When it comes to home search sites, the term “off-market” is commonly used, but it can have varying meanings. Understanding the different interpretations of this term is crucial for both buyers and sellers in the real estate market.
In the realm of real estate, “off-market” can signify several things, with its significance heavily dependent on the context. Whether you’re searching for properties in San Francisco, CA or Burlington, VT, grasping the concept of off-market properties and how they function can provide valuable insight into what you encounter and how it impacts property availability and visibility.
>>See more: How to Find Off-Market Properties
Understanding “Off-Market” Properties
When a property is labeled as “off-market” in real estate, it typically means that the home is not publicly listed for sale, often because it is not included on the multiple listing service (MLS). Reasons for a property being off-market can range from it not being for sale, a listing expiring, the seller pausing marketing efforts temporarily, or the property being shared exclusively within a real estate agent’s professional network.
The term “off-market” can be perplexing as it is used in diverse ways in different contexts. While on home search platforms like Redfin, it commonly indicates that a property is not currently listed for sale based on available data. However, for real estate agents and investors, “off-market” may refer to a property that is indeed for sale but is being marketed privately rather than being publicly advertised.
The MLS serves as the primary database where real estate agents share listings with one another and distribute them to public home search sites. Homes that are not actively listed for sale on the MLS are generally classified as off-market.
Defining Off-Market Properties
An off-market property is a property that could potentially be for sale but is not publicly listed on the MLS or major home search platforms. These properties may be shared through agents, word-of-mouth, or professional groups. They are also referred to as pocket listings, private listings, or exclusive listings.
According to MLS Clear Cooperation policies, if a property has a for-sale sign or other public advertising, the listing agent must submit the property to the MLS within 1 business day to ensure fair opportunity and access. Off-market properties are not publicly marketed or shared as active listings on the MLS.
An off-market property differs from a home labeled as “off-market” on a search site, which often simply indicates that the property does not have an active listing.
Selling Off-Market Homes
When a home is sold off-market, the sales process typically follows the same steps as most other real estate transactions: the buyer submits an offer, the parties sign a contract, and the deal progresses through inspections, appraisals (if necessary), and closing. The primary distinction lies in how the property is marketed and discovered.
Off-market homes are typically shared in limited ways. Some are circulated through agent networks or brokerage exclusives, where listings are shared only within a company or with select agents and clients before being listed on the MLS. Others are sold as pocket listings, where the seller has enlisted an agent but opted not to market the property publicly. In certain cases, homes are sold through word-of-mouth or direct outreach, such as referrals, buyer letters, or investor networks.
Reasons for Selling Off-Market
While selling off-market may result in less exposure, leading to fewer offers and potentially a less competitive final sale price, there are several motivations for sellers to choose this route:
- Privacy: Selling off-market can limit public photos, open houses, and visibility on listing sites, which can appeal to sellers seeking a more discreet selling process, such as public or high-profile figures.
- More control and potentially less hassle: With only select buyers viewing the property, sellers have more control over timing, logistics, and inspections.
- Testing the market: Some sellers utilize off-market exposure to assess buyer interest or pricing before deciding whether to list publicly.
- Targeting specific buyers: Off-market sales enable sellers to reach a smaller, more qualified group of buyers, such as developers or investors, particularly if the property does not qualify for conventional financing.
- Other opportunities: Occasionally, a property is not actively for sale, but motivated buyers may contact the current owner to explore a private sale opportunity.
Can You Purchase an Off-Market Property?
It is possible to buy a house that is off-market, contingent upon the reason why the property is off-market. While some off-market homes are being sold privately, those labeled as “off-market” on public listing sites may not be actively listed for sale and may not be available.
You may have the opportunity to acquire an off-market property based on:
- The seller’s intent: Some owners are open to offers even without a public listing, while others have no intention of selling.
- How the property is being marketed: Homes shared privately through agents or networks may be accessible, while withdrawn or paused listings present more uncertainty.
- Timing and motivation: Life changes, relocation, or market conditions can make sellers more receptive to off-market offers.
- Buyer flexibility: Off-market transactions often progress on the seller’s terms, which can impact price, contingencies, or timing.
Assessing the Viability of Off-Market Transactions
Off-market property transactions are tailored to specific buyer and seller objectives and timelines.
For sellers, selling off-market can be advantageous if privacy, convenience, or timing are top priorities. For buyers, off-market opportunities provide access to properties they might not otherwise encounter, allowing them to focus more on location and desirability rather than outbidding competing offers.
However, selling off-market may result in less exposure and fewer offers, potentially impacting the final sale price. Buying off-market may entail less transparency, fewer comparable sales data, and no guarantee of securing a favorable deal.
Ultimately, while off-market transactions can be beneficial in certain scenarios, consulting with an experienced real estate agent to devise a buying or selling strategy aligned with your personal objectives is always advisable.
FAQs
Is Buying Off-Market Cheaper?
Purchasing an off-market property does not necessarily equate to a better deal. Off-market homes are not publicly advertised, which may result in less competition, but their prices are more likely to reflect the seller’s goals rather than the local market. Just like other real estate transactions, off-market properties can sell below, at, or above market value.
Are Off-Market Listings Legal?
While selling a home off-market is legal, real estate agents must adhere to specific MLS and industry regulations regarding how and when listings are publicly marketed. Clear Cooperation policies aim to ensure all buyers have access to available homes for sale, yet there are scenarios where off-market listings can circulate through private networks.
Can First-Time Buyers Purchase Off-Market Properties?
First-time homebuyers can acquire off-market homes, although identifying opportunities may pose a challenge. Off-market property sales may be more favorable for buyers with ample cash, as conventional financing could be more challenging or less enticing. Collaborating with a real estate agent with an extensive professional network can enhance the likelihood of finding an off-market property.