Costa Mesa Pocket Listings

Big Trend in Off-Market Listings

As our Costa Mesa real estate market continues its spring sprint towards higher prices, there have been new trends emerging in the local market. If you haven’t kept up with the local market, there is a significant lack of inventory across all property types. For instance, as of this writing, there are only 14 homes or condos in the Mesa Verde area that did not have an accepted offer on them, and that number might be high. Normally, we should have at least 40 homes and condos for sale at this busy pre-summer market time.

Consequently, the lower inventory has produced steep competition for available homes. Homes are receiving multiple offers and prices are quickly ramping up as some sellers are taking advantage of the lack of inventory. I’ve heard the term “price gouging” a few times this week. Even at the higher prices they are closing though, which means agents and sellers are finding a way to sneak past appraisal and loan issues that usually pop up with a quickly escalating market.

One of the interesting trends that have popped up is the return of the “pocket listing”. A pocket listing, for those that are unaware of the term, is essentially a seller that has told an agent that they can sell their home if they have any buyers that might be interested in it while keeping the home off of the MLS and the public market. Oftentimes if you were to drive by a house like this, there would be no sign in the yard, so you would never know it’s for sale. This is happening at a national level as well, as mentioned in this article.

Costa Mesa pocket listings are very much a double-edged sword. In a more normal, balanced market, I would say from a seller’s perspective they do not hurt or help. Sometimes a seller is not committed to the selling process or prefers to maintain some type of privacy, and it can make sense for a seller. In my opinion, when you have a highly balanced market might be the only time a seller benefits from a pocket listing.

With the real estate market essentially on fire this spring, and most homes selling in their first weeks on the market, a pocket listing significantly detracts from a seller who is looking to get top price.

Why?

A seller who relies on a single agent to sell their home has not exposed themselves to the broader market. There are over 10,000 agents in Orange County, and there are about 100+ that work in Costa Mesa real estate circles consistently. When you exclude the people who work in Costa Mesa real estate, you just give up on any buyers that those agents are working with – does it make sense NOT to show your home to those folks? I don’t think so essentially, a seller is empowering only one agent to sell the home, and that agent probably does not have the seller’s best interests in mind.

There have been a bunch of homes this spring that have sold for what most of my fellow Costa Mesa real estate agents would deem as lower than market value. How much? When comparing similar homes in similar neighborhoods, with similar square footage, I have seen prices of pocket listings sell for $25,000 -$75,000 under the market. And that’s only because they weren’t on the MLS. Full exposure would have brought higher prices in this market.

Is this wrong?

Not really, a Costa Mesa seller can do whatever they want. An agent cannot, however. An agent must follow very specific procedures with our rules within our MLS to do something like a pocket listing.

Would you do a pocket listing, knowing that you might not get that extra $50,000 for your home? Everyone has reasons, but just be sure when you only work with the “Costa Mesa Pocket Listings” agent, you understand you probably aren’t getting full value for your home in a hot market.