Off market properties: What are they and how to buy

In real estate, “off market” can mean two things: that a home is not for sale, or that it’s for sale but not listed. Most generally, “off market” means that a property wasn’t listed on the MLS by an agent.

The MLS (Multiple Listing Services) doesn’t hold all the properties that are for sale. In fact, 11% of all sellers find their buyer without listing their property, according to the National Association of Realtors (NAR) 2021 Home Buyer and Seller Generational Trends Report. And those off market sales tend to be highest in areas where the housing market is most competitive.

There are several reasons a seller might not list their property. 

• Seller’s market. If it’s a seller’s market, sellers often have the luxury of holding onto their property to wait for the right offer. Some markets are so intense that agents and potential buyers actively contact owners with offers on their homes, even when they aren’t necessarily for sale. 

• Foreclosure with tenants. A house in the early stages of foreclosure might not be listed if the seller has tenants and they don’t want to alert them that the house is for sale. 

• Pocket listing. The seller might engage a real estate agent to market the home privately in what’s known as a pocket listing. In this case, agents contact clients directly with the listing, or they might share pocket listings with a small group of area agents.

• Not available to show. MLS listings have to be available to show. If a seller isn’t available for showings, they might temporarily take a house off the market. In this case, a listing agent will change the status to “temporarily off market.”

• Coming soon. You may see a property listed as “coming soon” on the MLS, and this could mean that the seller wants to gauge buyer interest before listing it.

• Call local agents. The easiest way to find off market homes is to call local real estate agents. Often, agents know what’s coming to market soon or have clients that want to do an off market listing. Well-connected agents will be able to give you intel on neighborhoods and houses to watch.

• Off market listing services. Real estate auction websites and pocket listing services allow sellers to advertise non-MLS-published properties. Sign up for email notifications about new off market properties.

• Alternative listings. Foreclosures, short sales, and bank-owned homes are all considered off market properties. You can find them at real estate auctions, bank websites, or even the old-fashioned way—the newspaper. Just keep in mind that most of these properties are sold “as-is,” so you’ll want to research a property before you snap it up at auction. 

• Public records. If you’re willing to do the legwork, consider checking public records for expired listings (homes that went off the market after they failed to sell). You might be able to make a deal with the seller.

• Less rushed. Owners of off-market homes are usually not in a rush, so investors can take some time to look at the property before making an offer. You won’t be trying to beat other buyers to make an offer.

• Unique deals. Unless sellers have contracted with an agent to market their home as a pocket listing, they’re likely not looking for a bidding war. They might be concerned about their privacy or trying to quietly offload the house. In cases like these, you might just get a deal.

• More inventory. Including off market listings in your search also increases the number of properties that are potentially available to you. In a hot housing market, other buyers are your competition. Looking off market increases the inventory in your own search and excludes your competitors.

• Less stress. Off market transactions tend to be smoother and more flexible because the time pressure is off the table. Because the competition for the property is lower, the seller doesn’t have the liberty to put as many conditions on the sale, so buyers have an advantage, especially if it’s a distressed property.

While there are plenty of pros to buying off market, there are also a few cons to consider.

• Could take longer to close. Plenty of time might benefit the seller, but if you’re in a rush to close as a buyer, this could be a disadvantage because the seller doesn’t have the pressure to to move quickly like that of a listed property. Plus, finding off market deals can take a lot more time and labor than cruising the MLS.

• Harder to determine fair market value. When a property is listed on the MLS, you can easily compare comps, price per square foot, and other aspects of the property—because it’s all on one page. It’s more difficult to determine fair market value for a property that’s available to a smaller pool of buyers. You’ll need to do some real estate market analysis on your own.

• Fees. Pocket listing services and off-listing markets may charge membership fees.

In some hot markets, potential buyers walk door-to-door. It’s a numbers game, but could yield results. You can learn a lot via word of mouth. If there are vacant properties in a neighborhood, you might ask the neighbors for a little intel or the contact information for the homeowner and speak to them without involving an agent.

Serious about getting the word out? Direct mail marketing, such as making a postcard with your number on it that indicates your enthusiasm, is another strategy. You never know how many potential sellers might be out there who want to hear your offer—especially if you can buy in all cash.

Bungalow is the best way to invest and manage your real estate portfolio. We work with you to identify, purchase, fill, and manage residential properties—so that you can enjoy up to 20% more in rental income with a lot less stress. Learn more about Bungalow.