Real estate experts say “pocket listings”—private, off-market listings that don’t appear on the local Multiple Listing Service—are surging in the luxury market. Three real estate professionals share their perspectives on the growing trend:
Q: Pocket listings are increasing in markets like the Silicon Valley and New York, where the inventory is tight and demand is high. Is that happening in the local market?
Tim Smith, the Smith Group, Coldwell Banker Residential Brokerage: Absolutely, I would estimate that pocket listings have conceivably doubled since 2013, when everything needed to be on the market to sell.
Adrienne Brandes, Surterre Properties: The percentage is approximately 25%, according to my broker. In my experience, however, it is closer to 45%. Corona del Mar, my area, has several cottages that are on valuable lots. The best use is to tear them down and build bigger, newer homes. I have builders that are looking for this product, so I scout these homes out and often sell them off-market.
Q: What do you attribute the increase to?
Chris Brigandi, owner, founder of Arbor Real Estate: For high-end homes, our clients really want privacy. Once a home hits the MLS and is then sent to real estate websites, all of the information is out there. From that juncture, it’s easy to do a tax search and find out who owns the property. For that reason alone, a lot of clients do not want their homes listed in the MLS.
Brandes: Buyers don’t necessarily want to commit to an agent, especially in a hot market. If the seller uses a large firm like Surterre there’s a chance the seller will get a tremendous amount of spin from those agents on that property. I can put out a pocket listing to 420-plus agents, and it stays in a databank, so it’s almost like our own internal MLS.
Q: Is there a typical pocket listing client?
Smith: A typical pocket listing client is very concerned about privacy and/or wants to test the market before officially listing. These clients generally know their target buyer and ask agents to specifically target their ideal demographic without publicly announcing the listing.
Brandes: A savvy seller might want to test the market through this process. And buyers absolutely love that they can buy a property off-market. They feel like they’re getting a better deal. They’re on the inside of the trade.
Q: What are some other positives?
Smith: Pocket listings protect the privacy of both parties and create an element of exclusivity.
Brandes: It is an opportunity to negotiate with the buyer and the seller off-market and realize a better price, whether it is for the buyer or the seller.
Brigandi: A quality real estate professional has large lists of clients, as well as a network of brokers with buyer clients, which makes the pocket listing model a viable option.
Q: Are there any negatives to the increase?
Smith: Pocket listings are limited by a lack of exposure to buyers. Without maximum exposure, you eliminate the possibility of creating a multiple-bid scenario to get the highest price for the sellers.
Brandes: If you expose the property to the MLS, you have a better chance of reaching a larger audience. If I have a “hot” property, I will expose it for one to two weeks before I look at offers. This can drive up the price for the seller. Also, small firms can’t compete with the Surterres of the world on “pockets” because of the number of agents we have. Many deals are made in our office hallways.
Paradise in Peralta Hills
The 11,000-square-foot estate at 560 South Peralta Hills Drive in Anaheim Hills sold on Sept. 17 for $4.05 million, reaching 92% of its February list price of $4.4 million.
The 1.3-acre property includes a seven-bedroom, eight-bath Spanish-style estate, a guest house, two separate swimming pools with an adjoining waterfall, an outdoor entertainment pavilion with a full kitchen, and a sports court.
Sonia Jekums of Seven Gables Real Estate represented the seller, and Dustin Sweeter of Keller Williams Realty-Norco negotiated on behalf of the buyer.
Cottage on Cliff
The 2,500-square-foot, Craftsman-style home at 31889 Circle Drive in Laguna Beach closed on Sept. 24 for $4.95 million, coming within 99% of its July list price of $5 million.
The home, nestled atop a 5,227-square-foot, cliff-top lot, has terraces on every level that offer views of the Pacific coastline, Catalina Island and Thousand Steps Beach located directly below. The gourmet kitchen has a backsplash made of authentic beach glass. The open living room features built-ins and sliding doors opening to a teak deck.
Tim Smith of the Smith Group, Coldwell Banker Residential Brokerage, represented the seller, and Christa Lee Canaday of RE/MAX Fine Homes worked on behalf of the buyer.
