During Housing Shortages FSBO and Pocket Listings Win

September 1, 2016 Matt Williams

A big part of buying and selling real estate in your area in the future may well be pocket listings and "for sale by owner." Why? Read on...

When you think of the words "housing shortage" you probably think of cities like San Francisco and New York. Sure, these cities are traditionally very tough places to find a home to buy or even rent, but just check the news each week lately and you'll find reports on just how hard it is now to find a good home to buy in almost every major metropolitan area. It's also spread to the suburbs surrounding them and now into most every populated area in the country. In fact, there's a new American housing shortage

What's Causing The Housing Shortage

How did this happen, you may ask? Well, it's actually pretty simple to understand. Since the last recession and the mortgage collapse, new construction has moved at a snail's pace. New home starts are actually occurring at the slowest rate in U.S. history.

Video: Explaining the Shortage

Plus, there's just a lot more of us. People are living longer and new people are being created faster. Job growth is healthy and that means more of these new people are growing up and entering the work force. All that means we need more and more places for people to live and work.

And the need is spread throughout the US. 

Whether you live in Atlanta, Boston, Birmingham, Houston or Los Angeles, there's a housing shortage. Draw a circle about 20 or 30 miles in diameter around a populated area and you've got a housing shortage. 

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What Does a Housing Shortage Mean for Home Buyers and Seller

As you'd imagine, a housing shortage is tough on would-be buyers. In areas where there's low inventory of available houses, it's an almost certainty that several things will happen:

  • Price rise
  • Buyers get highly-selective
  • Available homes disappear before ever hitting the market
  • Cash buyers stand out

In many of the nation's tightest markets, the atmosphere is downright hostile. People actually fight over access to available homes! They scan obituary columns daily and stalk neighbors on social media for news of work transfers or moves our of the area. As well, this all leads to all leads to two other very noticeable trends:

  • More sellers decide to go without a Realtor and do "For Sale By Owner," or "FSBO"
  • More seller decide against listing openly in MLS and go out as "Pocket Listings"

Why For Sale By Owner and Pocket Listings Rise in Tight Markets

Pocket Listings are homes that sellers want to move but don't want to enter into the open market via MLS. Usually, sellers contract with an agent to market these homes "word of mouth" through the agents network of other agents and waiting buyers.

In today's tight markets, pocket listings have become a kind "for sale by owner" particularly for sellers offering upscale or luxury homes. It offers them lots of conveniences from more privacy, the ability to be more selective than legally allowed with open listings and convenience. Plus. it can also allow for higher prices to be had and savings on the commission since there's often just one side to pay since the same agent who holds the pocket listing usually finds a buyer.

As to FSBO sellers, tight markets and increased availability of documents and legal resources such as Rocket Lawyer) are giving more and more sellers the confidence to go it alone.

In this country, property has always been sacred but selling your own home to maximize your value on the equity you've built is a right that, until now, most homeowners have been too afraid to do.

Today, the housing shortage and the chance for even more earnings from selling a home yourself are enticing more and more sellers to list and sell themselves - and quickly. Traditionally, FSBO sellers have taken much longer to sell due to lack of exposure. Again, the web and social media - plus the housing shortage - are now affording FSBO sellers more likelihood of a quicker sale.

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