If you’ve decided you’ll be selling your home, off-market may have crossed your mind. Learn about the benefits and drawbacks of selling a house off-market compared to a traditional sale, and why it isn’t the best option for every situation. Let’s take a closer look to see if selling your house off-market could be a good move that meets your needs.
Selling your home on the open market
There are two ways you can sell your home: publicly on the open market or privately as an off-market sale. If you’ve sold a home through a Realtor®, you likely remember your agent entering details about your property into the Multiple Listing Service (MLS), a database that provides public access to the largest pool of properties for sale in the marketplace.
Your agent posted photos and information about your listing to market your property that included:
- Your asking price;
- Your address;
- Your listing agent;
- Exterior and interior photos of your property;
- Your home’s square footage;
- Number of bedrooms, bathrooms;
- Features and amenities;
- Property taxes;
- Number of days on the market, and more
These details about your property then make their way onto every real estate website online where interested buyers get their first peek at your home.
Selling a house off-market
In contrast to the open market, the other option is to sell your house off-market. In an off-market sale, the seller doesn’t list their home on the MLS. Instead, they sell directly to a buyer. This can be done without an agent, such as requesting an all-cash offer from a house buying company, or by working with a real estate agent to share the listing with a private network of buyers as an office exclusive. This differs greatly from the conventional way of marketing a property publicly on the MLS where it’s easily accessible to any broker, agent or the general public.
Prior to 2020, off-market listings called “pocket listings” or “quiet listings” were a more regular practice amongst agents, though they could be somewhat controversial due to their lack of transparency.. The mindset was, “this is my listing; I’m not going to give anybody else access to it,” says real estate agent Jim Griffin, a top real estate agent in Johnson City, Tennessee.
Understand the Clear Cooperation Policy
In response to concern about the fairness of this practice, however, the National Association of Realtors® implemented the MLS Clear Cooperation Policy in May 2020 that put an end to these secretive pocket listings to ensure that all potential buyers have fair access to listing information.
Specifically, the Clear Cooperation Policy requires agents marketing properties to the public to post a listing on the MLS within one business day. The term “marketing” is considered anything from posting an ad online to putting a sign in a yard.
“If we begin to show a listing, it has to be on the market within one day,” says Kim Pratt, working with over 67% more single-family homes than the average Arlington agent. “We have to let the sellers know as well because the sellers can’t go around and market their property a week or two ahead of time.”
According to Pratt, agents have the opportunity to market a property as “coming soon” under this policy, but are prohibited from showing the property until it is posted on the MLS within the one-day period. She comments further that these rules deter listing agents and their partners from keeping listings away from other brokers and agents.
The end of pocket listings doesn’t mean the end of private listings
It may be the end of the pocket listing as we knew it, but agents can still market private listings as office exclusives in which agents can transfer information within their brokerage without needing to post it publicly on the MLS — but it must stay within the brokerage.
Pratt says she can market a property within the office that could be sold as a private listing to an investor or client within the brokerage but it needs to stay in-house. “I couldn’t call my friend down the street with another brokerage and let her know [of the listing]” explains Pratt.
Finding qualified buyers for off-market sales
There are plenty of investors who are always looking for a good investment, so it’s possible to find investment companies and buyers when you know where to look.
It’s not difficult for a well-connected agent like Pratt with a healthy network of investors contacting her brokerage to find buyers for an off-market sale.
“We have a ton of investment companies; people call us all day long to get on that investment list because they want to be on the list of investors that get notified when properties are off-market.”
Although Pratt can inform agents inside the brokerage about properties, she’s not allowed to “blast it out to a list of investors,” she explains. “We can let sellers know we have investors; at that point, we can reach out to investment companies.”
iBuyers are instant buyers that use technology and algorithms to buy real estate quickly. Some iBuyers have been known to make a cash offer in as little as 24 hours. Working an iBuyer can take the hassle out of arranging showings, open houses, and staging homes for sale.
Consider selling to a house flipper
Flippers are real estate investors that purchase properties with the intention to renovate and resell properties for a profit, with some even turning their trade into popular television shows. Flippers, however, often purchase houses sight unseen from auctions and other off-market sources way below market value, which means flippers might not give the best offer.
Look for buy-and-hold investors
Buy-and-hold investors purchase real estate properties as a means to strengthen their portfolios. As the name suggests, these investors hold onto properties for an extended period. They build wealth by generating rental income and receiving tax incentives and benefits. It’s not uncommon for buy-and-hold investors to pull equity from one home to purchase another.
Get a cash offer with Simple Sale
HomeLight’s Simple Sale Platform offers sellers access to hundreds of pre-approved cash buyers and is a convenient way to bypass the conventional listing process. Sellers won’t need to pay agent fees, arrange showings, or worry about the hassles of repairs, inspections, and staging a home for sale. Best of all, sellers receive a competitive cash offer when using the platform.
