The housing market in the U.S. is much bigger than investors like you might realize. The total market value of housing in the country is nearing $50 trillion as of August 2024. What you might not realize as you're browsing home listings is that you might be missing out on off-the-market property.
According to OfferMarket, only about 1% of housing is "on-market." The other 99% is either property not currently for sale or are potential off-market properties.
There's a huge opportunity for you as an investor in these off-market listings. But why exactly are these properties being kept off public listings and how can you find off-market properties?
What is an Off-Market Property?
Off-market properties are properties that are not listed on any Multiple Listing Services (MLS) and are considered not publicly available for sale. This includes what is commonly known as a "pocket listing." Pocket listings are when a property does not have a public listing but is still available for sale through a real estate agent or their network.
Another common off-market listing style is when potential sellers utilize online platforms to gauge buyer interest instead of a local multiple listing service or listing agent. These types of listings can include anything posted online, including social media.
Many real estate investors stick to the open market and overlook or simply don't know about off-market deals in their area. This can lead you to miss the hidden gems that can be found in pocket listings and other off-market deals.
Those in the know in the real estate industry know that it's worth researching. That's because whether it's residential, multifamily, or commercial, any kind of rental property can be kept off of a local MLS listing despite being for sale.
Why Sellers List Properties Off-Market
You might be wondering why property owners would list their property in a way that attracts fewer buyers. Wouldn't conducting a home sale using the local MLS be easier and quicker?
There are a few reasons why home sellers typically list their property this way:
Testing the Market: Owners might list their property off-market to test current market conditions and gauge interest from potential buyers.
Avoiding "Days on the Market": A common stigma in the real estate world is that the longer a property has been on the market, the more you must be willing to come down on the price. Off-market homes avoid this problem because the amount of time the property has been listed isn't publicly shown as it is with the MLS.
Maintaining Control and Discretion: An off-market sale lends a greater sense of control to the owner. It can help them maintain privacy by giving them full control over who sees the property and when.
Evading Listing Expenses: Sellers who desire the most cost-effective listing possible might seek to go off-market. They can avoid the costs of open houses and marketing this way.
Benefits of Buying Off-Market Listings
So why should you or any other real estate investor go through the trouble of finding off-market properties? It sounds like a bit more work than simply browsing your local MLS listings.
In fact, there are a few benefits to you that can make the extra effort worth it:
Less Competition: The busier your local market is, the more you'll have to battle with other investors or home buyers when making real estate deals. Pursuing off-market properties means you'll be less likely to enter a bidding war since fewer eyes are on those properties.
Potential for Better Prices: Owners can negotiate lower fees when selling in this way since they only have a single agent to work with in the process. This potential lower cost for them means potential lower costs for you, the buyer.
Increased Flexibility in Negotiations: Since you'll only be directly dealing with the seller's agent and the seller themselves, there's more room for negotiating in your buying process. You'll find the experience to be more flexible and accommodating, with a greater potential to lower the asking price for the savvy investor.
How to Find Off-Market Properties
Finding off-market opportunities can be the tricky part. Ultimately it will come down to your ability to network with other real estate professionals and use that towards your goal of finding properties.
Working with Local Real Estate Agents
Real estate agents in your local area are the most important piece of your network in finding property off-market. More often than not, off-market properties are sold through a real estate agent or their network. If you have strong relationships with a wide network of reputable real estate agents, you can find these investment properties more easily.
These relationships extend out to your greater web of contacts as well. It's important to establish contacts with other investors and industry professionals to widen your reach as far as possible. The more you know, the more likely you'll find those hidden gems.
Leveraging Online Platforms and Social Media
Social media and other online platforms can help you find opportunities as well. Not only can it help you expand your network, but you can also find off-market listings directly here. Websites like Zillow have programs specifically for buyers and sellers of off-market properties.
Strategies for Real Estate Investors
Direct mail marketing is one of the best ways you can incorporate advertising into your strategies for finding investment property. Targeted mail can connect you with owners of an off-market home that you wouldn't find otherwise.
Another crafty angle you can take is to utilize public records to locate distressed properties. These properties can typically be unlisted but still available through real estate auctions.
Don't overlook neglected properties either. You can find properties like this outside of MLS listings that can be refurbished and flipped for a profit. These properties often lead to good deals because sellers are highly motivated to sell quickly.
How to Maximize Your Property Investment
We understand all too well that finding a great investment opportunity in an unexpected place is exhilarating. However, it's important to keep in mind that buying the investment is only half the battle.
Once you have that rental property secured, we hope you'll choose Axela Management as your property management partner. We have an experienced team of professionals ready to take your investment and expand it together with you.
We offer services in specialized property management areas like multifamily and commercial. Whether big or small, we're equipped to handle day-to-day operations and the big picture of your investment.
Axela Management - Your Partner in Property Management
Visit our services page or contact us today to learn more about the difference Axela Management can make in your investment portfolio.
