How To Find Off-Market Properties: The 10 Best Ways In 2023

Searching for real estate opportunities that extend beyond the Multiple Listing Service (MLS) is becoming more critical than ever. According to the Federal Reserve Bank of St. Louis, the monthly supply of new houses in the United States is the lowest it has been in a year, and historical prices and mortgage rates will most likely keep inventory low for the foreseeable future.

As a result, investors must diversify their pool of potential properties with homes that aren’t listed. Off-market properties award savvy investors the ability to increase their odds of securing a new deal and tapping into unrivaled opportunities.

Understanding the meaning of off-market properties and knowing how to find them can give investors a significant edge in securing lucrative deals. In this guide, we will dive into the ins and outs of an off-market property, exploring the best strategies to uncover these hidden assets and unlock exclusive opportunities in the real estate market.

After reading this guide, investors of every level should have a better understanding of the following:

• What Are Off-Market Properties?
• How To Find Off-Market Properties For Sale In 2023
• Why Do Investors Want Off-Market Properties?
• Pros Of Off-Market Real Estate
• Cons Of Off-Market Real Estate
• Off-Market Listings Vs. The MLS
• Final Thoughts

*In our video below, Alex Martinez, CEO of Real Estate Skills, shares his experience of purchasing a seven-figure off-market multifamily property. Alex also provides two reasons why shifting focus to on-market deals can lead to getting off-market properties for wholesaling, house flipping, and even purchasing a rental property.

What Are Off-Market Properties?

Off-market properties refer to those available for sale but not publicly listed through the conventional channels most buyers are accustomed to. Unlike the properties on popular platforms like the MLS, off-market listings operate outside the traditional marketing channels.

An off-market property is not publicly advertised on the MLS or similar portals. Instead, selling sai properties is typically facilitated through word of mouth, often within the broker's network. The exclusive nature of an off-market property allows for a more discreet and targeted approach to buying and selling real estate.

An off-market property presents unique opportunities for buyers and sellers alike. For sellers, off-market listings, also known as pocket listings or exclusive listings, offer the advantage of privacy and a chance to gauge the market without widespread exposure. On the other hand, buyers who actively seek off-market properties can gain access to hidden real estate gems and potentially secure deals that are not widely advertised.

Investors can tap into a world of possibilities beyond conventional listings by exploring off-market opportunities, opening avenues to uncover exceptional properties, and gaining a competitive advantage in the ever-evolving real estate landscape.

Why Would A House Be Temporarily Off-Market?

There are various reasons why a house might be taken off the market, changing its status to "Temporarily Off-Market" in the local MLS. This status indicates that the property is not currently available for showings. Let's explore some common reasons for houses being temporarily off-market.

One frequent scenario involves sellers temporarily removing their house from the market to address necessary repairs or renovations. By taking the property off the market during this period, sellers can focus on improving the home's condition, ensuring it meets the desired standards before presenting it to potential buyers.

Another reason houses are temporarily off-market is when sellers have house guests, often during holiday seasons or other special occasions. To maintain privacy and ensure a comfortable environment, sellers may temporarily withdraw their property from active listing status, resuming showings once their guests have departed.

These routine instances of houses being temporarily off-market serve to prioritize the seller's needs and enhance the property's overall appeal. By addressing repairs or accommodating personal circumstances, sellers aim to position their homes in the best possible light when they re-enter the market, ultimately increasing the chances of attracting interested buyers and securing a successful sale.

Thinking about investing in real estate? Join Alex Martinez at his FREE training to learn how to get started with house flipping and wholesaling!

How To Find Off-Market Properties For Sale In 2023

Locating an off-market property in 2023 may be as simple as trying one of the ten strategies listed below:

• Direct Mail Marketing
• Online Resources
• Networking
• Real Estate Agents
• Builders & Contractors
• Wholesalers
• Public Record
• Word Of Mouth
• Real Estate Auctions
• Driving For Dollars

Direct Mail Marketing

Direct mail enables investors to target potential property sellers directly, creating personalized letters or postcards to grab their attention.

By offering a compelling value proposition and following up with interested prospects, investors can uncover off-market properties that may not be easily accessible through traditional channels, expanding their opportunities for successful deals.

Online Resources

Investors can leverage their website by creating a dedicated section or landing page where property owners can submit information about a potential off-market property they want to sell.

By optimizing the website for search engines and promoting it through targeted marketing efforts, investors can attract property owners and generate leads for off-market opportunities.

Networking

Building relationships with real estate agents, brokers, attorneys, and other investors can lead to word-of-mouth referrals and access to off-market real estate deals that may not be widely advertised. Networking allows investors to stay connected, share their investment criteria, and uncover hidden opportunities in the market.

