What Does Off-Market Mean? For Sellers And Buyers

by | Oct 3, 2023

In real estate, “off-market” refers to a property not publicly listed for sale on the Multiple Listing Service (MLS) or other traditional marketing channels. Instead, it is typically sold privately, often through word-of-mouth, personal connections, or exclusive networks. Sellers and agents don’t advertise off-market properties to the general public. Their availability is usually known to a select group of potential buyers or their real estate agents.

You may see a property listed as off-market if you’re using a real estate platform like Zillow or Realtor.com. In this case, the platform’s current data shows the property isn’t for sale.

Example Zillow off market listing

Just because a property is listed as off-market doesn’t mean it isn’t for sale.

If you’re new to the idea, you may wonder:

  • Why would a seller keep a property off-market?
  • What are the pros and cons of selling your property off-market?
  • Why do investors look for off-market properties?
  • How do you find off-market properties?

This guide to off-market real estate will answer those questions and more.

⬇️ Want To Watch The Video Instead? ⬇️

In real estate, “off-market” refers to a property not publicly listed for sale on the Multiple Listing Service (MLS) or other traditional marketing channels. Instead, it is typically sold privately, often through word-of-mouth, personal connections, or exclusive networks. Sellers and agents don’t advertise off-market properties to the general public. Their availability is usually known to a select group of potential buyers or their real estate agents.

You may see a property listed as off-market if you’re using a real estate platform like Zillow or Realtor.com. In this case, the platform’s current data shows the property isn’t for sale.

Example Zillow off market listing

Just because a property is listed as off-market doesn’t mean it isn’t for sale.

If you’re new to the idea, you may wonder:

  • Why would a seller keep a property off-market?
  • What are the pros and cons of selling your property off-market?
  • Why do investors look for off-market properties?
  • How do you find off-market properties?

This guide to off-market real estate will answer those questions and more.

⬇️ Want To Watch The Video Instead? ⬇️

Off-Market Real Estate Statistics

Let’s start this guide by discussing how frequently property owners sell off the market. According to a small survey from Off-Market, 40% of their real estate investors sourced their last deal off-market. 

10% of all sellers find a buyer without ever listing their homes on the MLS, according to the National Association of Realtors (NAR) 2019 Home Buyer and Seller Generational Trends Report.

Pocket Listings

A pocket listing is an off-market listing marketed privately, typically by a real estate agent, to a select group of potential buyers or their agents. It is not officially advertised or listed on the Multiple Listing Service (MLS). The property’s availability is shared within the agent’s network, brokerage, or among specific clients.

Not all off-market property sales are done through a pocket listing. Many off-market sales are done without a seller or buyer’s agent.

Pocket listings are sometimes considered unethical. It’s difficult for an agent to fairly represent the best interest of both parties if they act as a dual agent. Agents can easily violate anti-discrimination and antitrust laws. 

Why Would A Property Owner Sell Off-Market?

There are many reasons why a property owner would choose to sell their property off-market.

To Test The Market

Many sellers and seller agents look to attract buyers off-market to test the market. This strategy gives sellers a picture of the sellability of their property and what they might get for it. Seller agents will reach out to their network to find interested buyers.

This strategy will usually net a lot of real estate investors looking for their next steal. However, the right agent can find plenty of motivated buyers looking for their first home. Sellers want to avoid a property spending weeks or even months on the market. The higher a property is on the market, the more bargaining power a buyer will have to lower the price.

On the buyers’ side, we hear countless stories that go like this.

A young family is looking for a home in a specific neighborhood. They make offers on multiple for-sale homes but get outbid by buyers with more cash. Right before giving up, they hear about an off-market seller in their neighborhood and find their home.

How did they hear about this off-market deal?

We’ll get into the luck and strategy of that later.

Selling With Tenants

If a seller owns a rental property, they may not want their tenants to know a unit or house is for sale. We get it. Relations between tenants and landlords can get contentious. We’ve heard some nasty stories on both sides of the coin. We’ve worked with a few landlords who wanted out of their property ASAP—one who even feared for their safety because of criminal tenants.

Private Life Events

Sometimes, the owner sells because of a life event they don’t want to publicize, such as a divorce or financial hardship.

Privacy

Pocket listings and off-market sales are common in wealthy neighborhoods with homes owned by celebrities, athletes, and influential figures. Regardless of wealth and status, some sellers decide the cons of selling off-market don’t outweigh their need for privacy. They know that their money and connections can help them find a buyer without the need to market it on the MLS.

They may want to avoid the foot traffic from strangers in their homes or living out of a hotel during the sale process and showings. This happens with sellers who recently had a child or older property owners.

Distressed Property

Some homeowners own a property that needs repairs before it’s sellable through traditional methods. Traditionally, homes go through a municipal inspection before they’re legally sold. However, property owners can work out a deal where they sell a property as-is.

This can benefit both the seller and the buyer. The seller can get cash from a distressed property that wouldn’t sell without costly repairs. Buyers usually get a discount on a property that they can repair to live in or sell for a tidy profit. We’ve purchased many properties with foundation issues that the homeowner can’t afford to fix.

Urgency To Leave/Sell

The need for a quick sale can hasten if the homeowner is experiencing financial hardship like bankruptcy or foreclosure. Some buyers just want to leave a property because they’re relocating. If they’re buying a home, closing the deal on their old home allows them to make a more attractive offer that is contingency-free.

We’ll let you in on a little secret if you want to purchase off-market property.

Inherited properties are a goldmine to real estate investors and surviving family members. Put simply, when multiple family members are involved, the odds are high that one of them is desperate for money. This opens the prospect for a quick, highly discounted, off-market deal.

