Whisper Listings: Could They be Your Secret to Homebuying?
Kevin Brouillard
Open houses, mortgage paperwork, bidding wars: Buying a home can take a lot of effort these days. Some in-the-know prospective buyers, though, may have a special perk: access to properties before they even hit the market.
The practice, known as pocket listings or whisper listings, has become more common in real estate recently, as the market hit full boil during the pandemic.
While this insider access may sound enticing, you may wonder if these listings are legal and have financial implications. Read on to learn the scoop and see whether these listings might help you land your dream home.
What Are Whisper Listings?
Whisper listings are properties that are promoted by a real estate broker to an exclusive group of trusted agents to find a buyer who can pay the desired asking price. In other words, agents utilize their professional networks to sell a property rather than putting it on the market. Prospective buyers outside an agent’s inner circle will likely never know the property was for sale.
A little more detail may help clarify the whisper listings definition:
Whisper or pocket listings are not listed on a multiple listing service (MLS) — the databases real estate professionals use to help clients buy and sell property — even though they’re technically for sale. Popular listing websites like Zillow and Realtor.com source many of their listings from MLS feeds.
You also won’t find a “For Sale” sign in the front yard of a secret real estate listing.
Overall, whisper listings tend to make up a small percentage of real estate sales, but when focusing on top-tier properties, the numbers can rise significantly. Those who are selling their high-priced homes often don’t want to do open houses or otherwise have a lot of people walking through their property. Estimates run as high as 50% to 75% of homes in the highest-price bracket never hitting the market.
Yes, although there are consumer rights and laws that offer some protection to prospective homebuyers. For example, the Fair Housing Act gives buyers the right to be free from housing discrimination during the sale, financing, or rental of a property.
Because of their exclusivity, whisper listings have been criticized as discriminatory. In fact, the National Association of Realtors® established a clear cooperation policy in 2019 with the goal of reinforcing consumer benefits and competition in the housing market.
The new policy requires Realtors to list any property they are marketing to buyers on association-owned MLSs. New listings must be submitted within one business day of any public marketing, meaning other agents should be aware of and able to see the property the following day.
There are some loopholes in the policy that allow whisper listings to continue in specific circumstances. Namely, Realtors can still take advantage of “office exclusives,” which are listings shielded from the public and marketed to their internal agency network. The agents in those offices can then share the property information with their clients.
Listing agents can also take advantage of the one-business-day grace period to promote the property to a select clientele. The policy is that “within one business day of marketing a property to the public,” which can include yard signs and flyers displayed in windows, “the listing broker must submit the listing to the MLS for cooperation with other MLS participants.” Since business days exclude weekends and holidays, the exclusive group of buyers can get a jump on the competition for putting in an offer.
How to Find Whisper Listings
By definition, pocket listings are about connections and insider knowledge. A useful place to start is by finding a real estate agent with a strong professional network and familiarity with the neighborhood you’re hoping to buy in.
Experienced agents may be more prepared to figure out how to find pocket listings thanks to a larger client base, too. Having handled numerous real estate transactions in the community, they could have insight into when former clients want to put their homes back on the market.
They may also know the prices and terms that prior clients would be willing to part with their homes for. Essentially any property can be treated as a whisper listing if you’re able to make an offer on a house that is attractive to the owners — even if they weren’t considering selling.
Is It a Smart Approach to Home Buying?
Real estate whisper listings may be advantageous for buyers for several reasons.
First, there is generally less competition for off-market homes than those listed widely on an MLS, helping buyers purchase a home at or below asking price. This can be especially valuable in a tight or hot housing market.
Given the word-of-mouth nature of pocket listings, potential buyers are generally hand-picked by listing agents based on both their qualifications and the type of property they’re looking for. This approach can cut down on the number of showings in the home buying process, which may be important for some buyers due to privacy and time.
Before committing to this strategy, there are some additional benefits and drawbacks to consider.
Pros of Secret Real Estate Listings
A secret real estate listing can offer advantages to sellers and buyers alike.
For sellers, a pocket listing affords considerable privacy — both in terms of keeping the sale status under wraps and reducing foot traffic at a property. By focusing on qualified buyers in the listing agent’s network, the sale process could be expedited without the hassle of negotiations and contract contingencies.
Sellers may opt for a pocket listing to test out an asking price and gauge interest. If the whisper listing doesn’t secure a full-price offer, sellers can reconsider the price before putting the property on the open market to attract new buyers without any record of a price change. This is helpful since prospective buyers may view a price cut as an opportunity to make an offer under the asking price.
The primary benefit for buyers is reduced competition on a property. Since the listing has only been shared with a select group, it’s less likely that a listing will go into the realm of counter offers and bidding wars.
Cons of Secret Real Estate Listings
Now, consider the downsides of pocket listings:
Whisper listings are often pursued in the hope of fetching top dollar from buyers. From a buyer’s perspective, the perk of first dibs on a property may come at the expense of an accurate assessment of its value and the ability to negotiate a house price. Putting aside the allure of exclusive access is important to ensure that the property fits your needs and makes financial sense.
For sellers, a secret real estate listing limits the potential pool of buyers instead of promoting the property on any of the hundreds of multiple listing services and across major real estate sites. Opening a property to the market can increase your chances of a multiple-offer situation and getting bids over the asking price.
While a pocket listing may reduce the hassle of multiple showings, the approach could extend how long it takes to find a buyer for the price you want.
The Takeaway
A whisper listing, also known as a pocket listing, is shared only with an exclusive group of an agent’s inner circles. Secret real estate listings can offer advantages to both sellers and buyers: The seller has privacy and perhaps a better-qualified pool of prospects, while buyers may face less competition. There are also drawbacks, however, as these listings may present pricing and timing challenges.
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‡SoFi On-Time Close Guarantee: If all conditions of the Guarantee are met, and your loan does not close on or before the closing date on your purchase contract accepted by SoFi, and the delay is due to SoFi, SoFi will provide you $2,000.^ Terms and conditions apply. This Guarantee is available only for loan applications submitted after 6/15/22 for the purchase of a primary residence. Please discuss terms of this Guarantee with your loan officer. The property must be owner-occupied, single-family residence (no condos), and the loan amount must meet the Fannie Mae conventional guidelines. No bank-owned or short-sale transactions. To qualify for the Guarantee, you must: (1) Have employment income supported by W-2, (2) Receive written approval by SoFi for the loan and you lock the rate, (3) submit an executed purchase contract on an eligible property at least 30 days prior to the closing date in the purchase contract, (4) provide to SoFi (by upload) all required documentation within 24 hours of SoFi requesting your documentation and upload any follow-up required documents within 36 hours of the request, and (5) pay for and schedule an appraisal within 48 hours of the appraiser first contacting you by phone or email. The Guarantee will be void and not paid if any delays to closing are due to factors outside of SoFi control, including delays scheduling or completing the appraisal appointment, appraised value disputes, completing a property inspection, making repairs to the property by any party, addressing possible title defects, natural disasters, further negotiation of or changes to the purchase contract, changes to the loan terms, or changes in borrower’s eligibility for the loan (e.g., changes in credit profile or employment), or if property purchase does not occur. SoFi may change or terminate this offer at any time without notice to you. ^To redeem the Guarantee if conditions met, see documentation provided by loan officer.
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