In the competitive Bay Area real estate market, it’s not uncommon for a hot home on the Multiple Listing Service (MLS) to garner upwards of a dozen viable offers from motivated buyers. But at the end of the day, is all the competition actually better than selling your home quietly off-market?
And for buyers and those looking to get into real estate investing, are off-market real estate deals the hidden gems in this competitive real estate market? And if so, what are the different ways to find off-market deals, given that they’re not publicly advertised on the MLS?
These are questions that we get all the time from our real estate clients, both sellers and buyers alike. There’s a lot of mystery and intrigue surrounding the off-market property, sometimes referred to as a “pocket listing.”
In this article, we’ll define and demystify off-market real estate deals, help you navigate the pros and cons of off-market real estate listings – for buyers, real estate investors, and sellers alike, help you find pocket listings, and help you decide whether it’s right for you and your overall real estate and wealth goals.
What Is An Off-Market Real Estate Deal, Anyway?
An off-market property is one that is not listed on the MLS (multiple listing service). This means that the property is not (yet) marketed to the public, so you wouldn’t see that property publicly listed for sale, even though the seller is in the process of selling the home.
Depending on the property owner’s overall strategy and goals, the seller’s agent may market the deal to their network or through limited marketing to test the waters and see if the property can attract competitive offers, before or instead of listing it on the MLS.
In some cases, even though a property is not listed on the MLS, the seller’s agent may still choose to market the deal via platforms like Zillow, to garner interest from potential buyers.
Why Keep Real Estate Deals Off The MLS?
Savvy property owners and experienced real estate agents know that listing real estate properties on the MLS can take a lot of work. For one, there’s often a lot of prep work that goes into cleaning up and preparing the property for sale. Sometimes, this can include updates and renovations, staging, painting, and more.
Avoid Extensive Prep Work
When you market real estate deals off-market, you can potentially attract a buyer or real estate investor who might be willing to buy the property as-is, without the additional prep work. This can often save you time, money, and headaches and get the property under contract quickly and with much less hassle.
Minimize The Risk Of Becoming A Stale Listing
On top of that, once a property is listed on the MLS, the clock starts ticking on the MLS’s “days on market” counter. This is one of the many data points that the MLS tracks, but it’s an important one that buyers and real estate agents take notice of.
Typically, here in the competitive Bay Area real estate market, popular real estate deals fly off the market, often in under 14 days. Once a property is on the MLS for longer than, say, 3 or 4 weeks, it starts to lose steam fast and is perceived as a stale listing. At that point, potential buyers start to think that something may be wrong with the property, and interest drops fast.
This is one of the potential risks of putting your property on the MLS, especially if you’re not fairly certain that it will attract a good amount of interest and sell quickly. That’s why shopping real estate deals around off-market first can be a great strategy to test the waters and see what the general appetite is for your property.
Off-Market vs. On-Market
There are many ways to approach marketing your home as a seller. In our experience, we most often see sellers choose to do one of two things. Either they choose to sell off-market from the get-go, or they choose to test the waters and see what the off-market interest is, before going on-market.
Initial Off-Market Round
The vast majority of sellers tend toward the latter, in which they work with their agent to do an initial round of off-market marketing before going on the market. This off-market period allows sellers to entertain potential offers, get a better idea of the value of their property in today’s market, and see the conditions and stipulations put forth by potential buyers.
Fully Off-Market
Sometimes, sellers who intended to go on-market will receive an off-market offer that blows away their initial expectations, often from buyers who may be willing to pay a premium to avoid competing with other buyers.
As a result, those sellers may choose to forgo listing their property publicly on the MLS so that they can take the stellar off-market offer. Sometimes, this helps to minimize the prep work and additional renovation costs they were planning to invest, thus further contributing to their overall proceeds from the sale.
Off-Market, Followed By On-Market
Other times, even with great offers in hand, sellers may choose to forge ahead so that they can see what will actually happen when listing it on the MLS and mass-marketing the property. Of course, there is no right or wrong path for everyone; it depends on each seller’s motivations and individual goals for their homes.
Pros and Cons Of Selling Off-Market
Selling your home off-market isn’t right for everyone, which is why we highly recommend that you discuss your overall real estate and wealth goals with your agent, so they can help you decide on the best strategy for you.
Regardless of whether you actually sell your home off-market, there’s almost always tremendous benefit that comes when you market properties off-market, at least initially.
Pros of selling your property off-market:
- You may be able to sell without doing some or all of the prep work (painting, repairs, upgrades, staging, etc.).
