How to Find and Buy Off-Market Homes

Most homes for sale are listed on the Multiple Listing Services (MLS). However, you can find homes not listed on an MLS for sale, which are known as off-market homes. Potentially, these properties can provide a better deal, a more private deal, or the specific features you may want in a home.

What Are Off-Market Homes?

Off-market homes are not advertised for sale on through MLS. As a result, off-market homes, also known as pocket listings, are more exclusive. Typically, a single real estate agent will handle an off-market home transaction.

Advantages for Buyers and Sellers

Both buyers and sellers can find upsides to opting for an off-market home transaction.

Buyers

• Less competition: Off-market homes are not widely advertised, which means there is a smaller pool of potential buyers. If you find an off-market home as a buyer, you have less risk of getting into a bidding war with other buyers.
• More flexible negotiation: With an off-market home, you potentially have more room for negotiation. Buyers and sellers can talk directly and come to an agreement that works for their specific needs without the pressure of a traditional sales timeline.
• Potential for a better deal: Off-market homes offer more room for negotiation, and fewer competitors could result in a better price for a buyer.

Sellers

• More privacy: When a home is publicly listed, sellers must contend with more interest and the possibility of hosting an open house. An off-market listing means a smaller pool of interested buyers and more privacy.
• More serious buyers: Off-market listings are not always easy to find. Buyers searching for them may be more motivated and prepared to make an offer.
• Potential savings: With just one agent involved in the transaction, sellers could save on the sales commission. Given the exclusivity of off-market listings, sellers could also attract higher offers.

How to Find Off-Market Listings

While off-market homes have their advantages, finding them can be a little tricky.

Contact Real Estate Agents

Real estate agents can be a good source to tap when you are looking for off-market listings. You can start in your personal network. Do you know any real estate agents who work in the areas you want to buy? Let them know you are interested in off-market homes.

You can also start your search in a specific area. Look up real estate agents who work in that area and reach out about the possibility of off-market listings that might be on their radar.

Go Online

While you won’t find off-market homes on traditional real estate sites, there are sites and tools available specifically for pocket listings, such as:

Approach Homeowners

You can also approach homeowners directly if you’re interested in buying their home. You can also spread the word through your network. Someone may be able to introduce you to a homeowner interested in selling an off-market home.

Simply knocking on doors or asking people directly may be a hit-or-miss strategy. You can also send out mailers or post online in neighborhood forums to help you chase down leads.

The Buying Process

Buying an off-market home is similar to buying a listed property in many ways. You will need to get approved for a mortgage unless you plan to pay in cash. Once you find a home you want to buy, you will make an offer and schedule a home inspection. The deal will go through the underwriting process and then, ultimately, close.

But there are ways that the process of buying an off-market home is different from the traditional route. The deal will likely be a dual agency sale, which means a single real estate agent will represent both the buyer and seller.

Real estate agents who execute dual agency transactions are expected to represent each party equally. However, it is important to be aware of potential conflicts of interest, particularly if the agent has a personal relationship with one of the parties.

Challenge for Off-Market Listings

MLS Clear Cooperation Policy

The MLS Clear Cooperation Policy is a rule implemented by the National Association of Realtors. The MLS Statement 8.0 rule requires Realtors to add any property they are marketing to a MLS within one business day.

The Clear Cooperation Policy was implemented to reduce off-MLS listings, which the National Association of Realtors (NAR) says “… not only skew market data and reduce seller and buyer choice but also undermine Realtors’ commitment to provide equal opportunity to all.”

The Practical Impact

MLS Statement 8.0 does limit off-market listings. All real estate agents who are members of the National Realtors Association and all National Realtor Association MLSs are required to abide by this policy.

Off-Market Listings Remain

While MLS Statement 8.0 does limit off-market listings, buyers and sellers certainly still have opportunities.

Under MLS Statement 8.0, there are some options that allow for more privacy. For example, sellers can opt to keep their homes from being listed on an MLS IDX display. The listing will not be displayed on the internet. The policy also allows for “office-exclusive listings,” which allows agents to share listings one-on-one with buyers.

National Association of Realtors membership is voluntary. That means there are licensed real estate agents who do not work with the association and are not subject to its rules, including MLS Statement 8.0.

The Bottom Line

While MLS Statement 8.0 does place some restrictions on off-market listings, it is still possible to find them through real estate agents, online, and via word-of-mouth. Off-market homes can offer advantages for buyers and sellers. Consider those potential advantages, the legwork of finding an off-market home, and the ins and outs of the buying before deciding to pursue this option.