Sell to friends and family
If you have a friend or family member interested in buying your home, you can sell it to them off-market. To save money, you might consider completing the sale without professionals, but know that selling to a family member can be tricky and still come with complications such as contracts, fees, and repairs. Make sure to hire an attorney to handle the legal work and keep in mind that if you set your price below fair market value, there could be tax implications.
Find out what your home is worth
If you are considering selling a house off-market, it can be helpful to have an idea of what the value of your home might be. Using HomeLight’s Home Value Estimator tool, you can learn the value of your home in just two minutes by answering seven simple questions. Our home value estimator uses market trends, sales data, and your home’s last sales price to determine the value of your home.
If you have the opportunity to make $20, $30, $40 or $50,000 over asking, it doesn’t make sense to sell off-market. On the other hand, somebody may make an offer higher than the listing price to stop the property from going on the market.
- Kim Pratt Real Estate AgentCloseKim Pratt Real Estate Agent at NextHome On Main Currently accepting new clients
- Years of Experience 13
- Transactions 506
- Average Price Point $228k
- Single Family Homes 483
Is selling a house off-market right for you?
Selling a house off-market comes with its pros and cons. An off-market sale gives sellers more privacy, discretion, and confidentiality. It also can allow home sellers to bypass inspections and repairs that can delay the closing during a traditional sale.
On the flip side, sellers won’t receive as much exposure for off-market listings. MLS listings can lead to a higher purchase price that comes from multiple offers in a hot market, however, a buyer might offer a higher sale price to keep a property off the market. Let’s examine if selling a house off-market fits your needs.
Pros to selling a home off-market
Can you identify with the following scenarios? If your answer is yes, an off-market sale may serve you well.
- You don’t want to publicize your asking price or share how many days your property has been on the market; you wish to test the waters and adjust the price gradually.
- You value privacy and discretion for sensitive and personal reasons, for example, you’re going through a divorce and you prefer to keep the sale confidential.
- You’re renting your property and don’t want to disturb tenants living on the premises.
- Your property is in bad need of repair and you prefer to bypass the repairs.
- You’re a high-profile individual and want to maintain confidentiality.
- You prefer to skip staging, open houses, and frequent, impromptu showings.
- You need to sell your home fast because you have a deadline or you’re about to go into pre-foreclosure or foreclosure. Going with an off-market sale can help get it sold prior to having it taken by the bank, according to Pratt.
Cons to an off-market sale
You’re a seller who wants as much publicity and exposure as possible; when privacy and discretion are not an issue and you have no qualms about listing the details of your home on the MLS, when your top priority is to receive the best return on your investment. If you’re a buyer who identifies with any of these and the following considerations, you’d likely benefit more by selling your home on the open market.
- You’re not in a hurry to sell and don’t mind taking the time to stage your home and make repairs if it means getting a better offer.
- You have a firm asking price and aren’t willing to accept a lower offer. With a limited number of buyers when listing off-market, “you might have to take a little less money than if you went on the open market,” says Griffin.
- You want to get the highest price possible for your home. Listing your home off-market will have less of a chance of a bidding war. “If you have the opportunity to make $20, $30, $40 or $50,000 over asking, it doesn’t make sense to sell off-market,” says Pratt. “On the other hand, somebody may make an offer higher than the listing price to stop the property from going on the market.”
Three steps to a successful sale
Whether you’ve decided to sell your house off-market or publicly on the open market, the following three steps are essential elements for an efficient and successful sale.
Provide required disclosures
Most U.S states require sellers to provide a disclosure statement to buyers. You’ll need to inform the buyer about any issues with things that are broken and damaged or provide potential hazards such as if your home has lead-based paint, mold issues, or asbestos. Know that if you fail to be transparent about these issues, you can end up being sued in court.
Ensure your property has a clear title
For a real estate property to change hands from a seller to a buyer, your property needs a clear title. According to the NAR, title issues account for 11% of delayed sales. A title search must be performed by a title company or an attorney to make sure the seller is the legal owner and they don’t have any liens from creditors or legal claims on the property.
If you have a lien on your property, you can work the payment into the settlement of the sale at closing. Reach out to an attorney to learn your options.
Close the deal
The day of the closing has finally arrived. You and the buyer will sign documents, pay closing costs, and address escrow items. You’ll transfer ownership of the property to the buyer and provide the keys. In return, you’ll receive a cashier’s check or a wire transfer of fees to your bank. The deal is done.
Still unsure if selling your house off-market is the best option to suit your needs? Connect with a top real estate agent who can advise you according to your unique circumstances.
Header Image Source: (Paula Morin / Unsplash)
- "Multiple Listing Service (MLS): What Is It," National Association of Realtors® (2007)
- "Window to the Law: Understanding the MLS Clear Cooperation Policy," National Association of Realtors® (March 2020)
- "What Is an iBuyer?" NerdWallet (November 2021)
- "How to Sell a House to a Family Member," Forbes Advisor (March 2021)
- "Realtors® Confidence Index Survey," National Association of Realtors® Research Group (January 2022)