- You may be able to sell your home faster and with fewer showings.
- You may be able to find buyers willing to pay a premium to avoid the competition of an on-market listing.
Cons of selling your home off-market:
- You’re not exposing your home to the maximum number of buyers, so you may be forgoing potential bidding wars that could increase the price of your home.
- You’ll never know exactly what the market would have been willing to pay. It’s possible that listing your home on the MLS would have attracted a higher offer, but it’s also possible that that off-market offer is far above what you’d get after listing your home on the MLS. If you choose to accept an off-market offer, you’ll have to be okay with not knowing for sure.
For Buyers & Real Estate Investors – What To Consider When Bidding On An Off-Market Deal
If you’re in the process of purchasing a home or getting into real estate investing, off-market real estate deals can often be a hidden gem, especially in this competitive Bay Area real estate market.
In order to be competitive as a buyer or real estate investor in bidding on off-market real estate deals, you’ll need to have a solid grasp on exactly what you’re looking for, work with a well-connected agent to find off-market deals, think outside the box to strategize around ways to find pocket listings, and be prepared to move quickly.
Prepare To Pay A Premium In Exchange For Less Competition
When you make offers on off-market deals, you need to be prepared to put your best foot forward and potentially pay a premium. The reason for this is that, in order to convince the seller to sell directly to you without listing it publicly on the MLS, you must create a compelling enough offer so that the seller is blown away and decides not to entertain other offers.
This doesn’t always mean that you need to come in at top dollar. A clean and compelling offer can also include strong terms, flexibility, and more. It’s important to work with a strong agent who can help you get the details of what the seller is looking for, so you can meet those needs.
Ways To Find Off-Market Properties
For buyers and real estate investors looking for off-market deals – in order to find off-market real estate deals, you’ll need to be strategic, flexible, and willing to think outside the box.
Work With An Experienced And Well-Connected Real Estate Team
In order to get access to pocket listings, you’ll need to work with a real estate agent who’s well-connected in the area. Your agent should have a strong network and constantly be in touch with other agents in the area, to stay up to date on new and upcoming off-market real estate deals.
In order to help you find off-market properties, your agent should be well-connected with other real estate agents in their brokerage and throughout your target area, as well as through larger organizations such as the National Association of Realtors.
As a bonus – if you’re a real estate investor, you should also look for a realtor who has real estate investing experience and can help you get access to more pocket listings.
Other Ways To Find Off-Market Real Estate Deals
In addition to passively waiting to hear about off-market deals, there are ways to connect directly with homeowners who may not actively be in the process of selling, to explore the idea of purchasing their home.
Actively pursuing properties that are not yet for sale – via direct mail marketing or driving for dollars – can be a great way to get into real estate investing.
Here at the Joe Dickerson Group, we work directly with motivated buyers and real estate investors to find properties that meet their criteria through various strategies, including…
- Direct mail marketing – sending out letters to homeowners in the area you’re interested in
- Strategically connecting with agents who focus on your target areas
- Calling property owners in the neighborhood where you’re looking to buy
- And more!
Whether you are a first-time home buyer, real estate investor, or exploring possibilities for your next home, feel free to reach out to our team to learn more and see how we can help you find off-market real estate deals.
For buyers, the main opportunities in pursuing an off-market deal include…
- You open yourself up to more inventory, offering more options and opportunities.
- You might actually pay less than what you would pay if the deal hit the MLS. This is rare, but we have seen this happen.
- You may be able to avoid competition, but possibly pay a premium for that luxury. This is more common and definitely something our team can help you with.
Overall, when it comes to off-market properties, we do our best to explore different ways to find properties to meet our buyers’ goals and to educate buyers on the true value of off-market properties and the risks associated with bidding on an off-market real estate deal, so that they don’t overpay and thus come to regret it.
Are You Looking To Buy Or Sell Off-Market Listings?
Off-market properties are extremely popular in the competitive Bay Area real estate market, and unless you’re “in the know,” you may not get access to them as a buyer, or you may not fully reap the potential benefits of marketing your property off-market as a seller.
That’s why it’s so important to work with an experienced and well-connected real estate team, so you can minimize the hassle and headache and ensure that you’re set up to reach your overall real estate and wealth goals.
If you’re interested in seeing our current pocket listings or would like our help to find off-market properties, or you are considering selling your home, let us know. We’d be happy to hop on a call to discuss your real estate and wealth goals and see how we can help!
