Pocket listings are real estate listings not made available through a Multiple Listing System (MLS) where any member of the public can get information about them. Instead, the agent representing the seller lists the home privately, bringing potential buyers to the house and negotiating directly with them. The agent does not need to split a commission with a buyer's agent, as buyer's agents don't know about the listing. There are some pitfalls to a pocket listing as well as some benefits.
One issue is that by not exposing a home to the largest possible number of buyers, the seller may miss out on a better offer. With pocket listings, the number of people who see the home is small, and the offers may not be very competitive. Agents have an incentive to sell the house for as much as possible to increase the size of the commission, but it isn't always possible to find a buyer willing to pay more when the listing is exclusive in nature.
For sellers, the pocket listing can increase privacy. Celebrities and sellers with unique properties may request this type of listing to avoid attracting attention. Limiting the number of potential buyers reduces the number of times the home needs to be shown, and it can eliminate people who just want to gawk, rather than put in a serious offer. Privacy may be important for other reasons, like wanting to quickly and quietly sell a home without alerting the public to the fact that the seller is planning to move.
The agent with this type of listing has an exclusive right to sell. With pocket listings, any buyers must go through this agent and cannot approach the seller directly. Agents stand to make more on such transactions if they find qualified buyers. The sale may also move along more quickly, which can be beneficial to some sellers. Pocket listings may only be on the market for a few days, allowing the transaction to finish rapidly.
Sellers interested in pocket listings should work with an agent who has an established customer base. Such agents will have access to a number of prospective buyers they can take to see the property. A new agent, or an agent without a library of clients interested in home purchases, may have trouble finding a buyer because of the private nature of the listing, and it is possible to lose out on the transaction. Sellers should also always review their real estate contracts carefully so they understand their rights and responsibilities.