Pocket Listings- Any Benefit to the Buyer?

[Brook W.]

Can someone please explain what the benefits are to the buyer? I get the benefits to the seller and agent.

[Mike Izquierdo]

in regards to #2

Some recent scenarios I have closed demonstrating seller advantages:

-Scenario A - How a seller can benefit from pocket listings - More exposure over a longer period of time can lead to more opportunities and choices.

1. Now I do primarily deal with fix and flip investors who like to see their money be turned 4 times a year, this typically means acquisition to disposition in 90 days. By beginning your marketing early through other agents you could maximize exposure. The more agents you connect with and let know about your amazing new listing coming soon ultimately means more buyers and more options for offers. Also, sometimes it can compel an otherwise exhausted buyer to see one last property after a weekend of open houses if you mention that the property is not listed yet but will be coming soon in x amount of days. Most buyers these days are online 24 7... with websites now that receive syndication from the MLS....everyone has access to it. Some buyers truly desire something different, something exclusive, something customized.

One recent exceptional outcome I have achieved with marketing pre-mls is to come across a buyer with a high down payment. The seller can then make a strategic choice weighing into consideration, time frames, possibility of another highly qualified buyer coming etc. Last year for example my team and I sold somewhere around 30 properties in 90032. A few times during construction an agent would let me know about an atypical buyer in the area...for example placing a 300k downpayment on a 400k house. Now in that area it is few and far apart when a buyer like that surfaces. When I find a buyer like this I will try and get as many of my coming soon listings onto that buyers radar because they may be gone by the weekend pulled into another area or property. In this situation, It was a easy decision for my seller to accept an offer during construction phase. Seller in essence made a very strategic decision to accept an offer pre mls because of the high probability of closing with that buyer in a area where FHA loans are much more common place then a 300k downpayment. FHA escrows often take 45 + days to close....When an investor can close a deal 30-60 days earlier consistently he can literally complete an extra flip off the time saved and hedge his investments by diversifying into more deals.

Now at the end of the day, we are the experts, it is our role to guide our sellers and make the best choices. For certain properties in certain price ranges it may not be appropriate. Listings agents should have a pulse on the market, and be able to make decisions whether or not to market pocket listings and to which type of buyers. I have clients that demand only being shown pocket listings. (buyers in all price ranges might i add) I also have clients that I know would kill me if i showed them an under construction home.

*Important- Pocket Listings are not for the faint of heart or inexperienced. They are much more difficult to sell then a standard MLS listing and require more work. My office when choosing to complete a pocket listings always includes a marketing plan that ends with a MLS listing. The goal is to create opportunities that would otherwise not be there if we waited to begin our marketing after the mls listing. We have a significant marketing budget which we use to perform all the normal marketing a agent would do during a mls listing but what makes us different is we begin it as soon as absolutely possible. If an investor closes on a property who we work with, we usually begin marketing that day. Take a look at your next MLS listing and look at how many views it receives. On several of my listings I am able to receive more impressions on possible buyers and agents through my marketing techniques then the MLS is capable of 10 times over. I use email, website, print ads, door knocking, cold calling, and some secret techniques of my own 0:)

Scenario B (least likely but happens)

Investor was over leveraged and mismanaged his construction funds. He had a rather large portfolio and was left with two properties that had been gutted. For privacy reasons ill use similar yet rounded numbers.

Property was located in Los Angeles County, and was down to the studs. I could have sold it for 300-350k to a cash buyer because it was obviously not financeable and seller had no equity since he had already pulled cash to finish other projects. Since my team has experience in these scenarios we took it as a challenge. We marketed it as a customize your own home property. We found a buyer who loved the idea to be able to customize his home for his wife as an engagement present. They understood the situation the seller was in and saw it as a opportunity to get a truly custom home for a fair market value instead of competing in a multiple offer situation. They put a significant down payment which contractually was to be used by seller for completing the remodeling per their choices of flooring, paint colors, counter top and cabinet selection. We set up milestones, inspections, and other safeguards for both seller and buyer. Property sold for 500k which was on the upper fair market value range. This scenario greatly benefited the seller because he was able to complete his construction and not get foreclosed on. Buyer of course did get to customize his home which is also rarer. This is a pretty rare example in an extreme situation but it happens. Trust me id rather not sell a property like this but I will if Its possible.

anyways to continue with my lovely sale, these funds were then used to finish another property the investor ran out of funds on. since the other property in was kept off the market it was remodeled and placed on the MLS and later sold.

More recent scenarios for seller benefits

I don't know if 1 in a 1000 is a accurate number wether it is high or not...but I understand what you are trying to say. I can say this. I also work with plenty of sellers that contact me because of the pocket listing nature. Here are some real life reasons I have been hired to sell someones property recently where they have contacted me directly.

1. I do not think it is anyones business whether I sell my house or not, especially my neighbors. Please discreetly as possible sell my house. If it is not possible to be sold in this fashion the I do now want to sell.

2. I do not need my family to know that I may be selling the house. Can you sell it without a for sale sign.

3. I have had long term tenants, and I do not want them to know about the sale in case it does not go through. Because it could scare them and they may begin looking for a new place to rent.

3. "My tenants are like my family." "They run their business' from their units. I do not want a sign in their front yard, open houses, or nosey buyers which may disturb them".

4. My properties are under construction but we are open to customizing the buyers home for a premium and or a highly qualified buyer

Now yes in certain situations, some requests from seller will hurt the sale. such as not doing an open house or not placing a sign on the property. I always communicate to sellers that there is a trade off from their privacy to exposure when never exposed to the MLS. But if it makes the seller happy, and they can live their life without added stress to their kids, family, or tenants it can be worth it to them. If an investor can purchase and sell more properties as a result of quicker turn times from pocket listings, it would be in their disinterest to not at least consider pre-mls marketing as a pocket listing. When pocket listings are worked correctly in the right circumstances they are highly effective in benefiting the seller and buyer much more then the agent benefits, who in my opinion works much harder then the agent who simply lists it on the MLS.

... sorry for long post ...its too easy for me to talk about pocket listings. hopefully it makes sense. lol.

point is. yes sellers can benefit from pocket listings, and i think they are more common and desired by sellers then you may believe.