Off-Market: What Does It Mean
Are you looking for potential properties and not finding the home of your dreams? Consider looking into off-market properties! Follow along as we explain what that is, how to find them, and more.
One benefit of selling your home is that it's up to you how you market it. You can either have it listed on the MLS, or you can choose to opt-out and have it marketed privately and to a smaller amount of people. Selling your home can be intrusive, with photos, details, floorplans, etc., all posted on the internet, and people are constantly walking in and out of your home. While gaining exposure is beneficial in the selling process, some sellers prefer a more private form of marketing. This is where off-market or FSBO properties come in. According to recent NAR statistics, 10% of home sales in 2021 were listed for sale by owner. It's not as popular as listing your home on the multiple listing service, but there are reasons why some sellers prefer t, pros, cons, and more.
Off-Market
The term off-market in real estate can mean one of two things; either the home is not for sale, or it is, but it's not listed. Most often, it's the latter. The house is for sale, but it was not listed on the multiple listing service (MLS) by an agent in the area. These listings can also be referred to as pocket listings which are handled by a single broker and not made available on the MLS. This also means that the agents hanging these listings must put in more work to find buyers, so having a broad sphere of influence and connections is essential. Pocket listings are enticing to sellers looking for a more "exclusive" buyer but don't offer as much benefit to your everyday seller since the home is not marketing to the masses.
The multiple listing service (MLS) is a database where brokers provide data about properties for sale. You can see listings from all brokers in the area, connect with agents, and connect homebuyers to home sellers. Putting your house on the MLS opens you to more opportunities and ensures it's seen by every potential buyer working with an agent. Off-market listings are not posted on the MLS, but there are rules to ensure people can still gather information on the property. Under the Clear Cooperation Policy, the National Association of Realtors implemented, a home must be listed on the MLS within one business day or marketing to the public. This was implemented to ensure agents handling off-market properties and pocket listings weren't keeping information "secret" and only showing it to select people. However, if the seller directs the agent to make the listing an "office exclusive," the agent can pass around information without putting it on the MLS.
Off-market can be the best decision for you as a seller, but it does come with some disadvantages. For example, your home receives less exposure. Some sellers may want/enjoy the privacy, but listing on the MLS is the best idea if you're looking for the best offer. Another disadvantage is that these listings are essentially banned by the National Association of Realtors Clear Cooperation Policy, even though you can still tell your agents you're interested in an exclusive office listing.
Investors will often buy off-market properties because they can negotiate better deals when buying and selling. They also appreciate that the properties are not publicized, which brings less competition. Once an investor finds the right property, they put an offer on the home, expecting to achieve a profit.
How To Find Off-Market Properties
Hire An Agent
Agents often have and know information before anything is made public or before anything hits the market. For instance, agents may know that a property is coming soon and can get you in front of the seller before it does. The agent also might have clients who already have off-market properties ready for a buyer.
Public Records
You can sift through public records yourself if you have the time, or the agent you're working with can do this for you. Looking through expired listings is one of the best ways to find off-market properties. Expired listings are those that sat on the market for too long and are now still for sale but no longer listed on the MLS.
Off-market Listing Services
Some services, like listing sites, allow sellers to advertise their property themselves. These can be auction websites, pocket listing services, etc. Some people will look for off-market listings or for sale by owner properties on Facebook and Craigslist.
Auctions
You can find foreclosures, short sales, and bank-owned homes at real estate auctions. These homes are not listed on the MLS, and most are sold "as is," so you may get them for a lower price, but there will be work to put in. You can also find these listings on bank websites and newspapers.
Face-To-Face
It may not be your first option, but you can find properties by door-knocking and approaching homeowners. Some may not like the invasion of properties, but it never hurts to try! If there's a neighborhood you're interested in, consider asking around or knocking on doors to find out if anyone is selling their home privately. If you're not interested in door-knocking, you can mail postcards, letters, flyers, etc., stating your interest in the area/neighborhood.
Real Estate Wholesalers
The responsibility of a real estate wholesaler is to find the undervalued property, estimate repairs, and then hand them off to interested investors.
You can also find properties through word of mouth, asking around, posting on social media, looking at regular listing sites, etc.
Why Do Sellers Choose To Keep Their Property Off The Market?
There are many reasons why a seller may choose to keep their property off the market.