Investors can tap into their network by engaging with real estate professionals, attending industry events, and joining local real estate groups or associations.

Real Estate Agents

There’s no reason investors can’t leverage the expertise and connections of real estate agents to access off-market properties. By communicating their investment goals and criteria to knowledgeable agents, investors can tap into their network and receive exclusive access to pocket listings or off-market opportunities that align with their investment objectives.

Real estate agents can provide valuable insights and assist in negotiating deals for off-market listings, maximizing the chances of finding lucrative investment opportunities.

Builders & Contractors

Establishing relationships with builders and contractors can help investors discover off-market houses. These trade professionals often have insider knowledge of upcoming or distressed properties that are not publicly listed.

By networking with them and expressing their investment interests, investors can access exclusive off-market opportunities and potentially secure favorable deals.

Wholesalers

Investors can leverage wholesalers to discover off-market properties. Wholesalers specialize in finding distressed or undervalued properties and then offering them to investors at a discounted price.

By connecting with wholesalers through networking or online platforms, investors can access a stream of off-market opportunities and potentially secure profitable deals.

Public Record

Researching property records, tax assessments, and foreclosure listings can help investors identify potential opportunities that are not actively marketed.

This approach allows them to directly reach out to property owners and negotiate deals, bypassing traditional listing platforms and gaining access to hidden investment prospects.

Word Of Mouth

Investors can tap into the power of “word of mouth” to discover off-market real estate deals. By networking with local real estate professionals, attending industry events, and engaging with community members, investors can learn about potential opportunities that are not publicly advertised.

Building solid relationships and seeking referrals can lead to valuable off-market leads and access to hidden investment deals.

Real Estate Auctions

Attending real estate auctions is a great way to uncover off-market properties. These online or in-person auctions often feature distressed properties or foreclosures that are not widely marketed.

Therefore, investors can identify potential off-market deals and secure properties at competitive prices by participating in auctions and conducting thorough research.

Read Also: Wholesaling Auction Properties: The (Ultimate) Guide

Driving For Dollars

Investors can "drive for dollars" by physically driving through neighborhoods and looking for distressed or vacant properties.

By taking note of neglected properties, investors can research their owners and contact them directly to discuss potential off-market deals. This method allows investors to identify hidden opportunities and negotiate directly with motivated sellers.

Why Do Investors Want Off-Market Properties?

The allure of off-market properties lies in the potential for better deals and increased flexibility during the buying and selling process. Unlike properties listed on the MLS, off-market listings are not widely known or advertised, providing a unique advantage for buyers and sellers.

One key advantage of off-market houses is the opportunity for more favorable negotiations. With limited exposure, buyers and sellers have additional time to discuss and refine the terms of the deal, potentially leading to more advantageous pricing and contract terms; this contrasts with scenarios where inexperienced buyers from the MLS might submit offers above the asking price—only to encounter issues such as appraisal discrepancies later on. Off-market transactions allow both parties to navigate contract contingencies and structure the transaction to minimize surprises.

Furthermore, the availability of off-market properties often signifies a unique opportunity that seasoned real estate investors seek. The exclusivity of these listings means fewer buyers are aware of them, reducing competition and increasing the chances of finding undervalued opportunities in the market.

In the end, the appeal of off-market homes for investors lies in the potential for more favorable negotiations, unique opportunities, and increased control throughout the transaction, ultimately leading to enhanced returns on their real estate investments.

Read Also: 25 Questions To Ask Motivated Sellers: Investor’s (ULTIMATE) Guide

Pros Of Off-Market Real Estate

Off-market real estate deals present numerous advantages for investors seeking unique and competitive opportunities. Here are some key perks to consider:

• Less Competition: Off-market deals offer buyers a distinct edge by reducing the competition. Unlike properties listed on popular platforms or the MLS, off-market homes are not exposed to a large pool of buyers. This decreased competition allows investors to avoid bidding wars and increases their chances of securing desirable properties without the risk of losing out to multiple competing offers.
• Potential For Lower Sale Prices: With limited exposure, off-market deals tend to stay out of the spotlight and attract less attention; this allows investors to fly under the radar and negotiate favorable purchase prices before publicly listing properties. The reduced visibility and competition often lead to lower sale prices, allowing investors to acquire properties at attractive rates.
• Smooth Negotiations: The exclusivity of off-market houses contributes to more relaxed negotiations for buyers and sellers. With fewer interested parties, negotiations can proceed with less pressure and more flexibility, facilitating the possibility of securing contracts and terms that may not be feasible in a competitive open market. That said, buyers must still come prepared with contingencies and clearly defined terms to leverage this advantage effectively.
• Adjustable Transaction Times: Off-market real estate sales generally provide more flexibility regarding transaction timelines. Sellers of off-market homes are often not in a rush to sell, allowing potential buyers to conduct thorough due diligence and take their time before making an offer. However, it's important to note that specific off-market deals, such as pre-foreclosures or short sales, may require a quicker closing process. In such cases, the limited time available is often compensated with a more significant potential for discounts on the purchase price.
• Unique Opportunities: Off-market listings result from various circumstances, including financial dilemmas or sellers looking for a discreet and swift exit from a property. These situations create mutually beneficial opportunities for both buyers and sellers. Investors can capitalize on such situations, often resulting in attractive contract terms, profit margins, and the potential for creative deal structures.

