You Want To Buy; Is A Pocket Listing Right For You?
In my previous post, we explored some of the concerns of pocket listings that need to be covered with a seller when discussing selling their property as a pocket listing. There are more cons than benefits of selling your home this way. There is much a seller should carefully consider. The real estate professional will also need to consider the pros and cons as well as there are typically no written agreements. Without the assistance of other brokerages and the power of the MLS, the agent will also need skill and a strong network. In this post, we will look at the process of buying a home that is listed as a pocket listing.
From a buyer’s perspective, a pocket listing could be something that might give you leverage, maybe even over all of those powerful cash investors. Investors have “bird-dogs” in almost every brokerage scouring the MLS for all the best deals. It’s not your imagination that they seem to know where each good buy is and snatch your home right out from under you. You have to level the playing field. Pocket listings and the right REALTOR® or agent just might give you that. These types of homes are usually reserved for serious buyers only; buyers that know a good deal when they see one and are prepared to take action.
With the Feds purchasing less mortgage-backed securities and the economy moving back into a healthier range, interest rates will rise. Investors will be forced to make their money work for them in other ways. Real estate will again be an excellent safe choice. Homebuyers (owner occupied homebuyers; retailers) will experience and even more difficult task ahead to try to stay one step ahead of professional real estate investors, find a suitable and available home, and act quickly enough to close the deal.
If a seller chooses to do a pocket listing, it is generally marketed by a single REALTOR® or agent who then scours their list of qualified buyers that are standing buy, ready to spring into action and close the deal. Sometimes the pool of buyers is very small. I know we had some in our office and the REALTOR® never told the rest of us in the office until he had exhausted his own buyer list. Many REALTORS® prefer to keep their deals in-house and only list on the MLS if they can’t sell as a pocket listing.
Don’t think that a pocket listing purchase means that you will pay a lot less for the home. But, you can rest assured that you won’t find yourself in the middle of a pricing war. The advantage here is timing and exclusivity, not purchase price. Cash buyers will still be preferred over financed buyers because cash deals can close fast — sometimes in just 7 to 10 days versus a typical 30-45 day lender close!
With inventory (available houses to market) being just a small fraction compared to the amount of buyers looking, this creates fierce competition for desirable properties that are priced right. Now, more than ever, is the time to seek out a full-time professional REALTOR®. A good one will provide their buyer client with information about upcoming inventory that they are aware of, sometimes even before it hits the open market. This gives the buyer client a tactical advantage to drive past the house, see the neighborhood, check out tax records, and get an initial opinion about the house even before there are photos or available access.
If you are working with a real estate professional, ask their advice to see if considering pocket listings is a good fit for you and your situation.