It's been said that paranoid people are usually right. If you're convinced there's a whole world of secret apartment sales happening right under your nose, you're onto something. At least partially.
While the world of so-called "off-market" or "whisper" listings isn't exactly seedy—it's perfectly legal to sell an apartment without publicizing it, or to buy it directly from the seller—a growing number of homes are trading behind closed doors, without so much as a photo surfacing on StreetEasy.
"A lot of deals are happening this way because the market is strong," says Citi Habitats agent Nathaniel Faust, noting that brokers are able to coax owners into selling by showing them how high a price they could get. "A lot" is still relative, though, and Miller Samuel numbers guru Jonathan Miller tells us, "The whispers are so low that we generally can’t hear them data-wise. I’d make a wild guess that pocket listings account for 5 percent of all sales right now." Miller also notes that off-market sales are still primarily seen on the high-end market, so the higher the price of the home, the more likely you are to see a "whisper" listing.
For buyers, these listings offer the opportunity to land an apartment without going through the headache of a bidding war. An entire website, HomeCanvasr, even launched this year with the sole purpose of hooking up buyers with off-market Brooklyn houses (for a price, natch: $200 up front, then $50 a month for a subscription). With the practice expanding outside the realm of the ultra-high end, Lisa Garey, an agent with Coldwell Banker Bellmarc Group tells us, "It's a shadow market that's a mirror image of the real market."
So what's a normal buyer or seller to do? Get in on the action, of course! Here's the first installment of our three-part guide to NYC's secret listings, where we decode the lingo you need to know:
This is just a sexier way of saying that an apartment owner wants to sell—or at least is thinking about selling—but has let only a small pool of connected brokers (and their buyers) know about it.
Normally, sellers sign an exclusive agreement with a broker to market their apartment, and ads and photos go up on the broker's website, as well as on search sites like StreetEasy, Zillow, and so on. Then, the broker schedules a series of open houses for prospective buyers to see the place in person, and if things go well, bids from buyers start to come in—there may even be a bidding war.
A whisper listing forgoes all that—the apartment's photos and information never go public, and the property is only shown to select buyers hand-picked by the seller's broker. This isn't always the wisest strategy for sellers, but it does have its benefits, namely convenience—no open houses to deal with—and privacy.
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There seem to be as many different definitions of "pocket listing" as there are brokers in NYC. But as a rule, if you're a homeowner who's talking to a broker about hiring him to sell your place—but you haven't signed an exclusive contract yet—then you are his pocket listing.
Apartment owners considering a sale will often mention this fact to a few different brokers (people they've worked with previously, neighbors in the building, etc.) to see what kind of interest their place generates. At this point, the broker (or brokers) are putting out feelers for potential buyers, but won't pull the trigger on publicizing the place until the owner makes the business relationship official.
"Pocket listing" also has negative connotations—it can technically mean a listing that an exclusive broker was supposed to publicize but illegally chose not to in hopes of bringing in their own buyer and keeping the portion of the commission that would otherwise go to a buyer's broker. This practice has largely subsided in the age of the Internet. "If sellers check on StreetEasy or Trulia and don't see their apartment," says Faust, "they get very upset."
If you're in the market for a Bed-Stuy brownstone and a broker you know is trying to sell one, congratulations, you're one of her pocket buyers—really just a snazzier term for a client or contact of the broker who might be interested in their listing.
"To get the exclusive on a listing, a lot of brokers will bring in their 'pocket buyers' and tell the seller, 'This is what I can do already, I could bring you ten times as many options with the exclusive,'" HomeCanvasr co-founder Jonah Landman tells us. "Really, it just means a direct buyer who the broker has a relationship with."
For buyers, however, this means an early shot at a new property. "I tell my clients that you want every broker in town to feel like you're their pocket buyer," Landman says.
For tips on handling an off-market sale, click here, and for prospective off-market buyers, check out our guide here.
Buy and sell like a NYC insider: your guide to elusive 'whisper' listings (part 2)
Buy and sell like a NYC insider: your guide to elusive 'whisper' listings (part 3)
Broker trying to talk you into selling? How to make sure you get the best deal
Buying a Brooklyn brownstone? New website unearths "secret" listings
But do you have compassionate cojones? (And other questions to ask before hiring a broker)