The Pros and Cons of Pocket Listings

Being a new Real Estate Agent can be a daunting and scary experience, to say the least. The fear of saying something or not saying something with the idea of a potential lawsuit always looming was a real worry early in my career. I am still very mindful and adhere to our strict Code of Ethics and with twelve years behind me now I can at least take a deep breath and remain calm. One of the most popular questions early on was, “Do you know of any deals? Are there any secret listings not on the market?” It always made my Code of Ethics radar go off. I later realized what they were asking about were pocket listings.

How Does a Pocket Listing Work?

Pocket listings can come with advantages but also considerations that must align with the National Association of Realtors (NAR) guidelines. There are specific regulations and guidelines regarding real estate transactions. Pocket listings must adhere to our Hawai’i state laws which include disclosure requirements and fair housing regulations.  NAR’s guidelines encourage Realtors to practice transparency and fairness in all transactions. While pocket listings could offer some advantages, we as agents must remain mindful and navigate these while complying with ethical and legal standards.

Some potential benefits of pocket listings:

• Privacy and Discretion: Hawai’i’s luxury real estate market can often involve high-profile clients seeking privacy as well as sellers that just don’t want to deal with a parade of people touring their home. Pocket listings allow sellers to maintain confidentiality while maintaining control over the property’s exposure.
• Exclusivity and Demand: The allure of exclusivity could potentially drive demand and create a sense of scarcity to motivate buyers.
• Depending on the situation and contract between the Listing agent and the Seller, there is the potential for some cost savings with photos and other costs associated with listings.

Some potential drawbacks of pocket listings:

• Limited Exposure: Missing out on MLS exposure will restrict the property’s visibility to a much larger audience which could potentially miss out on reaching motivated buyers who rely on MLS and licensed agents outside of the listing agents brokerage.
• Fair Housing Laws: Sellers should be aware that choosing to sell their home as a pocket listing with the goal of screening buyers can be a delicate dance and could be interpreted as discriminatory. Therefore, it is critical that sellers do their best to remain impartial.

Here in Hawai’i, the use of pocket listings can be a strategic choice but it requires a careful balance between confidentiality, Fair Housing and the parameters set by NAR. If you are considering leveraging the benefits of exclusivity or aiming for maximum market exposure, understanding the nuances of pocket listings in Hawai’i is essential for both buyers and sellers. If selling your home is on the horizon and you and would like to talk more about the benefits and drawbacks of pocket listings please reach out.