstrate value to their clients by being able to forward them pocket listings that can’t be found online.
Note: Most MLS systems such as the Hudson Valley’s HGMLS will require all exclusive listings to be uploaded to the MLS within a certain number of hours after the listing agreement has been signed, with the only exception being a signed statement by the seller that they understand the benefits of marketing their property on the MLS and public websites, but still choose not to.
Pocket Listing vs Whisper Listing
A whisper listing is simply another term for a pocket listing, and the two are often used interchangeably. With that said, whisper listings can sometimes mean a listing where the listing agent doesn’t have a signed exclusive with the seller yet. As a result, the term whisper listing is a bit greyer than the term pocket listing, as the latter typically means a signed exclusive listing agreement is already in place.
A whisper listing can also be used to mean a privately marketed For Sale By Owner listing, meaning the owner of a home doesn’t want to utilize a pocket listing, but would rather sell a house privately by owner.
This can often happen in large apartment buildings where the owner of an apartment “whispers” to the doorman that they wish to sell their apartment. The doorman then transmits that piece of gossip to essentially everyone in the building and their network, and then voila sometimes a direct buyer is found for what will be an off market transaction.
Pro Tip: There’s absolutely no reason to utilize a pocket listing or a whisper listing unless you are extremely concerned about privacy. Even then, it’ll be harmful to not give your apartment full marketing exposure in all but the hottest of real estate markets. Even then, how will you ever know that you wouldn’t have met another buyer who would have paid more had you marketed it publicly?
Pocket Listing vs Open Listing
An open listing is a property where the owner has refused to sign an exclusive listing agreement with any broker, but has offered to sign a buyer agent commission agreement with anyone who will or does bring a buyer. This open listing agreement is often known as a FSBO commission agreement or one time showing agreement.
In other words, an open listing is very different from a pocket listing because an open listing is essentially a For Sale By Owner listing, whereas a pocket listing is an exclusive listing with a broker that happens to be marketed privately.
Pro Tip: Why is selling For Sale By Owner or through an open listing not effective? Is it because of the lack of MLS exposure? Read our white paper on how to sell For Sale By Owner in NYC to learn more.
Pocket Listing vs Off Market Listing
A pocket listing is a home that is being actively marketed for sale, albeit through private channels, while an off market listing is not being actively marketed at all.
In fact, an off market listing typically refers to a previous listing on the market that has since been de-listed, either per the owner’s request or because the listing agreement expired.
Some MLS systems will have distinct statuses for off market listings, such as Temporarily Off The Market (TOTM) or Permanently Off The Market (POTM). The former will signify to brokers in the MLS that a listing is only temporarily being de-listed, but that the broker intends to re-list the property in the near future. The latter signifies that a listing has been permanently removed from the market and the seller has indicated that they no longer wish to list their property for sale.
How to Find Pocket Listings
Real estate investors find pocket listings by messaging as many brokers as they can with their search criteria, and asking brokers to keep them in mind for any listings they come across that match.
Nonprofessional home buyers can take advantage of pocket listings as well by asking their buyer’s agent to keep an eye out for pocket listings that are emailed to them, typically through newsletters and email blasts from other agents.
If your buyer’s agent is earning full commission (meaning you aren’t receiving a buyer agent commission rebate) and your deal size is large enough, you might consider asking your buyer’s agent to proactively reach out to agents in their network asking whether they have a pocket listing, or an upcoming listing that fits your search criteria.
What are Pocket Listing Commissions?
Pocket listing commissions are typically no different than the commissions brokers will charge for a traditional listing. Remember that brokers will still have to compensate buyers’ agents, and virtually all buyers will come from buyers’ agents if you’re doing a pocket listing. And buyers’ agents will expect to be compensated fairly, and to be paid a standard buyer agent fee.
What this means is you’ll still have to pay the typical real estate commission in NYC of 6% of the sale price, which will be split equally between the buyer’s agent and the listing agent. In instances where the listing agent finds a direct buyer, the listing agent will expect to collect both sides of the commission.
The rationale for this is the direct buyer is worth 3% on any other listing, and the listing agent could have helped the buyer agent buy another listing and earn 3%. As a result, the listing agent shouldn’t be disincentivized for bringing a direct buyer to his or her own listing!
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Disclosure: Hauseit and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.