Hip Pockets 101...or the Good, the Bad, and the Ugly!

Written by Posted On Tuesday, 01 October 2013 14:01

I’m sure by now most everyone knows what a “Hip Pocket” or “Pocket Listing” is but what you probably don’t know are the unwritten rules of a hip pocket….or better said, rules 101 for a hip pocket. For clarification, a hip pocket is traditionally a home that the seller doesn’t officially list in the local multiple listing system, but will sell for the right price. Most often, sellers use hip pockets as a strategy to create excitement or sense of urgency for buyers around a property that is “not officially on the market”.

There are seasons for hip pockets… like now! My thought is that there is “the good, the bad and the ugly” of hip pockets. Handled correctly, it can be a good thing for sellers. Treated improperly, it can be a disservice to a seller. When we are inundated with inventory, no one cares about hip pockets; but when there is a lack of inventory, agents are like piranhas, aggressively showing their clients new hip pockets before other agents know about them. This is "the good" of hip pockets. This is when a seller can get the highest dollar that the market can bear and if used properly, you can get multiple offers which can take you over asking price.

Let me preface my next statement by saying that most companies, including mine, love to sell their own listings, including hip pockets, in-house… ..there is nothing wrong with that. But what I believe IS not in the best interest of the client is when agents hold hip pockets within their own company for an extended period of time before exposing them to their friendly competitors…..this is "the bad" of hip pockets. If it is sells before other companies are aware of it, you have to ask did they give that property optimum exposure to get the highest dollar that the market can bear? Sellers need to beware of this phrase “we sell most of our listings in house." If you hear that, you need to ask, “Will all the surrounding brokers be aware of my property as well?" Believe me, you want your property exposed to as many agents as possible (whether you’re a hip pocket or not) so you can get the best price possible. If you happen to be in an office with great agents, odds are they will have a good buyer for your property (that's what you want). Our office happens to sell a good number of listings in house because we have a constant flow of ready, qualified buyers.

Final point is sellers should use only one agent! Often you will see two or three agents all having the same hip pocket. This is "the ugly" of hip pockets. Many agents avoid showing this property because there is a big question about who really represents the seller and if the buyer's agent will be paid. When I agree to handle a hip pocket, I always explain what I expect and what my seller can expect of me. If an agent is out there promoting a property as a hip pocket, there has to be loyalty and trust on both sides. Some agents ask for an “office exclusive listing” which protects the agent and their broker. However some sellers don’t want to sign anything binding until they're ready to actually list the property for sale. Best advice is to pick an agent that you trust and have a relationship with and honor them exclusively until you decide to sign an exclusive listing agreement.

With all of this being said, hip pockets can be a "good thing" and an effective tool to use in marketing your property if used properly. Just be sure to avoid the bad and the ugly....

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