Off-market real estate deals offer distinct advantages, including reduced competition, the potential for lower prices, smoother negotiations, adjustable transaction timelines, and the opportunity for unique deals. Diving into off-market properties enables investors to uncover opportunities that would have never otherwise transpired.

Cons Of Off-Market Real Estate

While off-market real estate deals offer compelling advantages, it's essential to consider some potential drawbacks of this approach. Here are a few key cons to be aware of:

• Lack Of Availability: Recent policies implemented by the National Association of Realtors (NAR) have reduced the number of pocket listings available for buying and selling. While there are exceptions to these rules, the overall availability of off-market properties may not be as abundant as it once was. Investors should consider this limitation and explore additional lead-generation techniques to supplement their off-market property search.
• Difficulty Finding Properties: With the availability changes, finding off-market listings has become more challenging. Relying solely on off-market sources can slow down the growth rate of an investment portfolio and make it more difficult to secure deals consistently. Investors must diversify their search strategies and utilize multiple channels to uncover potential off-market opportunities.
• Dealing With Inexperienced Sellers: One exception to the MLS rules is For Sale By Owner (FSBO) properties, which do not have to be marketed like other listings. However, investors may need help navigating FSBO transactions, especially with inexperienced sellers; this can complicate the negotiation and transaction process, requiring investors to be prepared for potential hurdles and additional due diligence.

While off-market real estate deals can provide unique opportunities, it's essential to be aware of the potential limitations regarding availability, the need for diverse search strategies, and the potential complexities of dealing with FSBO transactions. Due to their restrictions, off-market homes should be viewed as a complement to a more comprehensive search strategy. In particular, today’s best investors must also know how to find deals on the market.

Read Also: How To Find Vacant Properties: The (ULTIMATE) Guide

Off-Market Listings Vs. The MLS

Buying off-market properties and properties listed on the MLS requires two different approaches. Let's explore the distinctions:

When purchasing an off-market property, the process often involves proactive strategies and direct engagement. Buyers may need to network with industry professionals, establish connections with local homeowners, or leverage word-of-mouth referrals. This approach requires a more hands-on effort in searching for potential opportunities.

Once a potential property is identified, negotiations typically occur directly between the buyer and seller, without the involvement of real estate agents. The absence of a formal listing means buyers can build a direct relationship with the seller, potentially leading to more flexible and personalized transactions. However, it's important to note that due diligence and thorough research are crucial when assessing the fair market value of off-market deals, as comparative data may be less readily available.

In contrast, the MLS provides a centralized platform, streamlining the buying process. Buyers working with real estate agents gain access to a wide range of properties listed on the MLS, allowing for efficient browsing, property showings, and comprehensive information.

The MLS listings typically include detailed property descriptions, photographs, pricing details, and relevant disclosures. This wealth of information facilitates the evaluation of properties and the ability to compare different options.

Additionally, working with an agent can provide buyers with professional guidance throughout the transaction, including offer preparation, negotiation assistance, and contract management. Still, it's essential to be prepared for potential competition from other buyers in the MLS market, as properties listed on the MLS tend to attract a larger pool of interested parties.

Take your real estate skills to the next level by watching our informative video on gaining MLS access without a real estate license. Unlock the power of MLS data and gain a competitive edge in your investment endeavors. Don't miss out on this valuable resource and gain access to a wealth of helpful information for your real estate journey.

Read Also: How To Get MLS Access: The (Ultimate) Guide

Final Thoughts

Finding off-market properties in 2023 presents unique opportunities for real estate investors and homebuyers. By employing the ten best strategies outlined in this article, individuals can gain a competitive advantage, negotiate better deals, and uncover hidden opportunities. However, it's crucial to approach off-market properties with diligence, conducting thorough research and seeking help when necessary to ensure successful transactions.

At Real Estate Skills, our team of experts is ready to provide the tools you need to find off-market properties. We're committed to providing the knowledge, resources, and support you need to find and purchase off-market homes. So do yourself a favor and leverage our expertise to find your next off-market deal.