Privacy
The MLS opens your home to a lot of eyes. Sellers may often opt for off-market for privacy reasons, keeping photos of their home off large sites, etc.
Time
If you have a popular property in a great area, multiple agents may want to show your home to potential buyers a day. Sellers that don't have the time or ability to open their homes to showings constantly may choose to list their homes off-market as it limits the home's visibility. You also avoid the inconvenience of potential open houses or home staging. Even if you initially choose to list your home on the MLS, you can have your agent change it to "temporarily off-market" to put a pause on showings.
Foreclosure
This is common if a home is in foreclosure and the seller doesn't want current or future tenants to know about the circumstances.
Pocket Listings
Tying into privacy, some sellers will only want a small number of people to see their property. With a pocket listing, sellers will work with one agent who only advertises the property to clients within their brokerage.
Coming Soon
Some sellers will want to test the waters or gain buyers' interest before hitting the market. They will list their home as "coming soon" to begin advertising with the plan to put it on the MLS eventually. Remember that homes must be listed within one day of marketing the property.
Avoid Days-On-Market
When looking at homes on the MLS or other listing sites, days on the market can be a detrimental number. Buyers will often look at this number to determine whether or not a home is worth it. The higher the number, the more doubt a buyer will have.
Money
You can save money on the commission fee by negotiating a lower commission rate or not using an agent at all.
Pros of buying off-market
More opportunity
Buying an off-market property often correlates with less competition. Other home buyers that are looking strictly on the MLS won't see the property you're interested in, so instead of competing against 15 buyers, you're competing against one or two.
Negotiations
Typically, you have more time to negotiate a sales price because the seller either isn't in a rush or there in a bind to sell. For example, suppose the seller previously listed their property on the MLS, but it sat for too many days and expired. In that case, they may be willing to negotiate a better price with whoever is interested.
Cons of buying off-market
Time
Finding a property that isn't listed on the MLS can consume much more of your time and be challenging. The MLS is easy to use, your agent will enter your home requirements, price, range, square footage, etc., and everything within that will pop up, and you can begin browsing. With off-market listings, you may find yourself searching for months.
Condition
Since these properties are often sold at a "discount, " many of them are also sold "as is," meaning what you see is what you get.l There can be significant issues with the home that would end up costing you more in the long run.
Fair-market value
When looking on the MLS, you can easily compare comps and other properties. It may be harder to determine when looking at off-market properties, and you may have to do your own comparative market analysis to ensure the home is listed fairly.
FAQ
Does off-market mean sold?
In most cases, no. When browsing listing sites, if a home was recently sold, it will be labeled as sold. If it's labeled off-market, that could mean the house is for sale, but the listing is handled privately, and you must contact the owner or the agent.
Why might someone sell off the market?
Sellers and investors often choose to sell off-market if renters currently occupy the home, if they're looking for a cash buyer, if they want more privacy, or if they want to save money on commission.
Should I take my house off the market?
If your property has been on the market for too long, you may want to take it off. The number of days your home sits on the market can be detrimental to the selling process as it concerns buyers.
Can I take my house off the market after accepting an offer?
This is an option, but it's entirely up to the seller whether or not they want to continue to market the property. Although an offer has been accepted, it doesn't necessarily mean the contract is legally binding. The seller might keep the property on the market but be listed as "pending" if a sale falls through.
What does off-market mean?
A home is for sale but not listed on the MLS, or the house in question is not for sale at all.
Key Takeaways
Off-market properties have many advantages for buyers, such as negotiating a lower sales price, access to additional properties, saving on commission, and less competition.
Off-market properties are listed for sale but not on the MLS.
Sellers will often list their house off-market to test the water, have more privacy, and save on commission.
Certain types of off-market listings, such as pocket listings, are banned by the National Association of Realtors.
You can find off-market properties on specific listing sites, auctions, bank websites, face-to-face, public records, and through a real estate agent.
Off-market properties - Final thoughts
Buying an off-market property can be a lucrative decision, especially during a hot market. Listing a property this way can yield great advantages for both the buyer and seller compared to listing a property on the MLS. For those who know how to find and close on off-market properties, they can offer endless investments. Sellers receive more privacy, while buyers receive better deals. Off-market deals have the potential to be a win-win for both sides of the transaction. If you're interested in purchasing an off-market property, consider contacting one of our agents, who can assist you in your search!
Feel free to contact us or continue browsing our website to learn more about real estate or find your dream home!