According to the latest figures, the U.S. housing market is experiencing a record inventory shortage. In fact, the supply of homes hasn’t been so low since the beginning of 2005.
With limited supply and high demand, homebuyers face challenging times to find their ideal property. When they do find a property they like, it can inevitably lead to a scrambled attempt to secure it before anyone else.
In part, these market conditions have led to the growing number of properties now being sold as a so-called “off-market” listing. Which is generally considered to be a property not listed on the MLS.
One of the major benefits of buying a property that not everyone knows about is the lack of competition: far fewer buyers are aware of the sale.
In particular, buying “off-market” is especially advantageous for those looking for a luxury property. A high-value property on the MLS will naturally attract a lot of eyeballs, whereas an off-market listing means less competition between buyers.
It’s also an environment where many of the most special, non-commodity properties end up being listed.
The ‘Off-Market’ Misnomer
The phrase “off-market” is a misnomer. If a property is truly “off-market”, then technically it’s not for sale.
What most people really mean is that the property is not listed on the MLS. There’s also confusion around similar terms. For example, there’s a big difference between non-MLS and “pocket listings.”
Although some people use all these phrases interchangeably, we think it is important to distinguish between these different types of listings.
Why Do People Sell Their Luxury Homes Without the MLS?
First and foremost, selling a luxury home as an “off-market” or non-MLS property provides a level of discretion and privacy. For high-profile celebrities and Hollywood A-listers, selling in this manner offers a practical and necessary way of avoiding any unwanted media attention.
Equally, a person selling a home following a divorce or because of financial difficulties might not want to make their private issues public knowledge.
Selling without the MLS also involves less hassle for the seller. They don’t have to deal with the stress of having an open house and potentially dealing with a huge number of buyers – many of whom may be unqualified and simply curious to look around a luxury home.
In certain instances, a seller may sell off-market simply to allow themselves extra time to carry out repairs or renovations.
Do ‘Off-Market’ Properties Sell For Less?
While the chances of a bidding war may be reduced, luxury homes are often represented by smart agents who know how to sell a property by leveraging their networks, rather than relying on a “mass marketing” approach via the MLS.
For the seller, selling off-market effectively acts as a way of saying, “this is the price, take it or leave it”. They realize going on the MLS comes with uncertainty: they might receive more than expected, but if the property goes stale they might receive less.
Ultimately, the premise of buying a non-MLS home is a lot like attending a fine art auction. Buyers go along to find a special item, not because they anticipate being able to get a great deal.
So the main motivation for buying off-market shouldn’t be about seeking a low price. Instead, think of it as the best way to access a special property without having to compete with a huge number of other potential buyers.
Commonly Used Ways To Find Off-Market Luxury Properties
Buying a home is one of life’s most expensive, emotional and competitive purchases. Yet the rise of public real estate websites has led to property information becoming widely commoditized.
By selling a luxury home without the MLS, home sellers can ensure their property retains a sense of rarity and prestige. But finding these kind of properties isn’t easy – otherwise everyone would be doing it.
That said, if you want to know how to find off-market properties, the following tactics can prove useful.
Direct Marketing Opportunities
Property investors will often send out direct mail pieces informing specific homeowners that they are looking for properties in their area.
This approach can also work for private buyers.
You could approach a direct marketing company and ask them to design and distribute flyers to properties in your area that meet your ideal buying criteria. Ensure your contact details are listed and make it clear you’re a serious buyer.
Although this speculative approach involves some financial investment, it can be an effective way to draw out buyers willing to sell off-market.
Network With Estate And Divorce Attorneys
Some investors will also take a direct approach by getting in touch with estate and divorce attorneys. When people are going through a divorce, they often want to keep their property off the MLS to maintain an element of discretion.
So by drawing up a list of estate and divorce attorneys in your area, you can then contact each one in turn to find out if a luxury property has recently become available.
Strike it lucky, and you could potentially find out about a brand-new listing before anyone else does, giving you the opportunity to make a fast offer ahead of other potential buyers.
Bankruptcies And Short Sale Opportunities
Selling a home due to bankruptcy or financial issues is one of the key reasons some people choose to sell their home off-market. The seller may have fallen behind on mortgage repayments and need a quick sale to clear their debts.
As a homebuyer, you can pay a fee to access bankruptcy court records via PACER (Public Access to Court Electronic Records), which can reveal details of properties being sold privately, including their proposed sale price.
To find short sale opportunities not being advertised on the MLS, you could contact local agents or scour real estate aggregator websites.
Meticulous research is needed in both cases, but they each provide a viable way of finding a luxury property being sold off-market.
Network With Relocation Companies
A relocation sale or “relo” comes about when an employee is transferred out-of-town and they receive help to move and sell their home. Again, an individual may not want this to be made public and so they decide to have their home kept off-market.
Approaching relocation companies can prove a worthwhile way of finding out if they’re currently in the process of selling a high-value home that matches your criteria. Dealing with relocation companies comes with certain perks and pitfalls, including a potentially lengthy sales process, but it can be another way of finding a home that few other buyers are aware of.
The Value of Hiring An Agent
While all of the above examples can be effective if you’re willing to put in the work, they naturally involve a certain amount of effort and independent research.
That’s why it’s often easier to hire an experienced, top-ranking agent who knows exactly how to find off-market properties.
A verified top agent will be getting off-market listings delivered to them on a regular basis. They’ll have an invaluable network of other top agents in their market, who in turn will know the majority of homeowners who are considering selling their home.
In short, finding a non-MLS luxury property comes down to having the right kind of contacts.
If you’re looking for help in your home search, take a look at our list of verified top agents from across the U.S.
Aside from their unique contacts and industry knowledge, every agent listed is ranked within the top 10% of their local market.