Finding off-market properties has many benefits for both sellers and buyers.
This is especially true when there is a stronger seller market or a shortage in property inventory.
But how do you go about it, and which marketing methods are most efficient?
This article will provide you with the general benefits of off-market properties, why it got a bit more difficult to do that, and which marketing methods are the most efficient.
Why Off-Market Properties: Benefits for Sellers and Buyers
Off-market properties are also often called pocket listings.
There are benefits for both the sellers to offer a house off-market, but also for buyers, investors, and other real estate professionals.
Some of the benefits have their merits, but others are rather of a psychological or “placebo” nature.
To be on the same page definition-wise, off-market properties are not yet listed on the MLS, but they are for sale.
The Benefits for Sellers
Some home sellers prefer to offer their property off-market because they just want to test the waters.
Another benefit for sellers is that they can make their home sales more discreetly and privately.
The next benefit is that they can reduce their commission costs or even avoid them if they go the sale-by-owner route.
The commission reduction becomes possible because they only have to deal with buyers’ agents.
For other sellers, another benefit is that they will be able to reduce the chances of their home becoming a shelf warmer.
The latter happens when it gets listed on the MLS by a realtor, and it stays on the market for more than 30 days.
Once listed on an MLS, the clock starts ticking, and the “time or days on the market” start to count.
The longer the time on the market, the higher the chances of receiving rather lowball offers from potential buyers.
So, sellers think that by avoiding getting listed on an MLS at all, they can also avoid their house becoming a shelf warmer and getting bombarded with lowball offers.
In turn, by not listing it, they think they may get a higher price
The Benefits for Potential Buyers
The first benefit is the most obvious.
Going after off-market homes reduces the number of competing home buyers.
Why?
Because you will have access to an inventory that other potential buyers don’t have easy access to or no access to at all.
This approach is especially true when there is a market with a low inventory and/or a seller’s market.
When using this approach as a buyer in a “balanced” market, an additional benefit is to also get deals more often since the seller has lower commission costs.
The Benefits for Real Estate Investors
For real estate investors, going after off-market properties increases the chances of finding a deal.
Why?
When sellers usually work with a seller’s agent, and it’s a decent realtor, their house will usually get somewhat prepared to get offered on the market.
And the potential buyer group is usually made of retail buyers.
The chances are higher for pocket listings that the respective properties are not necessarily prepared to sell, and not many upgrades are made, if at all.
So, the likelihood of finding wholesale properties or fixers and flippers among these off-market homes is higher.
Of course, the exceptions are pocket listings where the sellers expect to get a higher price.
But that’s just one sub-group of sellers that prefer a pocket listing.
And, of course, your chances also depend on your market type.
In a hot seller’s market or a market with a low inventory (such as in the U.S.), finding deals among those pocket listings might get quite tough.
The Benefits for Realtors
Since off-market properties aren’t publicly listed, there are usually fewer buyers competing for them.
This could result in a smoother negotiation process and favorable terms for your buyer clients.
Access to off-market properties can give you a unique edge, attracting clients looking for something specific or wanting to avoid the public marketplace’s hustle and bustle.
Working with off-market properties often requires a high level of trust and strong relationships, which can strengthen your network within the industry.
Related to that, you can also serve as a trusted advisor to clients who value discretion and need more privacy for their real estate transactions.
Finally, providing your clients exclusive options unavailable to the general public can significantly increase their satisfaction, leading to repeat business and referrals.
It Just Got More Difficult to Find Off-Market Properties
Finding off-market properties got more challenging on January 1, 2020.
How so?
Well, there is a thing called Clear Cooperation Policy by the National Association of Realtors, and its implementation became mandatory by May 1, 2020.
What needs to be implemented?
I better quote it to be more exact:
“MLS Participants must distribute exempt listings within (1) one business day once the listing is publicly marketed. See Section 1.01, Clear Cooperation.”
My first thought was “not so funny” for realtors that want to go with pocket listings.
But it’s not as bad as it sounds.
First, it’s not a law, but it’s binding for all brokerages, agents, and member MLSs of the association.
