Many of us have heard the statement before, “off market,” but what is the definition of off market when it pertains to real estate.
To put it plainly, an off-market property is one that is not on a multiple listing service, which is also known as MLS. The majority of houses are listed on your local MLS. But many people don’t know that there are many homes and other types of properties that are for sale. You just have to look elsewhere for them.
Off-market real estate is defined as follows:
“Off-market” refers to a home that can be purchased if the homeowner receives an offer they want to accept; but chooses not to publicize the fact on the local multiple listing service or “MLS. Off-market sales can be faster, but they are not always the best option.” Off market properties are usually sold through word-of-mouth or personal networks.
When most realtor websites state that a home is ‘off-market,’ they mean that it is not for sale to the best of their knowledge. However, as previously stated, the property owner may be motivated to sell their home if the right offer is made.
In some cases, the owner may have listed the home, but buyers are not able to locate the listing.
If you are trying to sell your house off-market, there are a number of important benefits and drawbacks to using this method.
What are the benefits of selling off the market?
The main reason why a property would be sold off market is because the seller wants to avoid paying commission to any real estate agents. Or the property usually is in poor condition and needs repairs. There are companies that will buy homes in poor shape.
As previously stated, there are other benefits to selling your house off-market.
It Might Be Simply to Test the Waters
There is no better method for evaluating the market than to start with a practice run. Before you make a decision to list your home, test the market and your desired selling price. This will give you a sense of the home’s salability and provide you with information about the local market.
If the home is overpriced, you can still reduce the price without any impact on the MLS, and avoid having your listing notify other people that you’ve lowered the price on the house.
There is no “on-market” counter.
When your home is activated on MLS the number of days counter begins. This is the number of days your house has been on the market without selling. Each day the home doesn’t get a contract, the market adds pressure to sell, and potentially lower the asking price. Agents and their clients are able to see this information.
If you are selling a luxury home, it may take longer to sell, making it more vulnerable to low-ball offers. However, by going off-market, you may be able to avoid this.
Sellers Have More Authority
If you want to retain more power over the home sale process, this is the method for you. You will decide who will view your home, when it will be available for showings, what the final price will be, and what repairs you will make.
If you prefer privacy as a homeowner, this is also ideal because there will be little foot traffic through the house.
You Won’t Have to Hold Open Houses
Preparing your home for open houses is a major pain point for anyone who has recently listed their home on the MLS.
Having to freshen up or stage the house, make expensive repairs, and leave the home is a pain. If your home is not on the market, you should only show it to prospective buyers who are truly interested in purchasing the property.
Also sellers won’t have to leave their home when a prospective buyer requests a showing. This can be an inconvenience for sellers if they are busy.
Keeping out of the MLS spotlight
The focus that MLS listings bring is annoying for some home sellers. Furthermore, if you are a private person, having your home on exhibit online may feel like a privacy invasion. Neighbors can be extremely nosey.
If you’re the type of individual who doesn’t like having strangers come into your home, an off-market sale is a great option.
Discretion
If you want to sell your home quickly and discreetly due to a divorce, an estate sale or any other purpose, listing the property on MLS may not be for you.
What are the drawbacks of selling off the market?
Attempting to sell your primary residence off-market has two major drawbacks. These are some examples:
Fewer Buyers Can See Your Home
Expect fewer buyers to make offers on your home if you do not advertise and list it, similar to a pocket listing. Less competition usually can mean a lower sales price and fewer offers.
Furthermore, with lesser buyers, homeowners are most likely to be stuck with the home for a longer period of time. As a property that stays on the market, does lose value.
And if your buyer makes a conditional offer, you may be limited in your options.
Price reductions are possible.
You will not attract many buyers if you do not advertise that your home is for sale. You’ll ultimately be looking at potentially lowering the price of the residence if no offers are made on it. MLS is the best way to get the most people looking at your home.
However, instead of listing your home on or off the market, you can prevent all markets and receive a cash offer for your home right now. Many cash buyers are available in the marketplace.
Paying the costs of marketing the Property
You may believe that by going off-market, you will save money on MLS and realtor fees. This is offset by the expenses of purchasing other marketing options.
Do you have any ideas what it costs to market a property? It’s easy to spend a small fortune on envelopes, photocopying, and shipments!
Uncertainty about the fair market
Many realtors can discern the fair market value by entering a few key numbers into a CMA, the real price will be revealed when offers begin to pour in.
If you’re considering hiring a realtor but prefer to keep your listing confidential, you can always pocket list your home.
A Pocket Listing Defined
A pocket listing is an off-market transaction. It is the situation in which the seller decides they cannot sell the property by themselves, they seek the assistance of a listing agent. While this isn’t on the standard MLS, the realtor will use their relationships to locate a buyer for the home.
The real estate agent will market these properties, which may be labeled as “office special edition,” to a number of buyers that purchase these types of homes.
Agents and their brokers only show pocket listings to all cash buyers who want to stay out of the spotlight.
Pocket listings have become more and more popular. However, it has received some negative feedback from the industry for a number of reasons. Furthermore, the National Association of Realtors (NAR) put in place a rule to stop realtors from marketing pocket listings.
Final Takeaways
Many times off market properties are in such poor condition that it would be difficult to find a buyer on the MLS. If you are interested in buying an off market property, it is important to work with an experienced real estate agent.
Frequently Asked Questions
What are the risks associated with off market real estate transactions?
There are a few risks associated with off market real estate transactions. The first is that the property may not be as advertised. The second is that the seller may not be motivated to sell, which could lead to a longer sales process. Finally, there is a risk that the property may not be available for purchase at the agreed upon price.
Where is the best place to look for off market properties?
There is no one-size-fits-all answer to this question. Some of the best places to look for off market properties include online listing services, real estate agents, and word-of-mouth.
About the author: The above article on what off market means in real estate was provided by Andrew Reichek.
Andrew is a real estate agent in Texas. He assists buyers purchase investment property in the state of Texas, including DFW, Houston, and Austin, TX. He also writes about topics in the real estate industry that are of interest to buyers and sellers.