A short overview
There are a variety of ways to purchase a property, and one of these is called “off market”. This is an alternative way to buy a house that doesn’t involve finding a home through a listed platform. Instead, these are homes that aren’t necessarily for sale. So what does off market mean in real estate?
Key Points
Looking for a listed home is what most people do when they’re searching for a property to buy, however you may have heard the term “off market” being used in reference to real estate. This is another option for buyers who’d like to go the non-conventional route and to potentially find a better deal. Let’s delve into the topic of off-market properties and how you can access them.
What does "off market" mean in real estate?
You may have heard people talk about buying houses off market, or an off-market listing. In this context, the term means that the property is up for sale, however it hasn’t been listed on a public service like the Multiple Listing Service (MLS) or other real estate websites. So, it’s a silent sale that isn’t available to the public but is available to a select group of people.
The second type of off market property is one that is not for sale, in other words, if this property is not listed on any public listing platforms, that is because it is not for sale. Since this concept is quite cut-and-dry, we’ll focus on the first meaning of the term “off market” and how you can find these listings.
What is an off-market listing?
An off-market listing is one where the property is not listed publicly, but instead it’s advertised to a small group of people who are carefully selected based on whatever criteria the seller has in mind. Potential buyers will then negotiate directly with the seller, and the sale will be kept private. These can also be called pocket listings, which is when a real estate agent markets the property to a small group of buyers.
Off-market listings are growing in popularity in recent times, as the National Association of Realtors (NAR) 2021 Home Buyer and Seller Generational Trends Report shows, 11% of home sellers are able to find buyers without using the MLS. Generally, these types of sales are happening where the real estate market is booming, and a seller is looking to get a property sold without going via a public route.
How to find off-market listings
If you’re looking for the best off-market real estate deals, here are a few ways to find off-market listings:
- Local real estate agents: One of the most popular ways to find off-market properties is to consult local real estate agents. They might know which properties are coming onto the market, before they land, or they might have off-market properties already available that you can browse.
- Websites: There are various online tools like Zillow’s off-market program, real estate auction websites and other pocket listing services where you can find off-market listings.
- FlipScout from New Silver: A useful tool from New Silver called FlipScout offers real estate investors the chance to find good deals on investment properties that may be off market, and they provide useful insights into these properties.
- Build relationships: Finding off-market properties is a lot easier if you build relationships with people. For example, getting to know locals in the area you’d like to find a property, local real estate agents and other real estate investors are also good relationships to build for times when an off-market property is available.
Does off-market mean sold?
There is an old adage in real estate, which says that everything is for sale if the right offer is presented. This can certainly apply to off-market properties, because a property that is off market is not necessarily for sale at that time, but this doesn’t mean it’s sold. It can also mean that the property simply isn’t for sale, but this doesn’t mean that it’s sold either.
If a property was on the MLS and is then removed, this may be because the owner is having second thoughts about selling, or it’s a holiday period or the property isn’t selling so the seller is taking off the market for a while. The property is still available however, whether now or in the future.
Other off-market properties are for sale, but only to a select group of buyers and not the general public.
Why do sellers list properties off market?
- Selling off-market minimizes the disruption for tenants, for those who own a rental property.
- Sellers who are looking to save money on sales commission sometimes choose this route, because they won’t necessarily need to pay an agent.
- Off-market listings offer a private sale for those who’d like to maintain their confidentiality and keep the sale out of the public eye. Sellers would have different reasons for this, but privacy is one of the most prominent features for off-market sales.
- This way of listing a home can be used as a dry run, to see whether a property is likely to sell quickly or not at the price the sellers have in mind. It’s easier than having to list a property on the MLS and it can give sellers a good idea of what the demand is like for their home, and what the market is doing.
- Sellers can avoid having their property listed on the MLS for too long, if they first list it off market and then put it onto a public listing platform thereafter. Typically, buyers are put off properties that have been sitting on the MLS for a long time, particularly if it’s a high-end property, so this route helps buyers avoid this and be able to leave their home at a higher price to see if it sells, without any time pressure.
- An off-market listing is also a way for sellers to avoid having lots of people in their home, which is a good solution for people who don’t want to stage their home or simply don’t want to have the inconvenience of multiple show days and many people in their home.
- It can be easier to put together a win-win deal when sellers and buyers can negotiate directly with each other.
Can you access off-market properties without MLS Access?
The good news is, yes you can access off-market properties without using the MLS. Here’s how to find off-market properties:
- Local real estate agents are a wealth of knowledge and they’re a great place to start because more often than not, they will have access to some off-market properties at any given time.
- Another option is to go via real estate wholesalers, who spend their time finding good property deals for real estate investors and facilitating the sale to make sure that it goes to you. These are typically homes that need repairs and can be fixed and flipped.
- Property management companies are also an avenue to find off-market properties, as the owners of properties that are managed by these companies are often real estate investors and sometimes, they are willing to sell.
- Pocket listings are available to smaller groups of buyers, and you can find these through your local real estate agent, or through pocket listing services like HomeQT. This platform and others like it list homes that are not available on the MLS and facilitate communication between buyers and sellers directly.
Closing thoughts
Off-market properties can provide a great opportunity for savvy investors who are looking for good deals that aren’t going to get snapped up quickly by the competition. The trick is to know how to find these properties and how to evaluate the deal to determine if it’s worth your while. Platforms like New Silver’s FlipScout offer help with this, through the data and insights provided on each property. The biggest benefit of buying off-market properties is that you can often pick them up at a cheaper price than they would’ve been, however just because a house isn’t listed on the MLS doesn’t mean it’s a good deal so it’s still important to do your research.