I recently saw this sign posted outside of a home in my neighborhood. I searched the Multiple Listing Service for more information about the home and what they were listing it for, to no avail.
As a neighbor interested in values around my home and also as a Realtor who has clients looking in the area, I was very interested to know what they were asking for the home. I called the agent to find out only to learn that the home was already under contract.
Frustrated, I decided that I’ve been quiet on this matter for too long as I watch my competitors list & sell homes as “Coming Soon”. I want to voice my concern and educate home sellers why it might not be the best approach.
The Realtor likely bragged about how quickly she sold the home and I would guess that the homeowner is probably pretty proud that their home sold before it was even technically on the market too. In the real estate industry, selling a home before putting it on the broader market is called a “Pocket Listing”. It means the home isn’t on the MLS and hence isn’t on the normal real estate channels a home buyer would use to find a home. This is done all the time in commercial real estate due to their lack of a formal Multiple Listing Service. It’s rare to see it in residential real estate, but when it is a hot market, some agents cannot resist.
So, what’s the problem you ask?
My issue with pocket listings is that in a hot market, the agent isn’t putting the home out to the broader market which in turn means only a limited number of buyers actually know about the home being for sale. The harm in this for sellers is that fewer buyers knowing about your home, means less competition, which translates to you, the seller, not getting top dollar for your home.
For example, if you sell with a Coming Soon sign in the yard, you’ll likely only get a few interested buyers, maybe one or two of which actually make an offer. That may sound great to a homeowner, but what if instead of a few interested parties, you have several and you get to choose from 10 offers instead of two? Don’t you think you’d like to see 10 instead of two? Not only will you get top dollar but you’ll also get to choose the most qualified buyer and best possible offer.
So why do agents do this?
Simple. Because the Realtor stands to gain the most from a pocket listing, not the homeowner. They are hoping that sign in the front yard generates a phone call from a buyer who doesn’t have an agent. Then they can act as a dual agent and keep all the commission for themselves. It is also a way for them to collect the names and numbers of home buyers looking in the area who don’t have an agent. They are basically using the seller’s home as a way to get prospects.
My advice: Don’t do it.
I believe that home sellers are doing themselves a disservice by letting agents list them as a Coming Soon home. If your agent has recommended this to you, you may want to ask a few more questions and make sure they really have your best interest at heart.