BUYERS and Off-Market Properties: Trends & Outcomes
When a buyer visits an open house it’s very likely that the agent hosting the open house will tell a visitor that they know of other homes that are available but not on the market. Why do they say this? The primary reason is they want to work with that buyer and hopefully sell them a home. For the buyer to learn about this unknown property, they must provide their contact information so the agent can set up a showing for that property.
To recap the evolution of current practices, properties used to be known only to licensed agents who had access to the inventory book, forcing buyers to call a real estate office to find out what homes were available to purchase. Fast forward to broker’s online listings, consumer portals, agent use of social media, and now agent-controlled listings are now the source of what is available.
Once the property goes on the MLS, knowledge of its availability becomes ubiquitous, the days-on-market (DOM) timer starts, and the asking price is tracked. Sellers may feel comfortable with an off-market listing because the Multiple Listing Service (MLS) has become a race between time and price. The mainstream thought is that if the DOM number grows and the price is serially reduced, it means that something must be wrong with the home or the seller is not a “real” seller. This assumption is often not truly the case and there are several examples – for another topic (i.e., finding the true market price).
Not everyone wants to be public today. I have sensed a growing desire for privacy and discretion, especially involving sales of homes in the higher end. In the last year I have seen a trend of sellers not wanting a For Sale sign at the property, skipping the notice sent to neighbors that they’re selling, and limiting access to qualified buyers instead of holding open houses.
“Off-MLS”, or “pocket listings”, as these properties are called now, are sometimes strategically marketed this way by their listing agents (if seller requests or agrees) for several months or even for just a few days before going on the MLS. This can contribute to buyers feeling that they have private access in the competition to find the right home when it’s hidden from the easy access of the last several years. However, when buyers and agents feel that the right property is listed by someone but they must find it on their own, a sense of time pressure can creep in. There is a fear of missing out on their ideal home, and this has led to a growing number of Agents requiring Buyer Broker Agreements with buyers (so they don’t find themselves one of 10 agents looking for the same house for one buyer).
The outcomes for off-MLS listings can be; 1) it is sold and IS entered into the MLS for use as a comparable property, usually with a single photo; 2) it is sold and never entered into the MLS as a comparable; or 3) it does not sell off market and is then listed on the MLS for wider exposure.
So, while the MLS and syndication of its listings to third party services have made these properties available to everyone, the growing trend of pocket listing as a sales strategy used by sellers is reinforcing the value of having a professional insider on your team.
Some things old are new again.