Off-market listings: The (not so) secret housing market
Given how crowded the current housing market can feel, no one would be blamed for wanting to opt for a stealthier route. Luckily, that’s exactly what off-market listings offer. Also known as quiet or ‘pocket’ listings, off-market listings are homes that may be for sale but aren’t listed on the MLS.
While a rarity in the past, these under-the-radar properties have grown in popularity in recent years into a sort of secondary housing market. But how do you find them? And what’s in it for the sellers, buyers and agents involved?
First a little background. The vast majority of homes for sale are listed by agents using the MLS, which stands for multiple listing services. It’s basically a large database that sellers’ agents use to list homes they’re selling, and for buyers’ agents to find homes for the clients they represent.
There are lots of different MLS databases, each of which serve different regions of the national housing market. Listing a home off the market was pretty rare in the past, but has increased in popularity in recent years.
But wait…why? Don’t you want as many buyers as possible?
At first glance, off-market listings might not make sense to a potential seller. The current housing market, where interested buyers greatly outnumber available homes, has created double-digit price increases and copious bidding wars. Off-market listings decrease the number of eyes, and by extension interested buyers, a property will have. That would seem to not be in the best financial interests of a home seller, so why are these listings growing in popularity?
The benefits to sellers
Some home sellers choose a pocket listing because they prefer a more private sales process. Off-market listings also offer an opportunity for sellers to negotiate a lower sales commission since only one agent is involved. But one of the most valuable benefits of pocket-listings to sellers is the chance it provides to control pricing.
Because of the reduced visibility, an off-market listing can serve as a way for sellers to test the waters for a property, especially as it relates to price point. Sellers can gauge interest from a smaller, more select group of homebuyers, and if they find the house is generating a lot of interest at the current price they might decide it’s better to list it on the MLS at a higher price.
Similarly, an off-market listing helps sellers by removing the information around ‘Days on the Market’ that accompany each MLS listing. Generally, the longer a property is on the market, the greater the chance that buyers wonder why it hasn’t been scooped up—and might assume it’s over-priced. By removing that stopwatch, a seller can decrease the chances they’ll be offered a lower offer price.
How buyers can benefit
On the flip side of the equation, the stealth nature of pocket-listings can also be a boon to buyers. In a market as competitive as the current one, buyers can benefit from the reduced eyes (and competition) an off-market listing will receive. If you’re trying to buy into a particularly attractive neighborhood and/or want to avoid a potential bidding war, being one of the first to view a great property (and being able to make a strong offer quickly) can be a game-changer.
If they’re secret, how do I find them?
Thankfully, you won’t need any super-secret connections to find off-market listings—just some old-fashioned elbow grease. The best way to start is to identify the specific neighborhood you’re hoping to buy in, then create a list of real estate agents who service that area. Then reach out to them to see if they have an exclusive listings at the moment you could view.
Buyers can also pour over non-MLS resources like local For Sale By Owner (FSBO) pages, the classified sections of your local newspapers, or even Craigslist. Zillow has several off-market programs available to potential sellers and buyers.
Less appetite for off-market listings
One note to keep in mind if you’re looking to sell your home through a pocket listing is that in January 2020 The National Association of Realtors released “MLS Statement 8.0 Clear Cooperation Policy,” which requires any real estate broker who participates in a multiple listing service to submit their listing to the MLS within one business day of marketing the property to the public.
The policy isn’t law, but does signal new restrictions around off-market listings. However the policy also includes many options that allow RAR members and brokers to maintain both limited and full off-market listings, like opting out of an MLS internet display.
Today’s housing market can feel like an exhausting and crowded 100-yard dash, with tons of interest and eyes on every available home. For buyers, off-market listings offer a chance to thin out the competition and make a strong offer in your perfect neighborhood. And for sellers, they offer a chance to control the sale process, test the waters, and gauge what price might be right for their property.
And since time can be of the essence for off-market listings, it can only help your chances to get pre-approved (if you haven’t already). Having a pre-approval letter from a respected lender like Proper Rate can help your offer stand out from other buyers (even if there is less of them than) as you try to slide into a pocket listing.