For example, this policy is not binding for licensed agents, not National Association of Realtors members.
But consider that 88% of homebuyers use a real estate agent or broker in the U.S. and that most of these are National Association of Realtors members.
You can conclude that at least getting access to residential off-market properties via a realtor or broker got a bit more complicated.
Nevertheless, this new policy still allows brokers and agents in a limited way to have off-market listings.
So, there are still some loopholes.
According to statement 8.0, as a seller, you can have the respective agent not display your house on the MLS IDX or make the listing an “office exclusive.”
In the latter case, a realtor can share the property listing only with other agents or one-on-one with buyers.
What Options Are Left to Find Off-Market Properties?
Because of the above situation, there are three options left for you to find off-market properties:
- You could work with a licensed agent, not a National Association of Realtors member.
- You could still work with a licensed realtor who is also a National Association of Realtors member, hoping he has “office exclusive” listings.
- You could use marketing and prospecting methods that avoid realtors altogether.
Because of the mentioned constraints, your options are a bit more limited to finding off-market properties, at least if you have done this with realtors before.
So, to increase your chances, I will focus on prospecting and marketing methods you can use where no realtors are involved.
But I think even as a realtor, you will benefit from knowing these methods since you may also require convincing a seller of an off-market property to work with you.
17 Marketing Channels to Find Off-Market Properties
Since the indirect route via realtors is a bit more limited, only the direct route is left.
It means approaching or targeting potential and overall motivated sellers directly.
Why should they be motivated?
Motivated means they actually want or even need to sell because of some pressing problems or needs.
It will make negotiating easier for realtors, brokerages, independent buyers, and real estate investors.
So, no matter what type of real estate market participant you are, you have better chances of solving a problem or fulfilling their needs.
In my article about how to find motivated sellers applying the 80/20 principle, I covered what will come in this section already in-depth.
So, I will provide you with a shorter version of this article below.
When looking for different marketing methods, you will accumulate an extensive list of different ones quickly.
On the one hand, this is inspiring because you realize that you still have many options.
On the other hand, you may feel overwhelmed soon, not knowing what to focus on.
Here is a longer excerpt of the list of my article, and please feel free to feel inspired:
- Networking with hundreds of business cards and letting everybody know that you solve problems for motivated sellers
- Leaving flyers at unemployment offices
- Looking for ‘For Sale by Owner’ (FBSO) signs or vacant houses, or occupied but messy homes (Driving for Dollars)
- Running a classified ad on Craigslist that says, “We Buy Houses.”
- Run direct mailing campaigns to absentee owners, out-of-state landlords, estate/probate attorneys, divorce attorneys, vacant landowners, HUD/VA foreclosures, credit repair agencies, pre-foreclosures, specific zip codes, properties purchased between 3k and 20k within the last five years, laid off employees, hair salons/barbers (because they are social hubs), water, gas, and electric company shut off lists, carpet cleaners, people having garage sales, and owners of multiple properties.
- Cold emailing to Craigslist rental property classifieds
- Cold-calling FSBO sites
- Using bandit signs
- Reaching out to mortgage companies
- Put door hangers on target properties
- Using a bird dog
- Having mail carriers notify you of vacant properties
- Door knocking
- Advertising in penny-saver papers
- Buying leads from DataTree, ListSource, RealQuest, MelissaData.
- Running social or search PPC campaigns
A pretty long list, right?
And it wasn’t even everything I put in the list of my other article.
So, in that article, I concluded that the least time-intensive, most scalable, and easier-to-test marketing methods, and thus 80/20 of the long list of marketing methods, are social or search PPC and direct mailing campaigns.
Conclusion
Because of the Clear Cooperation Policy by the National Association of Realtors, it got a bit more difficult to find off-market properties, at least with the help of a licensed realtor who is also a member of the National Association of Realtors.
The other option is targeting and reaching out directly to potential sellers.
There are many existing marketing methods and channels to reach these potential sellers.
Using PPC campaigns on social media or search engines and direct mailing campaigns is 80/20 in terms of least time intensive, most scalable, and easier to test.
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