It’s no secret that the housing market in 2023 has been a challenging landscape—and one of the ways that sellers and real estate professionals today have tried to navigate those challenges is with the use of off-market listings.
In the past, off-market listings were less common. It made sense to circulate a listing as much as possible, in order to generate interest and, potentially, competition between buyers. Today, the priorities of some sellers have changed—and with consistently increasing demand, rising mortgage rates, and low inventory to be found in many markets, off-market listings have a few distinct advantages.
At least, that’s certainly what the numbers reflect: in Q3 of 2023, we can see a 7% increase in off-market listings since the previous year’s Q3—an increase that pales in comparison to the previous quarter’s 40.43% increase, Q1’s increase of 64%, and Q4 of 2022’s staggering increase of 102%.
Sellers and professionals both have cited too-high asking prices as one of the primary reasons for the surge in off-market—and withdrawn—listings.
But first, an important question:
What is an off-market listing?
Sometimes called quiet or pocket listings, off-market listings are listings for properties that are for sale, but haven’t been listed on MLS. These listings are circulated by word-of-mouth or within closed networks by the agents who post them.
In 2020, the National Association of REALTORS® (NAR) updated their policy on off-market listings, likely to address their surge in popularity. As outlined in the Clear Cooperation Policy, a listing broker must submit a listing to the MLS within one business day of marketing the property to the public. Examples of marketing the property to the public could include flyers, window displays, yard signs, any digital marketing of publicly facing websites, email blasts, and much more.
Off-market listings are regulated for compliance by associations like NAR, but it’s clear that they're not necessarily endorsed by them. As the numbers go to show, they're still happening in many markets across North America.
Why do off-market listings happen?
While far from an exhaustive list, here are some amongst the most commonly cited advantages that off-market listings offer:
Testing, testing, 1, 2, 3
When sellers decide to list their home using a private network, it might be a test run—to see whether their property, as well as the price they’ve set, gets interest.
There’s more than one advantage to this approach: if the price is too high, and the listing doesn’t generate buyer interest, the off-market listing can be taken down, and a new listing can be brought to the MLS at a lower price point without a record of that price change becoming available.
Further, in a market where homes typically spend more than 40 days on the market (a median number at its lowest in 2023 in May, at 43 days, and at its highest in January, at 72 days), listing off-market can be an effective way to reduce the length of time a listing needs to be made available through MLS.
When a price reduction is visible on a listing, especially if the home has been on the market for a while, it can encourage interested buyers to inquire about cutting the price further—or assume that there’s a less than desirable reason that the property remains available.
Playing things safe
Alongside the possibility of testing out a price, without the risk of repercussions if it needs to be lowered to generate interest, there is the issue of privacy to consider.
In an increasingly digital world and industry, sellers are less interested in making their address—along with photos of their home’s interior, details, and potentially floorplans—available for anyone to see.
The closed network in which off-market listings circulate can be an attractive option for sellers who make privacy a priority over pricing.
Open house versus office hours
With full-market listings comes the expectation of open houses and showings—and in a world where more people than ever are working from home, those interruptions can present more than just an inconvenience.
Regardless of whether tenants or owners occupy the property at present, the WFH trend is here to stay. Off-market listings tend to have a lower volume of interest, making showings easier to manage for residents and real estate agents alike.
Where does that leave us?
It could be any number of these factors, and others, that continues to drive the trend in off-market listings—but there’s no question that it is a continuing trend. While less stark than some recent quarters, the latest from BrokerMetrics shows that off-market listings are still on the rise, year over year.
When faced with a trend like this one, the best initiative comes from insights—understanding why sellers might opt for an off-market listing, the advantages (and disadvantages) of choosing them, and how to navigate a market in which they’ve become increasingly more common.
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