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Trying to buy a house in a hot market can feel like going to the mall on Black Friday. As soon as a home becomes available, dozens of buyers pounce like mad, outbidding one another while still trying to avoid overpaying. It’s a difficult balance to strike, and it sure is stressful.
But what if you could buy a house before it hits the market?
You might think this opportunity exists only for the wealthy or famous, but that’s not the case. Homes that don’t hit the market — known as “pocket listings” — can be a good option for buyers and sellers for many reasons. However, pocket listings come with rules and require a little luck or a special connection to a seller.
Here, we’ll explain the rules around pocket listings and what you can do to improve your chances of finding houses before they hit the market.
What is a pocket listing?
A pocket listing is a real estate agreement in which the property never makes it to a Multiple Listing System (MLS). Instead, it’s shown to buyers through the sellers or real estate agent’s private network.
Some sellers prefer this method because they don’t want to deal with the hassle of holding open houses or fielding many offers. Likewise, if they have a buyer in mind, like a friend or family member, they can steer the property in their direction without running afoul of fair market rules. (We’ll get to that in a moment.) Plus, in many pocket listing situations, buyers agree to handle any major repairs needed in exchange for the exclusivity of making an offer.
For buyers, there’s an obvious benefit: less competition. If hardly anyone knows the house is available, there are fewer offers, and yours has a much better chance of succeeding. There’s less stress, and you might get a better deal too if you avoid a bidding war.
The rules of pocket listings
While pocket listings have benefits for both buyers and sellers, there are some aspects that are too good to be true.
In November 2019, the National Association of Realtors® (NAR) voted to prohibit pocket or exclusive listings. Pocket listings were never illegal, but unethical real estate agents often used them to gain a better commission at the client's expense. Under the ban, listing brokers must submit any real estate listing to an MLS within “one business day of marketing a property to the public.”
See the loophole? Buyers who know a property will hit the market have less than 24 hours to make an initial offer, but they still have those 24 hours to get ahead of the competition. So if you know your next-door neighbor is moving and you love their house, or you’d like to buy your parents’ house, you’ll have a little wiggle room to make an offer.
There’s also the “Coming Soon” workaround. Real estate agents can still use a window of time to list a property as “coming soon” — all while accepting offers like a pocket listing.
Why do people sell off-market?
Sellers sell without listing their homes for many reasons. Yes, sometimes they might have a specific buyer in mind, like a friend or family member, but it’s not always for personal reasons. Some of the most common:
- They’re concerned about their privacy: Many celebrities use pocket listings to keep their identities and addresses confidential, but they’re not the only ones who care about privacy. Some sellers just don’t want it known that they’re moving.
- They don’t want to put in the work to make a home showing-ready: Selling through traditional channels requires some work to fix up your home and make it look great before putting it up for sale. That work ranges from little tasks like decluttering to major home maintenance projects. Some sellers would rather entertain off-market offers without putting in the work, even if that means selling for less.
- They want to test the market: A quiet pocket listing helps curious sellers gauge the demand by seeing what some specific buyers might pay for their home. That way, they can decide whether to continue with a pocket listing or go out to the open market.
- They believe there’s a great offer waiting: Some sellers believe that the exclusiveness of a pocket listing could lead to more serious offers. Of course, that could also happen on the open market but different sellers have different opinions.
How to get a pocket listing
How do you find houses before they are listed if you don’t live next door to them or know the seller personally? There are a few strategies worth pursuing.
1. Ask your agent about listings they’re trying to get
Real estate agents aren’t just working on listed properties — they’re thinking about the future too. Sellers interview agents before they list their home, so the real estate community knows when a property is likely to hit the market. A well-connected agent may have already been interviewed for a listing, and they can tap colleagues for intel on pocket listings, or could even reach out to homeowners directly to see if they’re interested in selling.
That’s why the number one way to find a pocket listing is to work with a reputable agent. An agent with a good reputation has the ear of other high-quality agents. If a fellow agent has some private, exclusive information about a potential pocket listing, they’re only going to share that information with other reputable agents. You want to make sure your agent is among that number.
In many cases, that means working with an agent from a larger office because they have a built-in network of other agents who have their ears to the pavement. Agents with the backing of a well-known real estate brand also may have more confidence reaching out to homeowners directly. If you let your agent know about a house you love, they can reach out for you to see if the owners would be open to selling. Unknown agents from smaller agencies might not have the same pull.
Showing that you’re interested in unlisted properties gives your real estate agent a potential buyer for a property before it’s listed and gives you an inside track. It’s a win-win.
2. Get to know the neighborhood
Get plugged into the community if you love where you live but want an upgrade or additional investment property. As we’ve stated, the best way to get a pocket listing is to have a personal connection to the seller. Parenting groups and social clubs are great places to hear about potential listings. Not only do people gossip, but families with young children may be more likely to move than ones with older children who are already established in their schools and communities.
As with your professional life, finding a pocket listing is all about networking. Join local groups and clubs, pay attention to people’s life events, attend open houses, and gauge the market to see who might be open to selling their home. Kids going off to college soon or getting married? A sick parent in another state? It might sound a bit morbid and voyeuristic but staying clued in with your neighbors is a great way to find an off-market listing.
Don’t be weird about it, just let friends, family, or neighbors know that you’re interested in buying in the neighborhood. You never know what they’ll say.
3. Contact HOA or neighborhood boards
Homeowners' associations (HOAs) aren't for everybody, but reach out to its board if you love a particular community. They tend to be the most clued into the community and can tell you if there are rumblings of anybody selling a home soon.
Many neighborhoods and buildings have their own online communities, too. If you’re able, join Facebook pages, Nextdoor groups, or other online forums to get the inside scoop on homes or apartments that may hit the market.
4. Track down pre-foreclosure or foreclosure homes
Owners at risk of losing their home to the bank might prefer to walk away with some cash instead. Many real estate listing sites show homes in foreclosure or pre-foreclosure. Specialized services like CoreLogic’s RealQuest and RealtyTrac can help you identify properties on which owners are delinquent on mortgage payments.
5. Mass mailing
An oldie-but-goodie, if you’re willing to put some money into your search, snail mail can be a big help towards securing a pocket listing. Identify the neighborhood you want to buy, write a brief letter expressing your interest in moving to the area, and ask if anyone is open to selling soon. Gather addresses by walking around or searching the area online and use a company like Dietrich Direct to send the mailings.
Finding a house before it’s listed is a great way to secure a good deal and avoid the stress of the open real estate market. But it’s easier said than done. There are rules against pocket listings today that make the practice more difficult than in the past. Still, this guide should arm you with strategies to find houses before they hit the market and get the best deal possible.