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Unfortunately, for sellers, if their home remains idle on the market for weeks (and sometimes months), the likelihood that they will sell it plummets. Potential buyers begin to believe that there are problems with the home if it keeps dipping in price. This stagnant period could lead to potential buyers fighting for even lower prices, which delays the process further.

A trend that has been building in the agent-seller relationship is sellers requesting agents to delay listing their homes on the Multiple Listing Service (MLS). Instead, the seller’s agent spreads word of the home to friends, brokers, and other agents. This listing now becomes known as a “pre-MLS” or “pocket” listing. The price is left marginally higher because these sellers are typically in no rush to sell the home. The seller’s desire is to test the market without actually having an official listing and see if they can get the highest purchase price possible. Rushing a home on the MLS could forgo the opportunity to gauge the amount of genuine feedback from buyers.

These “pocket” listings are proving to be quite beneficial for buyers, as well. Some housing markets across the US have a shortage of homes for sale, which leads to bidding wars on properties. Buyers are forced to bid on multiple properties, often landing none of their options. Buyers can turn to agents who are aware of pocket listings in order to avoid further bidding headaches. One negative for buyers in this situation is a seller being difficult to negotiate with on price. However, since buyers are often exhausted after multiple bidding wars, they are more likely to accept the seller’s terms. What cannot be ignored with residential home sales is a family’s desire to move into a home as quickly as possible and begin their new life.

Pocket listings are not a new phenomenon; rather, they are becoming more prevalent because technology has assumed a more prominent role in the real estate business. Agents share pocket listings with other agents regularly through e-mail, and even social networks such as “Top Agent Network.” Our world has become more open, and divulging knowledge of pocket listings to other agents is not as secluded as it once was.

This type of listing is particularly useful for luxury home sellers. Sometimes, these high-net-worth sellers do not wish to have multiple potential buyers walking through their homes, as it is getting ready to be sold. These sellers prefer to have agents prepare marketing for the home while also spreading the word to colleagues and prospective buyers. If no one is interested in buying the home at a marginally higher price that a pocket listing strategy allows, then the home can be priced more closely to comparable properties. Pocket listings are never recorded on the MLS, but once a home reaches the MLS its day count on the market begins.

Despite the aforementioned advantages, there are known risks for buyers and sellers regarding pocket listings. Buyers can often overpay for properties if sellers decide to price against the market. If sellers underprice, they can lose potential buyers. This is why some agents and brokers still prefer a typical listing as it reaches as many potential buyers as possible. Marketing becomes the essential component for ensuring a sale with pocket listings. Sellers should find an agent that is comfortable in their marketing approach.

Source: http://finance.yahoo.com/news/why-homes-secret-sale-sign-100045890.html