After getting outbid on 16 homes, Teresa Lasaga and Nick Palmer were about to give up on becoming first-time home buyers. Then an agent who had sold a home they narrowly missed out on told them about a “pocket listing” on another property in the same neighborhood. A pocket listing is a home for sale that hasn’t been entered into the Multiple Listing Service, and they account for a growing percentage of real estate activity in parts of the Bay Area. Instead of putting homes on the MLS, agents market them through informal networks or new online platforms. Some Realtor associations say this hurts sellers and are taking steps to discourage it. At the same time, some Multiple Listing Services are adding a “coming soon” feature that offers some of the benefits of pocket listings.
Palmer said the agent with the pocket listing — a 1,400-square-foot home in San Mateo’s Shoreview neighborhood — got in touch with his agent and asked them to submit an offer, saying, “If we like the offer, the house is yours. If not, we will put it on the market.” “We wanted to do something that would stand out so they would bite, but we didn’t want to offer so much they would think they could get a lot more if they put it on the market,” Palmer said. After some negotiating, Palmer and Lasaga, both 26, got the house for $640,000 and took possession in May. For a while, the couple worried they might have paid too much. But a few weeks ago, a smaller, slightly more updated house down the block went on the market for $100,000 more.
Growing trend
Pocket or off-MLS sales have always been around. Some celebrities, business tycoons and older sellers don’t want their homes on the World Wide Web and hordes of people traipsing through. But their prevalence seems to be growing. MLSListings Inc. is the MLS service for Santa Clara, San Mateo, Santa Cruz, Monterey and San Benito counties. It estimates that the percentage of homes sold in its territory that never hit the MLS rose from 12 percent in 2011 to 15 percent last year, and grew to 26 percent in the first quarter of this year.
It got those numbers by comparing home sales in county recorders’ offices with those in the MLS. It repeated that analysis for other counties and estimates that the percentage of homes sold off-MLS last year was 7.6 percent in San Francisco, 8.4 percent in Alameda and 29.4 percent in Contra Costa. These figures understate pocket listings, however, because they don’t include homes entered into the MLS as pending or sold. Some agents enter homes into the MLS after they have been sold to provide a more complete database for price comparisons.
In the first quarter, 14 percent of properties in the South Bay MLS went from active to closed in five days or less, said Jim Harrison, president and CEO of MLSListings, “which means they were probably sold before they were put into the MLS.” Harrison says he believes off-MLS listings “are growing in every major city,” based on feedback he got when his research was presented at a national Realtors meeting in May. One reason pocket listings are growing is because the market is so hot, it’s easier to negotiate a sale privately than to fix up a house, stage it and hold open houses. “Right now there are so many buyers and so few properties for sale, it’s just a function of the marketplace,” said Walt Baczkowski, CEO of the San Francisco Association of Realtors.
Jane Hopkins has many pocket listings that would be perfect for you and your family! If you are interested in either buying/selling a pocket listing, please contact Jane Hopkins today!
Credit: SF Gate