A guide for buying a home that’s not for sale

With housing inventory at historic lows, potential home buyers might have to get creative if they want to find their dream home. One option that’s become increasingly popular is purchasing off-market homes — properties that aren’t publicly listed for sale. 

These homes are sold privately through word of mouth or exclusive broker connections instead of being advertised on MLS listings. This approach appeals to sellers who value their privacy or want to reduce real estate commission costs.

It also allows buyers to tap into a hidden market of homes most people don’t know are available, giving them an edge in a competitive real estate market. But while this strategy can expand your options, it comes with unique challenges compared to the traditional home buying process.

Benefits of off-market homes

Off-market properties come with specific benefits for buyers and sellers, but there are some downsides to consider as well. 

Advantages for buyers

• Exclusive access: Buying off-market properties gives buyers exclusive access to homes that aren’t even listed yet. These deals are typically shared through real estate networks and word of mouth.
• Less competition: Since these properties aren’t being widely advertised, relatively few buyers will know about them. This reduces the likelihood of a bidding war and gives you more room to negotiate with the seller.
• Potential savings: Off-market deals often come with better pricing since the sellers may be more willing to negotiate to avoid a drawn-out closing process. Plus, most sellers save on commission costs associated with traditional MLS listings.

Advantages for sellers

• Creates exclusivity: Selling a property off-market creates exclusivity and could lead to better offers for in-demand properties.
• Test the market: This approach allows sellers to test the market, determine an appropriate listing price and attract serious buyers. And if they don’t receive the offer they want, they can publicly list the home later without affecting its market history.
• Discretion: Selling a property off-market maintains the seller’s privacy since they can sell the home without having open houses or putting their personal information online. This level of discretion is often appealing to celebrities and high-net-worth individuals. 

Common challenges in off-market transactions

• Hard to determine fair market value: It’s harder to determine the fair market value of a property without MLS data or recent comparable sales from public listings. This lack of information can cause the seller to undervalue or overprice the home.
• Limited buyers: Without MLS listings, sellers won’t be able to generate as much interest in the home or spark bidding wars that could lead to higher offers.
• Takes more due diligence: Foreclosure properties are often sold “as is” for below-market value and require careful research to identify potential issues like liens or necessary repairs that could affect the property’s value.
• Longer timeline: Off-market deals may involve longer timelines and more complex negotiations, especially without the guidance of a real estate agent.

How to find off-market homes

Finding off-market properties can be challenging, but it's possible to uncover hidden opportunities with the right approach and resources. Here are four tips to help you get started:

1. Enlist the help of an agent

Buying an off-market property without the help of a real estate agent is possible, but it makes the process much more challenging. An experienced real estate agent or REALTOR^® can use their networks and local market knowledge to find new opportunities, like homes about to be listed, expired listings or properties still available despite pending deals. They can also connect with potential sellers through direct mail campaigns, attending community events and real estate networking.

While MLS Statement 8.0 requires brokers to submit listings to the MLS, reducing the number of truly off-market homes, this rule only applies to agents who are members of the National Association of REALTORS^®. Non-member agents can still conduct private transactions outside of the MLS system.

2. Use online resources

Online tools are another valuable way to find off-market properties, giving buyers a way to connect with sellers who haven’t listed their homes publicly. Sites like Facebook and Nextdoor can connect you with potential sellers who may discuss selling their homes in private groups or forums before publicly listing them.

You can also browse non-MLS listings, like For Sale by Owner (FSBO) properties, where homeowners bypass real estate agents and list their homes directly. Certain online platforms also offer programs specifically designed to connect buyers and sellers of off-market homes.

Another helpful strategy is setting up alerts on platforms like HUD Home Store or monitoring public records for pre-foreclosures and short-sale opportunities to stay informed. And services like HomeQT can help you find hidden properties, though they don’t typically support complete online transactions.

While online resources can make it easier to find off-market properties, they do tend to be more competitive. If you find the right opportunity, you’ll need to be prepared to act fast and submit a compelling offer.

3. Look Into Inactive Listings

One of the most overlooked ways to find hidden real estate opportunities is by searching through expired or pending listings. When a seller removes their home from the market or lets the listing expire, it usually means they didn’t find a buyer willing to meet their terms. Reaching out with a thoughtful, appealing offer could encourage the seller to reconsider, especially if their circumstances have changed or they’re still open to selling.

