As the real estate market heats up again, the industry practice of “pocket listings” is returning. The National Association of Realtors does not have an official definition for pocket listings. The term typically refers to a property with a signed listing agreement (Exclusive Right to Sell or Exclusive Agency), but the listing is not entered into the Multiple Listing Service (MLS).
Realtors are bound by a Code of Ethics to always strive for the best deal for their clients, and some say pocket listings violate MLS rules. Although most MLS boards do not like the practice and the NAR has no official policy on them, pocket listings can be done ethically and fairly.
Why would sellers want a pocket listing?
For commercial properties and multifamily properties, this is not that unusual. The owners might not want their residents and property management team to know they are selling. They may not want to have a lot of investors – who are considered their competition – traipsing through their property and seeing how they operate. Some just want to maintain their privacy.
When a listing goes into the MLS, all information about the listings is publicly available to every agent and practically anyone with a computer. Pocket listings of investment properties allow brokers to better qualify potential buyers and only show properties to people they know are ready, willing, and able to purchase.
Finding pocket listings
Network with the top commercial real estate brokers in your area. Attend their socials and cocktail hours. Let them know you are a serious investor with the capability to purchase investment properties. Make sure they know what you are interested in buying.
Some agents who have been in the business for decades do not get out and network much any more, so call them. If you are a qualified buyer, they will take the time to speak to you. Start by inquiring about their listings in the MLS, and then ask if they know of any others that might be available or coming onto the market soon. Finding pocket listings requires patience.
Pocket listings are not always bargains
Some sellers are willing to sell if they can obtain a ridiculous price. As an investor, you want to develop a relationship with one or more agents who will constantly be looking for properties that interest you.
Some listing agents are reluctant to share information on pocket listings with other agents because they want both the listing and sales side of the commission for themselves. Buying properties at bargain prices is more a matter of recognizing a bargain than going out and finding one.
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