What's the difference between an off-market and listed property

In the realm of real estate, the concept of off-market property is increasingly gaining attention, especially in competitive housing markets where available inventory is scarce. An off-market property, also referred to as a quiet or pocket listing, is a piece of real estate that is available for sale but is not listed on the Multiple Listing Services (MLS). 

Off-market vs. listed property 

The significant distinction between off-market and listed properties lies in their availability to the general public and real estate professionals. Listed properties are advertised widely and featured on MLS, which is accessible by realtors and potential buyers, often leading to a broader pool of interest and potentially multiple offers or bidding wars. In contrast, off-market properties are sold more discreetly, with real estate agents relying on their networks and private channels to match these properties with buyers.

Pros of buying an off-market property

More time to look over properties

Without the pressure of a competitive market, buyers have the opportunity to thoroughly inspect and consider the property. This can lead to a more calculated and confident decision than a rushed purchase.

Stay ahead of the competition

Off-market properties are not listed on traditional platforms, which means they receive less attention from the general home-buying public. Therefore, buyers of off-market listings can typically  avoid bidding wars.

Flexible negotiations

The private nature of off-market transactions often allows for more open and flexible negotiations. Sellers might be open to negotiating terms and prices without the influence of competing offers, potentially leading to a deal that’s more favorable for the buyer.

Cons of buying an off-market property

Difficult to gauge fair market value

Without a plethora of comparable listed properties, determining the fair market value of an off-market property can be challenging. This lack of market-driven pricing information might lead buyers to rely more on appraisals or their own judgment to ensure a fair investment.

Additional fees

Buying off-market often involves different methods of searching and securing properties, such as engaging with real estate agents or private listing services. Enlisting the help of these professionals can incur additional costs, unlike traditional listings where sellers’ agents usually share commission fees with buyers’ agents.

Slow process

Off-market deals can be slow to materialize. Without the stimulus of an active market, both buyers and sellers may take time navigating the process, drawing out the period from initial interest to closing. This patience-testing process might not align with buyers looking to secure property swiftly. 

Why sellers list properties off-market

Sellers may choose to list their properties off the market for several strategic reasons. Off-market properties, also known as “pocket listings,” are not listed on the Multiple Listing Service (MLS) and offer a different route for property transactions. The distinct advantages of off-market listings appeal to certain sellers looking to test the waters, dodge the stigma of aging listings, or protect their privacy.

Testing the market

One reason sellers opt for off-market listings is to test the market. This preliminary step is often employed to gather feedback from real estate professionals and potential buyers on the listing price or the house’s appeal without making a fully-fledged commitment to selling. 

Avoid “days on market”

Another significant motivation for off-market listings is to avoid accumulating “Days on Market” (DOM), a public record of how long a property has been for sale. According to Jennifer Green, a Realtor with the Aston Rose luxury brokerage, DOM only reflects the time a home has been listed with a current agent. A high DOM can negatively impact perception, as properties that linger on the market for extended periods may be perceived as less desirable or inherently flawed. By keeping the property off-market, sellers can evade this potential red flag to buyers.

Maintain privacy

For high-profile individuals or those who seek discretion in their dealings, off-market listings provide an avenue to sell property without public attention. Strategies to maintain privacy in real estate transactions include using LLCs, trusts, or nominee trusts that can obscure the identity of the true owner in public records. 

How to find off-market properties

When delving into the real estate market, several factors beyond the basic property search can greatly influence a buyer’s success in finding and securing their ideal home. Here are some additional considerations for prospective buyers:

Understand alternative listings

While MLS (Multiple Listing Services) has traditionally been the go-to resource for real estate listings, alternative platforms like FSBO.com and Foreclosure.com offer niche opportunities for finding unique properties. Other digital services, such as Zillow and Trulia, provide extensive databases with a wealth of property information that can help identify potential homes. Buyers need to familiarize themselves with these platforms as they can present opportunities that may not be widely advertised elsewhere, possibly generating less competition and potentially better deals.

Pocket listings 

Pocket listings, also known as exclusive or quiet listings, are a discrete approach where a property is not publicly marketed on the MLS or other widespread platforms. Having a robust network is vital to unearth these listings. Building relationships with realtors can prove beneficial, as sellers often share pocket listings with agents they trust. Additionally, browsing online through off-market programs on platforms like Zillow provides leads to pocket listings before they hit the MLS.

Listing services

Services like Opendoor and HouseCashin Investment Property Marketplace connect buyers with off-market, distressed, and unique property types, often featuring real estate that bypasses MLS exposure. However, these listings can still be competitive due to their accessibility on the web.

Public records

Accessible through online directories such as the Public Records Online Directory or physically at local tax assessors’ or recorders’ offices, these records contain information about deeds, mortgages, tax assessments, and unadvertised properties that may be available for purchase.

Be prepared to negotiate

Negotiation is at the heart of real estate transactions. Buyers must recognize the importance of being prepared for this crucial phase. Negotiation tactics can range from the initial offer strategy to deciding on when to employ the power of walking away, as championed by Forbes. Experienced negotiators often advise not to reveal all cards at once and to maintain a tactical silence at times to leverage the situation. Real estate agents can provide valuable assistance in this phase, as their experience and knowledge about effective negotiation directly align with the purchaser’s interests.

Conclusion

Off-market property sales represent a significant, albeit less visible, real estate market segment, offering distinct advantages and challenges to buyers and sellers. These properties are not listed on public platforms such as MLS but may be available for purchase through private networks, bringing a level of discretion and exclusivity to real estate transactions.