Dangers of the Pocket Listing - Why Use the MLS

Dangers of the “Pocket Listing” by Barbara Wilson, Realtor, Coldwell Banker

There is a growing trend of selling houses “off-market”, without going on the Multiple Listing Service(MLS). There may be valid reasons, but you risk selling significantly below market value. There are ways to address concerns while ensuring your financial interests are protected.

Agents here must submit the listing to the MLS within 2 days of receiving it or you have to sign a waiver keeping it off the MLS until a certain date or acknowledge that your house will never be exposed to the full market. Why? To ensure that you are informed of the significant financial drawbacks of the off-market listing while still allowing time to prepare for sale before it is published.

According to the National Association of Realtors, off-market houses sell for about $39,000 less than on-market houses. And 88% of buyers are working with an agent. Agents find houses by searching the MLS agent site. So if your house is not there, the only agent who knows your house is for sale is yours, and possibly those in the same office. Certainly they don’t represent all your potential buyers.

NAR has also found that over 90% of buyers search online. Nearly every internet site pulls the listings from the MLS sites. So if your house isn’t there, it is hidden from 90% of buyers, dramatically reducing your showings, offers, and thus, your selling price.

It begs the question - why should only a small group of buyers know about your house? Why should they be able to buy it without competition? Don’t you think that someone else might possibly write a higher offer - if only they knew?

One reason may be privacy concerns. If you are a professional athlete, or other recognized person, you can protect your privacy by packing up the family photos and memorabilia that might reveal your identity, which you should do anyway – you are moving! Require your agent to be present at all showings. And hold title in a trust or other means that conceal your well-known name.

You may have health issues, inability to leave for showings, or you don’t want the inconvenience. Some solutions are to make it available to be shown during certain hours on a certain day or days, perhaps related to your appointments or other temporary outings. Have your agent present at showings. Put the house on the market when you have secured a new living situation, or go to a hotel for the weekend. That will be much less expensive than the potential loss of tens of thousands of dollars resulting from a drastically reduced buyer pool.

Your house is a significant part of your entire financial portfolio. The only way to guard it and ensure you are not giving money away is to have full exposure, which comes through the MLS. So don’t sell yourself short!