Why Do Investors Look For Off-Market Properties?

The wheels in your head are already turning, right? 

If you’ve looked for a property anytime, well… in the last FOREVER, you know how hard it is to find real estate. 

  1. The #1 reason that buyers look for off-market listings is to gain access to additional inventory.
  2. #2, they can scoop these properties up for a discount if the seller wants to sell quickly.
  3. #3, they can close deals quickly with little paperwork and negotiation.

How To Find Off-Market Properties

Real estate investors and homebuyers often look for off-market properties to purchase property. With inventory tight in most markets, off-market properties offer an opportunity to stay ahead of the competition. There’s no magical way to predict who will sell. If we could, realtors would be drowning in business 24/7.

Network With Agents

There are two tactics to find off-market deals. The first strategy is to ground and pound, meaning hit the phones, knock on doors, and send mass mailers. This strategy can work, but you’ll piss off many people who don’t want to be contacted for minimal gain.

An easier strategy and way to do business is to network with real estate agents and people in the real estate industry. Top real estate agents always have exclusive listings. They also keep their ears to the ground and network with people who are thinking of selling or know someone who wants to sell. Occasionally, those sellers are good prospects for off-market deals.

Once you find a few agents, you’ll want to give them specific targeting. Tell them what neighborhood, price, bed/baths, square foot, etc. Finding off-market real estate requires a lot of homework and networking.

Approach Homeowners

Get to know homeowners in the neighborhood you currently live in/rent. If you see a neglected property in your neighborhood, contact the owner. Oftentimes, properties are neglected because the owner can’t afford to rehab them. If you’re looking for your forever home, go on Zillow and look for homes that match your square footage. Send letters to them and see if you get a few bites.

Public Records & Preforeclosures

Your county records office will keep records of expired listings of homes that failed to sell and homes in preforeclosure. The problem with preforeclosures is that every Tom, Dick, and Harry is already harassing these property owners in preforeclosure. They’ve likely already built rapport with a buyer who had the balls to knock on their door.

Door-knocking is a good strategy because 99% of real estate investors are NOT willing to do this. The only reason a property owner is in preforeclosure is that they’re struggling financially. They’re looking for solutions but still need to be treated as humans.

Have a conversation and ask if they’d consider an offer.

Pros And Cons Of Selling Off Market

Lower Sales Commissions

In a traditional home sale, two agents are typically involved. Each agent receives a commission split of 3% each (on average). When you sell off-market, you’ll only deal with the buyer’s agent if they have one. In other situations, you have an agent, but the buyer is a real estate investor operating on behalf of themselves. This means you can save on commission fees.

Avoid Extensive Prep Work

When you sell your home on the MLS, you have to go through a lengthy process of listing, staging, and showing your home. This additional prep work takes time and money and can cause many headaches. Off-market sales can quickly get a property under contract with less hassle and paperwork.

Difficult To Gauge Market Value

Enlisting help from a realtor and listing your home on the MLS can quickly give you an accurate property value. Many homeowners who sell off-market have misguided notions of their property’s value. They either ask for too much because they haven’t experienced market feedback or leave money on the table.

Pros And Cons Of Buying Off-Market

It May Be Cheaper

Real estate investors look for off-market deals because they may come at a discount. We already listed the multiple reasons why a property owner may need to get out of a property quickly. The value you add to them is giving them the ability to do that in exchange for a discount.

Less Competition

Since off-market deals are not marketed on the MLS, they’ll have fewer eyes. When negotiating with a homeowner, this can work in your favor as a buyer. If the property is off-market because it’s being sold as-is without an inspection, that will scare away buyers.

Easier Negotiations

Off-market sellers are usually easier to negotiate with in exchange for privacy, flexibility, and speed. There’s less competition, and they have added incentives to get the deal done sooner.

Difficult To Gauge Market Value

Both the seller and buyer will have a harder time gauging the property’s market value. Skilled real estate investors like ourselves have sold and purchased more than a few properties in our time. This allows us to eyeball a property and make a fair offer to both parties. If you’re new to real estate or just looking for your first primary residence, we’d consider working with an agent.

If you’re not an experienced real estate professional, beware when buying an off-market property. Especially if the buyer has an agent and you don’t. We’ve heard of plenty of deals where they buy a home for 150% of its worth and feel proud that they negotiated 1% off buyers’ fees by not using an agent.

If you’re a buyer, remember that there are equally as many situations where sellers leave money on the table. This could be out of haste to sell quickly or because of a misguided understanding of the real estate market and process.

What Is “Temporarily Off-Market”?

You may find a property listed as “temporarily off-market”. Per MLS rules, sellers will delist their home if it’s unavailable for showing. If the seller makes repairs or has guests in town during the holidays, they’ll temporarily take it off the market.

Everything You Need To Know About Off-Market Property

That’s about it. Selling and buying off-market property in Haverhill and throughout Massachusetts is a big part of real estate. The invisible hand is hard at work as sellers and buyers negotiate deals. You may have ample reason to sell off the market. If you’re a buyer, you’ll need a fair amount of luck, persistence, and networking skills to get deals done.

Get One-on-One Guidance

Contact us below or call (978) 228-1068 to speak with us about selling your home fast.

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Elie Deglaoui - Author

Author

Elie Deglaoui

Elie is our office admin who handles all our day-to-day tasks and makes sure we always stay on track. He brings his love of music and sports into the office everyday to always liven up the environment. His outgoing personality makes it easy and fun for him to talk to homeowners, homebuyers, and everyone in between.

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