What are off-market listings?
The real estate market is hot, with homes in competitive markets like Nashville, TN, and Portland, OR, often snapped off the market in mere days. And although it may seem counterintuitive, this lack of housing inventory is motivating more “pocket listings,” which is slang for off-market listings – homes that are not listed on the Multiple Listing Service (MLS), and therefore not visible to the vast majority of browsers.
Off-market listings have an air of exclusivity for both the seller and buyer — sellers are drawn to the private, streamlined process that will often net them at least asking price from serious buyers, while buyers enjoy elite access to off-market inventory. Exclusivity aside, we’re taking a closer look at how an off-market transaction differs from listing your property the traditional way (i.e., on the MLS). Here’s some key information to know.
Who should sell off-market?
Very wealthy people, including many celebrities, often sell off-market. They do so for prestige and to stand apart from the general real estate market. Like a private club you must be invited to join; buying a house off-market makes buyers feel as if they’re part of something only an elite few are privy to. “Everyone wants something that no one else knows about,” says David B. Dubin, a New York, NY, real estate broker.
But even if you’re not selling a home that’s worth millions, you might still prefer to sell off-market. Why? For starters, it can be easier. A friend or family member might be in the market to buy a home. You can just sell it to them without having to list it first. Or if your home is in a very hot market, you (or your real estate agent) might want to mention that you’re selling to a couple of key people in town and wait to see if buyers start calling.
Dubin points out that you do need to be in a hot market with a desirable property for this to work. Either that, or you need to be in a position where you don’t need to sell anytime soon. “This is for a seller who is in no rush. Without exposure and listing a property, the seller has to own something that many buyers want to purchase,” says Dubin.
In some cases, an agent might approach a seller about selling off-market. While selling off-market may often be a good option for sellers, Mark Ferguson, a Colorado agent, cautions that working with an agent who approaches you directly may not be in your best interest. Ferguson says sellers need to see how much interest there is from all buyers, not just the listing agent’s portfolio of buyers. If the agent is approaching you, Ferguson says, “The seller should not accept offers before the house is put in the MLS.”
How agents find qualified buyers for off-market sales
Networking is key if an off-market listing is to succeed. “An agent [needs to have] a sizable sphere of influence and reliable buyers they know would be interested in the property,” says Michael Lucarelli, a California real estate agent. “Otherwise, they’re just limiting the amount of offers they can receive.” And buyers can’t be wallflowers if they expect to buy a great home off-market. “The more agent relationships buyers have, the more likely they are to find out about these types of exclusive listings,” says Lucarelli, who also recommends that buyers let agents know they’re looking for exclusive deals.
The advantages of selling off-market
If you like your privacy and don’t want people to know your home’s sales price or to view photos of your home, you’ll like selling off-market. “Maybe the house is a mess, or maybe [sellers] don’t want someone to know they are moving,” says Ferguson. “The main advantage is that the seller has anonymity,” says Dubin. “There is basically no press on the property and little to no exposure.” So if you can’t bear the thought of a huge for-sale sign gracing your home’s front yard, selling off-market might suit you. The arrangement can benefit agents as well. “The listing agent may already have a few buyers in mind and so will have to spend less time showing the property to others,” says Lucarelli.
Selling off-market can also be the best plan for landlords who wish to sell a home occupied with renters. That way, their tenants won’t be disturbed by constant showings. “My house in East Atlanta Village was sold through a pocket listing last year while we had renters in it,” says seller Dave Coustan. “It worked out extremely well, particularly because we were wary of putting our house back on the market at the time with good renters in place, and because it hadn’t sold the first time around.”
The disadvantages of an off-market sale
If you want to sell your house quickly, selling off-market is not the way to go. “There is no exposure, and it could take a very long time to sell,” says Dubin. “I have never recommended this form of selling.” You also might not get the best price. For one, you probably won’t have a bidding war situation, since so few people will even know about your house. “If there are fewer people who know about a house, the selling price will be lower on average over a house that is fully marketed,” says Ferguson.
However, other agents argue you might get a better price. “The prospective buyer, especially in a hot market like we have now, will feel like they are getting a sneak peek, which can add a sense of value and even urgency,” says Tom Hume, a Tacoma, WA, agent. “In my view, buyers who buy off-market frequently pay more than the open market would bring.”