If the seller has accepted an offer but the sale hasn’t closed yet, you can submit a backup offer.

Backup offers position you as the next in line if the original deal falls through, giving you a chance to secure the property without needing a new search.

A real estate agent can work with you to identify pending or expired listings in your area. Your agent can also tactfully reach out to the sellers with a compelling offer.

4. Communicate with homeowners

Word of mouth is one of the simplest and most effective ways to find off-market properties. Letting your friends, family, coworkers and acquaintances know you’re looking for a home could connect you to someone who’s considering selling. This kind of personal approach can be incredibly valuable and help you uncover opportunities that aren’t available in public listings or online searches.

For a more targeted strategy, some buyers use direct mail campaigns to reach homeowners who might be interested in selling. Personalized letters or postcards might spark interest among a homeowner who hadn’t previously considered selling. By being proactive, you can start conversations with potential sellers and find new opportunities in the housing market.

How to buy a house that’s not for sale: A 5-step guide

While it could be harder to find an off-market home, most steps in the off-market home buying process are similar to purchasing a house on the market.

1. Get your initial mortgage approval

Getting an initial mortgage approval is a great way to prepare for buying a property that is not for sale. Since off-market houses can be harder to find, it’s extremely helpful for you and your realtor to know the loan amount you’re approved for so you can search for a home within your budget. Once you find the perfect home that fits your price range, having a preapproval letter is a valuable sign to sellers that you’re serious about buying their home.

To get preapproved for a mortgage, you must submit documentation to your lender that shows your identity, credit history, proof of income, debt-to-income ratio and any other information that may shed light on your financial situation. Once you submit your application, you should receive a Loan Estimate within 3 business days informing you how large of a loan you can get approved for. Since preapprovals are typically valid for only 60 to 90 days, it is best to get preapproved at the beginning of your home buying journey.

2. Find and research off-market properties

Off-market properties are naturally harder to find than those on multiple listing services, so you may have to use multiple avenues to find your dream home. Talking to your social and professional network or with homeowners in the area you’d like to buy is a great way to hear about potential homes before they hit the market. Online resources like Facebook and Nextdoor are also excellent sources to keep up with local real estate news and become familiar with housing prices in a certain area. Checking expired or pending MLS listings is also a great strategy.

Investigate pocket listings

One alternative way to find an off-market property to buy is through a pocket listing. A pocket listing is a home that’s marketed through private channels rather than through the MLS. Pocket listings have become less prevalent in recent years due to the National Association of REALTORS^®’ Clear Cooperation policy, which effectively bans pocket listings, but you may be able to find them using your personal network.

3. Make an offer

If you can find your dream home off-market, the next step is to make an offer to purchase it. Since the homeowners may be surprised to receive an offer, your offer must be especially compelling. Contributing a large amount of earnest money is an effective way to entice the homeowners into considering your offer by showing them you’re a serious buyer.

4. Go through underwriting and get a home inspection

If the homeowner accepts your offer, the two most important final tasks are underwriting and getting a home inspection.

While you may be preapproved for the mortgage loan to purchase the home, underwriting is the final step for the lender to approve the loan for the specific property you want to buy. Once they complete an appraisal on the home and confirm through your income and credit history that you can afford the house at the appraised value, you’ll be officially approved for a loan.

While you may be tempted to forgo a home inspection to entice the homeowners to sell, ensuring the home’s structure and systems are functional is always a good idea.

5. Close on your home

Once you get final approval from your lender and the home passes inspection, closing on the home can take 30 to 45 days.

At least 3 days before your closing day, you will receive your Closing Disclosure form that explains the most important details of your loan, such as the amount borrowed, the interest rate, estimated monthly payments, closing costs and the amount of money you’ll need to bring to the closing table. You may also need to provide multiple forms of identity and proof of homeowners’ insurance. 

The bottom line: Off-market homes present a unique opportunity

Buying an off-market property is a great way to avoid competition and find unique opportunities. This process involves targeting specific markets, leveraging local insights and conducting thorough market research.

While the steps are similar to buying a listed home, you will need to make some extra effort to find and negotiate with a willing seller. But once you find a willing homeowner who agrees to sell, the process will move forward like any other real estate deal. 

If you’ve already found your ideal property, begin the mortgage approval process with Rocket Mortgage® today!