How to Find and Buy Off-Market Homes
With real estate inventory still tight in many markets around the country, home buyers need an edge, and that’s where off-market listings come in. Otherwise known as pocket listings, these are homes that are for sale but aren’t listed on the multiple listing services. That means the real estate agents selling these properties have to do the legwork to find buyers.
Off-market listings may seem counter-intuitive to the seller. After all, there is more demand than inventory which means bidding wars are a common occurrence in many neighborhoods. This all poses the question why would a seller want to do a secret listing? Some opt for an off-market listing to test the waters while others go this route for a more private sales process. Certain homeowners even think a pocket listing will create an allure that will get them an even higher price than a traditional bidding war.
Buyers Get An Edge Over The Competition
For buyers, the benefits of an off-market listing are twofold. For starters, it gives them access to inventory that their competition isn’t seeing. If you are buying in a particularly hot market, pocket listings may be the only way to purchase a home. In regular market climates, buyers of pocket listings often get a deal partly because the commission the seller has to pay is lower. Buyers who have access to these off-market listing increase the odds they will end up purchasing a home. (Read more, here: How To Avoid Overpaying In A Real Estate Bidding War.) And today it is easier than before to locate off-market listings. In the past, the only way to hear about a pocket listing was through word of mouth. The Internet changed all that and now websites like Zillow.com, PocketList.co and HiddenListings.com are examples of places buyers can find off-market houses.
Off-Market Listings Come In Different Varieties
When it comes to off-market listings, they come in different flavors. There are the traditional, secret prestigious listings—the exclusive, million dollar homes that most of us only see on T.V. Then there are those listings that will show up on real estate search websites 30 days or more before the house will hit the multiple listing service that everyone has access too. There’s also those opportunistic off-market listings where a real estate agent will approach a homeowner about selling their home.
Real Estate Agents Are Often Key To Off-Market Listings
Finding a traditional, exclusive, off-market home isn’t going to be as easy as searching the web. It’s going to require a little homework and lots of networking. Once you have pinpointed the neighborhood, you want to buy in you’ll need to come up with a list of top agents and contact them about any pocket listings they may have. That’s going to mean calling or sending an email to make contact. Some real estate agents even have websites where they showcase their off-market houses and have services that buyers can subscribe to and get email alerts about new listings. (Read more, here: Top 8 House-Hunting Mistakes.)
Websites Make It Easier To Find Them
In addition to contacting real estate agents directly, buyers have a lot of Internet tools available to them to find listings before they are open to the general public. For instance Zillow’s “coming soon” feature lets agents, brokers and multiple listing services market homes on Zillow thirty days before it hits the multiple listing services. That gives quick acting buyers a bit of an early advantage, granted their competition isn’t using Zillow as well. PocketList.co is a website that lists off-market real estate in the San Francisco Bay area and is an example of a local pocket listing service. (Read more, here: Top Websites For Home Sales.)
Finding a pocket listing is half the battle but seeing a deal go through is the end-game, which is why buyers of off-market listings have to know the ins and outs of the process. Once you get to contract, it is a standard deal, but since the agent is likely representing both of you, it can get a bit murky. While a pocket listing gives you VIP access to the real estate market, the tradeoff is often the real estate agent is representing both you and the seller. Known as a dual agency sale, while perfectly legal, it can be hard for the buyer to tell if the agent has his or her's best interests in mind. The higher the sale price, the heftier the commission for the agent. If you are buying in a market with little inventory, it may not matter if you are getting the best deal as long as you get the home, but it pays to be aware of any conflicts of interest. (Read more, here: 5 Ways To Save On Real Estate Fees.)
The Bottom Line
The real estate market is still hot in many areas of the country with more demand than inventory. (Read more, here: 4 Key Factors That Drive The Real Estate Market.) Frustrated buyers who have been bid out of home after home need any advantage they can get. Enter the pocket listing or off-market homes. These are homes that aren’t being seen by the general public, which means there’s a bigger chance of buying them. But it’s not without risk. There is a potential conflict of interest which has to be weighed against realizing the dream of homeownership through an off-market listing.