Rise In Private Listings In This Competitive Real Estate Market
Here’s how private home listings benefits brokerages, but hurts buyers and sellers
This blog post is based on an article written by Michele Lerner for the Washington Post. To read the full article, click here.
If you ask any prospective home buyer this spring or summer to comment on their biggest home buying challenge, you’ll likely hear about the severe shortage of homes on the market. They’ll tell you about the homes they lost to other buyers, the outrageous cash offers they can’t compete against and homes that sold before they even had a chance to see them.
There are many reasons for the limited availability of homes for sale, such as rock-bottom mortgage rates, homeowners delaying sales until the pandemic passes, and baby boomers choosing to age in place. Many real estate experts also point to another reason – pocket listings.
What are pocket listings? Also known as private exclusives or private office listings, they are homes that are marketed internally within a real estate brokerage or privately between agents and potential buyers but are not publicly marketed or listed on the Multiple Listing Service (MLS) or other websites.
For a brokerage, the benefit of a private listing is the higher probability that the sale will be handled on both ends by an agent within the same company, earning the full commission for the transaction within the company. Some sellers prefer private exclusives because they are privately marketed rather than allowing anyone to see photos and the price of their home.
“Historically, private exclusives have been used as marketing tools for extremely high-end homes or celebrity sellers who didn’t want to expose their homes to the general public,” said Larry “Boomer” Foster, president of Long & Foster Real Estate.
On the other hand, private exclusive listings can be detrimental for buyers who don’t have access to the full market of homes for sale. “In addition, sellers are less likely to receive the highest price for their property if they limit their pool of buyers,” said Foster. “While we encourage every seller to list their property publicly, sellers sometimes request us to keep their home off the MLS initially.”
Foster mentioned that recently one seller asked for their home to be privately listed and quickly received a full-price offer. Their listing agent also asked if they wanted to list publicly to see if they receive any additional offers. “The property sold for $130,000 over the listing price within a few days,” Foster said.
Maximum exposure on the open market is likely to gain the highest price and fastest sale for sellers, as well as offer access to all qualified buyers, not a select few.
If you’re thinking about listing your property, please contact a Fonville Morisey agent, who will always put your interests first. For more information, visit FMRealty.com.