In the heady days of the seller’s market, pocket listings were everywhere and agents were like oracles, showing buyers homes that hadn’t hit the market yet and maybe never would. It was a time when getting a “deal” meant winning a bidding war or making an offer before anyone else even knew a property was available.
But with the market shifting in favor of buyers in a growing number of places around the country, the days of the ubiquitous pocket listing may be numbered. Though the practice of withholding a property from multiple listing services likely won’t disappear entirely, real estate professionals from across the U.S. said this week that pocket listings may play a diminished or more specialized role in the future.
“It obviously doesn’t work as well when there’s less demand and less inventory,” Gary Gold, a Los Angeles-based Realtor with Hilton & Hyland told Inman, “In a buyers market, does a pocket listing make as much sense? No, it doesn’t.”
Pocket listings — also sometimes known as whisper or pre-market listings — have garnered considerable attention in recent months as a way to generate buzz. They were so popular that they were the target of criticism from Redfin and landed on the radar of the Department of Justice. Several top-selling brokerages launched their own pre-market listings websites, including Long and Foster, Compass and The Agency.
It was not uncommon to visit open houses in a market such as Los Angeles only to be told by the home’s listing agent that “I have a few more properties that I can show you before anyone else sees them.”
Gold described this tactic as a way “to create some sense of demand and urgency.” It works well in hot or superheated markets because buyers, fatigued from intense competition and losing bidding wars, see getting a head start as a serious competitive advantage.
“They got the benefit of not having to compete,” Gold explained, “and the sellers got full priced offers. Everyone’s happy.”
In a cooler market, on the other hand, Gold said a “deal” often means a lower price, and buyers will be wary of acting too soon.
“When you get into a buyers market, people don’t want to buy something that’s new on the market, they want something that’s a deal,” he said, adding that he and several other agents recently listed a high-end property and unanimously decided against doing a pocket listing. The experience was an example of how the real estate landscape is already shifting.
Other agents agreed that pocket listings also may play a diminished role in the future.
“It’s going to be fewer and farther between,” Jane Strauch, a Realtor with the Grubb Company in the San Francisco Bay Area, told Inman.
Strauch, who doesn’t pocket list the properties she sells, speculated that the practice will wane in usefulness especially among properties that have unusual floor plans or other atypical features. In a seller’s market, those homes might have sold as quickly as any other properties. That isn’t the case in a buyer’s market.
“It’s going to be the weird ones that don’t have that,” she said of pre-market listings.
The idea that in the near future pocket listings might be most useful on certain types of properties — particularly those that are the most conventionally desirable — was a recurring theme in comments from real estate professionals.
Drew Colon is the CEO of HipPocket, an app where agents can share off-market properties, and said pocket listings have historically been associated with luxury properties that have a “high price point or a very unique style.”
Colon anticipates seeing the practice of pre-market listing continue for high-end properties, but does not expect to see them at the lower end of the market.
“As the market shifts into buying, I think pocket listings are going to have a different place,” he added.
Others disagree. James Bohan-Pitt, who founded then later sold HipPocket and is now managing director of consulting firm DTP Ventures, said pocket listings can help agents differentiate themselves in a buyer’s market. And unlike many who spoke to Inman for this story, he was bullish on pocket listings at all price points, saying “this is by no means the end.”
The comment highlights the broad range of opinions, and lack of consensus, on how exactly a buyer’s market will impact the industry after many years of unprecedented price growth.
Others suggested that as the home-buying landscape shifts, pocket listings will be less about selling a property and more about doing market research or giving sellers realistic expectations about the value of their homes.
For example Christoper Dyson, who together with fellow agents and brokers at The Agency, founded ThePLS.com as a kind of MLS for pocket listings, told Inman he sees agents float their properties pre-market to gauge interest before putting a home on an MLS. In many cases, it’s less about generating buzz than about bringing sellers’ expectations back down to earth.
“Practically every single seller thinks that their house is worth more than the agent does. As an agent what do you do in that scenario?” Dyson, who asked. “We’ve seen a lot of our members say to their sellers, ‘why don’t we test your price point. If it sells you were right. If it doesn’t sell we’re going to put it on the MLS at the lower price.”
Grazia Bennett, an agent in the San Francisco Bay Area with Sotheby’s International Realty, agreed, characterizing the process as a way to gain leverage with sellers who are “having difficulty adapting to a new reality” in a buyer’s market.
“It gives you more leverage with the seller,” Bennett told Inman. “You can go back to your seller and say we tried but there hasn’t really been a positive response.”
Like many who spoke with Inman, Bennett does not see pocket listings disappearing. The picture is more complex, with pre-marketing likely working for some properties and not for others. But overall, she added, there are already fewer pocket listings out there in her market.
“I’ve seen less honestly,” Bennett said. “The market has changed so fast.”