There is a little controversy right now about the concept of a ‘Pocket Listing.’ There have been a number of recent news and opinion pieces, mostly from Realtor groups, condemning the practice of keeping a salable listing out of the MLS. Before I tell you what I think, let’s examine the Realtor point-of-view.
Since the advent of the MLS, the residential real estate business has operated on a cooperative basis. Because most MLS membership agreements require that every home listed by a member broker be offered for sale with an MLS listing (unless the seller signs an op-out waiver), every Realtor has an opportunity to sell any property listed with a competitor and earn a portion of the commission.
This is marketed as being in the best interest of the seller because it maximizes the opportunities for exposure of the home, getting it in front of more and more potential buyers through their individual agents. And after all, whether another Realtor comes in with the buyer or the listing agent finds the buyer him or herself, the cost to the seller will be the same; it won’t cost any more.
And that’s where the problem lies – real estate commissions are HIGH because each one is designed to compensate an outside broker and agent whether they are involved in the sale or not.
In general, when a seller lists with a traditional broker, he or she agrees to pay a percentage based commission. The actual percent varies, but will often be in the 5% – 7% range. Let’s consider something right in the middle, say, 6%. On a $500,000 home, that’s a $30,000 commission! Huge, right!? But one of the reasons it is so high is the listing office has to be prepared for the likely event that an outside broker and agent will bring the buyer – and, generally, they’ll be paid half of that commission. Of course, if there is no outside broker, if the listing broker finds the buyer his or herself, the seller still pays $30,000 because . . . well because that’s just the way it’s done!
At Help-U-Sell Honolulu Properties we don’t charge a percentage based commission, we charge a Low Set Fee. And, we unbundle commissions. If there is no outside broker involved, you don’t pay for one. Now that’s a real benefit to a home seller, one you can put a dollar sign on!
My opinion? I don’t think this needs to be an either/or question. How about flexibility? That’s why we put most listings in the MLS but only charge our sellers for an outside broker and agent if they are involved in the sale. If we sell the house without an outside MLS broker, the seller doesn’t pay for one.
And, if your home is very marketable and priced well, we have no problem holding it out of the MLS so you can save the most on commissions. Often, what I recommend is that we start without MLS and if we don’t have an offer or sufficient activity in 30 days, then go into the MLS and offer the home for sale through outside brokers.
At Help-U-Sell Honolulu Properties, we are about two things:
- Getting your house sold for top dollar
- Saving you the most money in commission expense
We will consult with you at the time of listing and continuously thereafter about how best to market the home, whether an MLS listing makes sense or not, and how to maximize your savings while selling for the greatest possible price.