How hot is hot when it comes to housing markets across the country right now? Crazy hot: Some houses sell within days, sometimes within hours, of listing. Then there are the growing numbers that sell even before they formally hit the market – sold through a controversial technique known as “pocket listings.”
What’s a pocket listing? Essentially it’s a private, “off-market” listing, often of short duration. Instead of putting the house on the local multiple listing service – which exposes it to a vast number of shoppers and agents via real estate websites – agents restrict access to information about the house to their own buyer clients or colleagues in the same brokerage, hoping for a quick, full-price sale.
Pocket listings are surging, real estate experts say, because of historically low inventories of homes for sale in major metropolitan areas, along with strong buyer demand and low mortgage rates. This combination has made control of upcoming new listings a powerful, highly profitable asset for agents in the most competitive sellers’ markets.
If agents can sell their off-market listing to a buyer-client they bring in on their own, they can collect both sides of the commission rather than splitting it with another agent. If they can sell it through colleagues in their own firm – even at a slight discount to regular commission rates – the full commission remains inside the brokerage.
Though no organization or research firm publishes statistics on the subject, top brokers in some highly competitive markets say pocket listings are becoming a significant factor in the business. Bill Podley, broker-owner of Podley Properties, a Pasadena, Calif.-based firm that specializes in middle- and high-end communities, says he has heard estimates that as high as one-third of luxury and upper-cost homes selling in northeast Los Angeles County now involve pocket listings. David Howell, executive vice president of McEnearney Associates Inc., a large brokerage in the Washington, D.C., area, says he heard a recent estimate that such listings may now run as high as 20 percent nationally. Glenn Kelman, CEO of Redfin, an online real estate firm, said “we are seeing more pocket listings across the U.S. In Boston and Los Angeles, we also see listing agents refuse to allow any showings of the home until the weekend open house.”