An off market listing is a home or property for sale that isn’t listed publicly on the multiple listing service (MLS) or syndicated to web portals such as Realtor.com. In Silicon Valley, these are often called pocket listings.
Everyone wants an off market listing
With competition for homes to buy being extremely steep, it’s not surprising that most home buyers and investors are looking for alternate inventory. Less competition obviously increases the odds of success.
Real estate investors
Investors often want to scoop these units up, rehab or flip them, and sell them for a big profit. Sometimes, though, they want to do more modest repairs and improvements and rent them out. Most weeks I get at least two phone calls from real estate investors asking if I have an off market listing that they can buy, and more messaging by text and email. The promise is that if I get them into contract on it now, they’ll let me be the listing agent when they sell it after the remodeling is done.
Real estate investors often purchase all cash, no loans. Frequently they have teams in place to check out the structure and to make improvements. These teams may make their fixes less costly than they would be for a regular home buyer looking for a place to live.
Home buyers
A couple of times recently I’ve had people searching for their own home reach out to me and interested in working with me if I had any pocket listings, and not as an exclusive agent. I always find it surprising, since contacting all of the agents in our MLS (about 17,000 people) would be exhausting and not very productive – it is pretty much searching for a needle in a haystack (that may or may not even be there). I believe that they will have much better success, and definitely be more efficient, if they team up with a dedicated buyer’s agent rather than going it on their own. From what I can tell, these buyers just don’t know what they don’t know.
Types of off market listings
In brief, there are several types of off market listing opportunities.
- Not listed at all, with anyone – sometimes a person can learn, by word of mouth, that a home will be sold in the future, possibly the near future, but there is no listing agent yet working with that home owner. These could also be For Sale By Owner properties.
- Listed with a real estate professional, meaning that there is a listing contract signed, but it’s not being advertised on the MLS in any way.
- This situation may lend itself to an “in house sale”, where another Realtor in the same office or company is aware of the listing and is able to show and sell the property. When the sale closes, it may go onto our MLS with 0 days on market and the category is “for comp purposes only”. Other members of the MLS never saw it.
- Due to MLS and NAR (National Association of Realtor) rules, we are not allowed to market these homes publicly unless they are also on the MLS in some fashion. Since the seller’s legal agent is the broker and not the salesperson, advertising a signed listing “in house” to other agents within the brokerage is not considered public marketing. However, if an agent puts a for sale sign in the yard, or an ad in the paper, that home must be on the MLS within two or three days. For that reason, you won’t be seeing company exclusive listings on agent or company websites. It’s not allowed.
- The home has a signed listing agent and the property is placed on the MLS for real estate salespeople to see, but it’s not being syndicated to other websites. There are 2 categories: “Members only: do not show” and “Members only: show”. Homebuyers whose searching is limited to Redfin, Zillow, or Realtor.com won’t see these properties, and they are about 15-20% of all available inventory, though lately we’ve seen certain markets where it may be closer to 50%. Some of them will never go onto the syndicated sites, while others may eventually “go live”.
- With Members only: do not show, this is typically a “coming soon” listing (unless something unexpected happens and it is either sold or removed from the market). When ready, they may become Members only: show, or they may be active listings will full syndication. Buyers who know that they are coming can at least drive by and learn more about that area and possible see the disclosure package early, though as the name indicates they cannot tour the property.
- Members only: show is a great opportunity for our buyers to get into a property with less competition than usual! In these cases the sellers may not want the whole world to see that their property is on the market, and they prefer a more quiet sale, if possible. Some of these homes eventually get put on the MLS with syndication, but many don’t.
Clair and I have had a few successful sales for our buyers with both of these categories.
Off market listing myths
Not every off market sale is a fixer upper, nor are they all “distressed sale” situations. Sometimes the main issue is speed, privacy, or inability to do all of the usual pre-sale prep.
Some home buyers who are searching for pocket listings want to “go it alone”, fearing that they will miss out if they have a buyer’s agent. Please also see our older post, Who Needs A Buyer’s Agent? I Can Find It All On The Web! (on our Valley of Heart’s Delight website).
Over the last few years, we have had several off market sales. In nearly each one, with one exception, a buyer without her or his own agent would have been unaware and unable to see the home, let alone buy it.
For a few of those sales where we represented the buyers, we were able to get them in the door with Members Only listings. Most of these were owner occupied, so they didn’t want people knocking on their door or trying to tour at any hour of the day.
This year we had a signed listing in Palo Alto and another Realtor in our company found it in the in-house weekly list of new listings, sales, and closed homes (it was not yet on the MLS in any form). The seller was happy to do a pre-market showing and was open to entertaining an offer. That one worked out, too, and all sides were happy.
In one exceptional case earlier this year, we had a signed listing in Berryessa and a buyer known to the seller stepped up with their own buyer’s agent to buy the home. It was perfect for those sellers and buyers, and we did close on that sale, though that is pretty unusual! Most buyers don’t know the sellers before they purchase a property, and this is the only time in my 3 decade plus career that this has happened to any of my clients, so I would not count on that. Most off market sales more closely resemble my first two examples.
In all of these cases (except the last), home buyers who didn’t have a buyer’s agent would not have been aware of any of these homes or been able to purchase them.
The market has changed, the rules have changed
In August 2024, our usual way of doing business was flipped on it’s head when the settlement terms between the Department of Justice and the National Association of Realtors kicked in. Further, it’s expected that these realty changes in 2024 will become law in 2025.
One of the many changes is that in the new listing contract (the California Association of Realtors version) there’s now a place for the listing agent to set a fee for working with an unrepresented buyer, meaning a buyer who wants to represent himself or herself. Like all commissions and fees, this is negotiable and it is not set in stone. Some home buyers who don’t want their own agent may believe that they will save money if they don’t have an agent at all. That may be true, but it may not be the case at all.
Most real estate professionals will have a conversation in person, or by phone, or by video, which is no obligation and no cost. When sorting out the best way forward, it can be wise to take advantage of this opportunity to learn the ropes from the pros. Buyer and seller options may be different from what they seem to be on the surface, and you don’t know what you don’t know!
