What is a Pocket (Off-Market) Listing?
What is a pocket listing?
A pocket (off-market) listing describes a property that is currently for sale off the public market directory, multiple listing service, Zillow, Redfin etc. Off-market means the owners have decided to sell, but the home is trying to be sold privately (at least for the time being). The irony is, off market listings account for a good percentage of sales in most major markets around the U.S. with up to 30% of condominiums selling off market in San Francisco.
If you think about a listing’s lifespan, it makes sense that ALL listings should have an off-market period. Once the homeowners decide to sell, they sign a listing agreement with a broker to represent them to market & sell their home. Once the listing agreement is signed, now the real work begins; cleaning, repairs, remodeling, moving out, staging, photography, videography, open houses, offer dates etc. During this period, it is in everyone’s best interest for the broker to find someone to buy the home off market, saving the giant hassle of the entire process of making a property look pretty enough to be worth fair market value.
The terms off-market, pocket listing, private listing, etc. are becoming more and more ingrained in the vocabulary of realtors and clients alike. A pocket listing, or private listing, describes the same thing; a home that is available for purchase, but not publicly advertised.
Current off-market listing at Arden
Benefits of Selling Off-Market:
There are certain benefits to selling a home off-market. The main one being advertising. There is little doubt surrounding the discomfort of opening up your home and letting strangers walk through it, analyze it, bash it, and ultimately buy or pass on it. Our homes are private places, selling a home on the public market and publishing open houses that are syndicated by nation-wide - if not global - portals like Trulia + Zillow is daunting. Telling everyone interested exactly when they can trample through your living room, look in your closets and test your appliances cannot be a good feeling.
Many owners in San Francisco, particularly in high rise buildings and in the luxury real estate market, chose to sell off-market. The trick here is hiring the right person for the job.
The concept of selling without advertising requires a deep rolodex / CRM of potential buyers, otherwise the entire strategy will crash and burn. Exceptional real estate agents are savvy at generating a list of pre-interested buyers for specific types of properties so homeowners can sell their condos as efficiently, and privately, as possible. After all, condominiums are basically commodities, so why not allow them to be liquidated and traded as efficiently as them
Other benefits of the off market model include not having to small talk with neighbors about where you’re moving, not having your parents insist on scrubbing every inch of grout in your master bathroom, and most importantly; practically not having to do anything. If a buyer wants a 2 Bed | 2 Bath, on a decently high floor with Bay Bridge views, and yours is the only one for sale.. sell it and clean it after you move out!
Sold loft at 200 Townsend after one privately marketed, off-market open house.
Benefits of Buying Off-Market:
Buying a home off-market in San Francisco is a huge advantage, according to basically every realtor, everywhere. Why?
You don’t have to compete!
A home receiving multiple offers is about as expected as a home selling in this city. The supply of real estate in San Francisco is minuscule compared to the demand, leading to potential home owners over-bidding on homes they really don’t even love.
Buying off-market allows for buyers to get first dibs on a property, having time to deeply analyze and inspect the home, then make a calculated offer based on fact, rather than hype. Agents in San Francisco have been blessed over the past decade with homes practically selling themselves, their main role during the listing period has become a glorified hype-man. “Everyone get your offers in by Wednesday’s offer date!’ Then, the agent puts all the offers in a pile, and ranks them based on a combination of Price & Terms (heavily dependent on the homeowners needs).
Homeowners know what price they are looking for during the off-market period, too. The rule of thumb in many top residential markets around the country is to list 5-10% below the desired final sales price, which can get really annoying when realtors suggest listing 15% + below the price their owners will take just to generate more buzz. In a pocket listing scenario, homeowners are pretty upfront about the exact price they want, allowing buyers to get a no BS answer to the ‘price’ question. Ironically, the only way true negotiations happen in San Francisco are predominantly for off market purchases, especially if the home isn’t staged or being prepped for sale. The best deals come when you can negotiate with a homeowner before they lift a finger, as it saves them the sizable effort of preparing the home for sale (let me repeat the above stated); cleaning, repairs, remodeling, moving out, staging, photography, videography, open houses etc.
The best agents in San Francisco have deep ties to the community, and know what homes are coming to the off-market syndicate before they even sign a listing agreement.
Why Agents are resorting to off-market knowledge to land clients:
Man vs. Machine; The war between agents and big data. Realistically, the next generation of real estate will see about 90% of realtors lose their jobs, and the top 10% of realtors having to serve 10x the clientele.
In the old days agents were the gateway to listings, the bottleneck of information, you HAD to call an agent to know what was for sale in any given market unless you wanted to drive around every street in the city. Now, big data players like Zillow and Redfin have infiltrated the real estate industry with and opened the listing market to the masses, with data analysis built in! Simply put, there goes the jobs of 90% of Realtors. Agents however, darwinistic by nature, are coming together to form tight knit communities with off market listings. Top Agent Network, PLS, and many more are trying to save the jobs of agents by further securing information and keeping listings to themselves. A noble strategy, but it will be short lived.
The irony is, most agents suggesting they’re plugged into the off-market syndicates are blowing smoke. It takes a relentless energy to know everything coming to market before it comes, and few actualize it.
Technology is proving that unless an uncanny amount of value is provided to the consumer, companies will quickly become extinct. Using Condo Weekly allows you to cut through the noise, communicate directly with the top agents in any building who have a finger on the pulse of every listing coming, some even 3-6 months out. Buyers feel confident knowing they’re plugged, homeowners have easy access to buyers wanting to buy their home without having to go through the laborious process of listing, a true win-win.
While the flow of information still bottleneck’s through agents/humans (which should be a good thing!), CW is actively positioning itself to be one of the first platforms to integrate blockchain transactions into the fabric its process, as well as one of the first in San Francisco. It’s coming, like it or not.