Just because there isn’t a “For Sale” sign in a yard, doesn’t mean the homeowner isn’t taking offers. You just have to know the right person.
Despite strong demand in many markets across the country, some homeowners are skipping the process of officially listing their home on the multiple listing services, leaving agents with the task of finding a buyer without publicly advertising it.
And real estate professionals say these “secret” listings — commonly known as “pocket listings” — are becoming more popular.
Kofi Nartey, a real estate broker at The Agency in Los Angeles, has recently seen an uptick in off-market lists. He says they currently make up around 10% to 15% of his firm’s sales.
But in a seller’s market with bidding wars driving offers well above the asking price in some areas, why would a homeowner sell their home in secret?
The reasons vary: some want privacy, others are testing the waters and some think the exclusivity can draw a higher sale price.
“Many times I’ve had pocket listings where people will say, ‘If I get this number I will sell, otherwise I have no desire,'” said Jade Mills, a real estate agent with Coldwell Banker Residential Brokerage in Beverly Hills, who recently sold a $38 million home off market. These secret listings make up about 10% of her sales, an increase from previous years.
Not publicly listing a home can reduce the pool of buyers, which could potentially mean missing a top offer.
Mills said nonpublic listings tend to be advantageous for properties listed at $10 million or higher. “In the upper price ranges, you don’t have as good of a chance of getting multiple offers.” She recently sold a house for $1.35 million, more than the asking price and after getting multiple offers, something that she said probably wouldn’t have happened if it wasn’t publicly on the market.
Off-market listings can be beneficial to agents by upping their commissions if they represent both the buyer and seller. But connecting the right buyer for an off-market listing or drumming up new listings can be a challenge, experts said.
Nartey frequently plays real estate matchmaker at social events.
“Any time I hear at a cocktail party or birthday party … if a [guest] mentions they are considering selling, I make a mental note of it,” he said. “And then when I am another event and hear someone who is looking, it becomes a matching game.”
He added that public sales can lead to off-market sales when a neighbor stops by an open house and questions the asking price of the home. When the home sells for that once-thought inflated price, Nartey will sometimes approach the neighbor about selling. “We have the buyer demand to pair them with a home that isn’t even on the market.”
Pocket listings are also sold among agents representing buyers and sellers. Those with an offline property will work with other professionals to find a seller.
Some use a distribution list to connect an off-market seller with a buyer, said Brett Forman, managing director with Dolly Lenz in New York City. “There are people we know in trusted markets and companies that we believe have the Rolodex to insert themselves into a unique situation,” said Forman.