All You Need to Know About Pocket Listings in Canada
What You Should Know
- Pocket listings are homes that aren’t publicly listed for sale
- They’re generally used for sellers who want their sale to be private, or to simplify the home selling process if you already have a buyer
- Your real estate agent will find buyers for a pocket listing by using their connections, or the seller could be selling to family or friends
- Potential buyers of pocket listings get exclusive access, which helps to prevent bidding wars and competition
What is a pocket listing?
A pocket listing also called an exclusive listing, is a home that is listed off-market. Pocket listings aren’t homes that have been taken off the market and no longer sold. Rather they are homes that are sold without being made public. This means that pocket listings won’t be found on a multiple listing service (MLS), publicly viewable, or widely advertised.
How do pocket listings work?
If a homeowner decides to sell their home through a pocket listing, they will work with a real estate agent who will not publicly advertise your home listing. To find buyers for a pocket listing, your listing agent will find home buyers within their network that they believe would be interested in purchasing. This might be from qualified buyers that they have worked within the past. Unlisted homes can also be sold directly to friends and family, which may allow you to skip home staging and other hassles. Home staging refers to preparing your home for sale by decorating or organizing the property to make it more appealing for home buyers. If you sell it directly to a home buyer, then you can sell the home as-in and skip any home modifications.
Since there is usually only one agent involved in a pocket listing because the listing agent also finds buyers, you can try negotiating for a lower commission when closing. However, the main reason sellers use exclusive listings isn’t to save on real estate commissions, but rather it is for them to keep their home listing a secret from the public.
Why do sellers use pocket listings?
Celebrities and politicians often use pocket listings so that details about their homes aren't made public, but regular homeowners can use pocket listings as well. In a regular real estate listing, anyone can see details about your home like your home address. From pictures of the inside of your home to showings bringing strangers into your home, a pocket listing allows owners to avoid having their home being shown to the world.
With a pocket listing, the homeowner can control who can see your home listing. Only serious buyers, screened by the listing agent, will be able to find your exclusive listing. A homeowner might require prospective buyers to sign a non-disclosure agreement (NDA) before they can view pictures of the house. They might also require buyers to show proof of funds before allowing them access to the home for a tour, or even just to know the address of the home. This helps to weed out people who aren’t seriously planning on buying.
A pocket listing keeps your home off MLS, which can be useful in certain scenarios. If your property is particularly expensive, which can take longer to sell, having your property listed for a very long time might lower buy offers. Being off-market allows your property’s days on the market to not be seen by those not involved in the transaction.
If you’re not sure what price to list your home for, such as if it’s a unique property with an unclear value, a pocket listing lets you receive offers from buyers without having to publicly set an asking price. If reactions from buyers indicate that a lower price is needed, you can easily reduce your asking price without the reduction being made public. You can also change your pocket listing into a regular listing and open it to the public at any time.
Cons for Pocket Listing Sellers
Being a private sale means that there will be fewer people submitting offers or bidding for your home. This means that pocket listings can sell for less than the home’s true market value.
Having only one agent to find buyers for your home might also mean that selling the home will take longer.
| Pros | Cons |
|---|---|
| Privacy by not having images of the inside of your home shown to the public | Not publicly accessible might mean fewer bids and offers |
| No public open houses or tours | Won’t have competition between buyers for a bidding war |
| Only serious buyers will see the home | Your real estate agent has to find buyers, rather than buyer agents bringing buyers to your listing |
| Helps avoid a stale listing with a high number of days on market if it takes time to sell | Having a single agent |
| Can possibly save on real estate commissions since you’re only working with one agent | Buyers won’t be able to see photos of the home online, and showings can be restricted |
Buyers of Pocket Listings
If you’re a buyer, a pocket listing gives you exclusive access and limits competition from other buyers. This can mean that you’ll have more time for due diligence and when you make an offer, you might be able to make a lower offer. Not only that, it is more likely that your offer would be accepted if there are fewer competing offers.
Be aware that the listing agent will be representing both the seller of the home and you as the buyer. Dual agency, also known as multiple representation, is banned in British Columbia.
How to find pocket listings
Pocket listings are a secret, so how can you find them? Working with a well-connected real estate agent can help, but you can also find pocket listings by asking friends or family if they’re planning on selling their home. You might even be able to create pocket listings yourself by asking current homeowners if they want to sell to you.
- With a real estate agent
Just like how a real estate agent can help pocket listing sellers find buyers, a real estate agent can also help connect buyers to pocket listings. You’ll need to be a serious buyer for agents to show you pocket listings.
- Asking friends and family
Pocket listings can be used to simplify the home selling process. If a friend or family member is thinking about selling their home, you may be able to purchase the home through a pocket listing.
- Asking current homeowners
An agent can help create a pocket listing for you by asking current homeowners if they’re looking to sell their home. This might include door knocking or cold calling, which you may even be able to do yourself. If a seller is willing to list their home as a pocket listing, you’ll be the first to have access to the listing.
- Online listings
Pocket listings aren’t listed on the MLS, but you might still be able to find them on other platforms online. This might include local classified websites, such as Craigslist or Kijiji.
Are pocket listings legal in Canada?
Pocket listings and exclusive real estate listings are legal in Canada.
Pocket listings are banned in the United States, where realtors must make listings available to the public within 24 hours. This gives only 24 hours for a pocket listing sale to be made before the listing is made public in the United States.
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