Apply the same level of thoughtfulness and scrutiny as you would had you gone a more traditional route, and you may save a significant amount of money on your home.
3 Ways to Find the Perfect Off-Market Home
Is the home of your dreams lacking a “For Sale” sign in the yard? That doesn’t necessarily mean it’s out of reach.
Indeed, in a housing market where demand is strong and bidding wars are common, homebuyers are increasingly shopping off-the-market — whether by approaching buyers directly or seeking so-called “pocket listings” before an agent puts the property on the market.
Purchasing a home this way can be tricky, but it’s one strategy for getting the property you want before it’s listed publicly.
Here are the three common kinds of off-market transactions and how to navigate each.
For sale by owner
Any house not listed with a Multiple Listing Service (MLS) is considered off-market — and that includes those for sale by owner. In addition to the traditional for sale by owner listing, would-be sellers and buyers may connect through friends, acquaintances and business advisors. It can save sellers the stress of listing a house and give buyers a heads up on a house before other buyers rush in.
Benefits: By going this route, sellers may save on real estate brokerage fees — typically six percent of the sale price — and be willing to pass some of the savings on to you, the buyer.
Caveats: Without the aid of a real estate professional, it’s up to you to determine whether the price is right. Negotiate terms of the deal with the seller and make sure you take all the necessary steps to secure financing and finalize the sale.
In the case of pocket listings, a seller has engaged a real estate agent but has not yet put the house on the market. The listing is, so to speak, in the agent’s "pocket." Buyers often find such property through their own agents, who learn about listings from fellow agents, home builders and others in their network. Because the trend is relatively new, however, reliable data can be scant. Perhaps the best measure of demand for pocket listings lies behind the number of new websites springing up around them — pocketdeed.com and hippocketz.com, to name a couple.
Benefits: In competitive markets, this is one way to expand your options and potentially avoid a bidding war.
Caveats: In hot markets, sellers are often not willing to negotiate and may expect you to sweeten the deal knowing that listing is always an option.
If you opt not to bring in your own agent, you could negotiate on price, but that approach has its own perils: A single realtor representing both sides of a transaction — that is, “dual agency” — represents an inherent conflict of interest. In fact, dual agency is banned in eight states and adds extra emphasis to the maxim buyer beware.
Yet another category of off-market purchase entails making an unsolicited or “make me move” offer via a real estate marketplace. Traditionally, such offers came about when buyers set their sights on specific houses or neighborhoods then canvassed the area with letters or by knocking on doors to find potential sellers.
Today, Zillow’s “Make Me Move” feature plays a similar role. With this, owners can indicate they are interested in selling their house without officially putting it on the market. Buyers, in turn, can roll the dice by making a competitive offer.
Benefits: If you are very motivated, you can navigate Zillow, Trulia or Realtor.com and find comparable prices in the area and approach homeowners with an informed offer. Here, too, you may avoid a bidding war and save on real estate brokerage fees.
Caveats: Even savvy home shoppers are prone to rookie mistakes such as failing to schedule the proper home inspections or neglecting to research the provenance of the deed. Be sure to have a solid grasp on home prices and abide by a detailed buyer’s checklist if you plan to go it alone.
Whatever strategy you might deploy for your off-market housing search, you could stand to save a significant amount of money and avoid many related fees if you apply the same level of thoughtfulness and scrutiny as you would had you gone a more traditional route.