The Short Summary
Have you ever missed out on purchasing a property because of competition from another buyer? Next time you may consider looking for a pocket listing to avoid counter-offers and pressure from other brokers.
Finding pocket listings can be done through various methods, any of which can be successful. However, it’s best to use multiple methods to increase your likelihood of success. You can find pocket listings by:
- Cold calling
- Online platforms
- Social media and forums
- Direct mail marketing
- Networking
- FSBOs
- Friends and neighbors
- Real estate wholesalers
- Motivated sellers
What Are Pocket Listings?
Pocket listings – also known as “off-market -properties”- are homes for sale that have not been listed on the MLS (Multiple Listing Service) or other real estate websites like Zillow, Trulia, or Realtor.com. In this sense, they are exclusive listings that can only be accessed through the seller or the broker representing them. Typically, the broker and seller will sign an agreement to keep the listing private for either a predetermined period or until someone makes an offer.
Under normal circumstances, when a seller hires a broker to market a property, the listing will be put up on the MLS (Multiple Listing Service) to help find a buyer. But some sellers desire more privacy or exclusivity and therefore will keep their home off the MLS and other popular listing sites. This presents interesting opportunities for real estate investors and those who want to buy a home without the added competition.
How to Find Pocket Listings
In order to find pocket listings, you have to get in direct contact with the seller or the agent representing the seller. So, you’ll have to do some old-fashioned networking if you want to locate these exclusive properties.
There are several methods you could use to find pocket listings, including:
Cold Calling
Create a targeted list of property owners in the area, prepare a compelling case, and emphasize the discreet and confidentiality aspects of the deal. It’s important to continue following up and building a rapport, to stay relevant in the minds of sellers.
The next step is to call local real estate agents and ask if they have an off market listing they’re looking to unload. Perhaps you fit the seller’s profile and have a budget they find satisfactory. You’ll likely face a lot of rejection, but if you’re patient, you may stumble upon a great deal.
Online platforms
Pocket listings aren’t usually found on real estate websites, however it’s worth checking websites like Zillow, Redfin or Realtor.com for properties that are listed as “exclusive” or “off market listing”. You can use the phrase “pocket listing” in your search as well. The listings may not be listed as such, but you may find a pocket listing tucked in between others if you search carefully.
Additionally, explore specialized real estate websites and databases that focus solely on off-market properties. By casting a wide net online, you increase your chances of stumbling upon the perfect off market listing or pocket listing that aligns with your investment goals.
Social Media and Forums
Look for local real estate groups on platforms like Facebook and LinkedIn, or real estate forums on social media or via other online channels. Occasionally, homeowners and real estate professionals may share pocket listings or discreetly discuss off-market opportunities within these groups. If you participate actively and engage with the community, you may be able to gain access to pocket listings using these channels.
Direct Mail Marketing
Create a direct mail marketing campaign and run this to property owners in the desired real estate market. The idea here is to express your interest in buying off-market real estate. This can pay off as some homeowners would like to sell their property without listing it on a public facing website. Sometimes, the personalized approach can pay off and homeowners can choose to sell their property to you, based on the fact that you reached out and are top of mind for them.
Networking
Building relationships with real estate professionals and real estate agents is a key method for finding pocket listings. The best way to do this is by attending local real estate networking events, real estate agent open houses or industry mixers. Here, you can build relationships with real estate agents and brokers in your area.
Real estate agents often have off-market listings and sharing your investment goals with them can help. If you make a good impression and put the word out that you’re in search of off-market listings, you may be the first person a real estate agent will call when a pocket listing comes on the market.
FSBOs
You can try bypassing the real estate agent and going straight to the buyer. Many people choose to save themselves the cost of the real estate agent commission and list the property themselves. These properties – also known as For Sale by Owners or FSBO’s – are typically not on the MLS (Multiple Listing Service) and may not be on other listing websites either. There are websites like FSBO.com and ForSaleByOwner.com where you can find these properties, or you can just keep your eyes peeled for FSBO signs in your area.
Friends and Neighbors
Leveraging your personal network is also a smart way to find off-market properties. Real estate is a business that everyone must engage in at some time or another, which means anyone is a potential lead. If you let your friends and neighbors know that you’re on the lookout for off-market properties, they may come to you first when they’re ready to sell their home because of the personal connection.
Real Estate Wholesalers
Wholesalers specialize in finding off-market properties and often have a network of sellers. Partnering with a reputable wholesaler can save you time and effort in locating pocket listings that are brand new. This way, they will find the listings and you can work out an arrangement with them to get access to these listings. Make sure to establish relationships with reputable wholesalers who have a proven track record.
Motivated Sellers
Another way to find off-market properties or pocket listings is to be the one to convince the owner to sell. The best way to do this is to identify motivated sellers – or homeowners who have an increased desire to sell quickly because of a major life event or financial problem. Their motivation could be a recent marriage, divorce, death, or sudden relocation. Or it could be that the owner is in pre-foreclosure or underwater in property taxes.
There are many ways to find motivated sellers, including referencing county court records, doing direct mail marketing, posting ads on Facebook, or looking for distressed properties in your neighborhood. You will need to have a soft touch when you approach these homeowners, to ensure that you don’t come across as predatory or opportunistic. However, identifying motivated sellers is a great way to scoop up a pocket listing at a discount.
Are Pocket Listings Illegal?
Pocket listings are legal but must be treated delicately. In 2019, the National Association of Realtors moved to ban pocket listings and now requires that members submit all new listings within one business day. However, there is no state or federal law that outlaws the practice, and not all real estate agents are members of the NAR.
There are ways that pocket listings can lead to a violation of fair housing laws. For instance, if a homeowner wants to keep a listing exclusive because he or she only wants to sell to a certain race, ethnic group, or other protected class, that would be against the law.
Pocket listings are typically associated with celebrities who want to keep their business out of the press and know that listing it on the MLS would attract unwanted attention. Or the seller may be an ordinary person who has gone through a traumatic experience like a death or a divorce and doesn’t want information about the sale to be available to the public.
As long as it’s the seller’s decision and they understand that keeping the listing exclusive may impact the final sales price and how quickly they get an offer, there is nothing illegal about keeping a listing off-market as a pocket listing.
How to Buy a House that’s Not on Market?
In theory, the process of purchasing a home that is an off market listing or a pocket listing, is the same as purchasing one that is listed on the MLS. You simply contact the buyer, make an offer and then fulfill the requirements of the closing. However, there are often additional steps that may make the process more complicated.
You may have no idea what kind of an offer the seller may accept on a pocket listing because the property is not being listed at a particular price. This means you’ll have to do the research yourself and determine a number that makes sense based on your budget and the available sales data. You may also have to explain to the seller why the amount your offering is fair because you won’t have other competing offers to validate the price.
Depending on the circumstances, the seller may be a bit harder to deal with. If they choose to keep the property exclusive, it means they don’t want to deal with unwanted attention. So you may have to work a bit harder to convince them to sell to you or even agree to meet with you in the first place.
The hardest part of buying an off-market property or pocket listing is locating it and getting the seller to agree to your offer. Once you’ve gotten over those hurdles, the closing process is no different than purchasing a listed property.