Inside the invisible housing market

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Housing inventory has been rising nationally, but some homes are not reaching the open market. Off-market real estate transactions are real estate sales that are not publicly advertised or listed on the Multiple Listing Service (MLS). These transactions take place confidentially, usually through direct negotiations between the buyer and seller or with the help of an agent who specializes in such transactions.

But how many deals happen off-market?

To better understand off-market trading, ResiClub reached out to BatchService, a fast-growing intelligence and technology company. Their data scientists analyzed real estate sales from their extensive database.

In all, about 1.2 million US home sales this year were made off-market, according to BatchService. That includes 175,363 in Texas, 123,637 in Florida, and 62,923 in Georgia.

Why do some sellers choose to buy off-market?

1. Privacy: Sellers may not want the sale of their property to be public information. This can be for personal reasons, such as avoiding public attention, or because the property belongs to a high-ranking person.
2. Market research: Some sellers use off-market listings to gauge interest without committing to a full public listing. This allows them to assess prices and demand.
3. Speed: Some homeowners may need to sell quickly and quietly, perhaps due to financial reasons, divorce, or other personal circumstances. In some cases, off-market sales can speed up the process.
4. Specialization: Keeping a property off the market can create a sense of exclusivity, which can attract serious buyers willing to pay a premium.

Often, an off-market seller is someone who needs speed or has a certain situation, says Ben Riehle, managing partner at FFCM, an Arizona-based real estate investment firm specializing in single-family rentals.

Riehle says: “Divorced couples where one spouse wants to rent for a while—or wants to avoid friends and neighbors finding out they’re selling.” “The homes are in a very bad condition, where the owners are talking to agents who recommend selling them to market investors. Unwise owners who were bitten by the shopkeeper. Owners who want to avoid paying commissions, so they call local investors who do direct mail or TV advertising.”

Sometimes siblings will inherit a house that they want divided four ways, but they don’t want to go through the trouble of fixing it. “They just want a quick easy sale,” Riehle said.

Austin Stowell, an Austin real estate agent, tells ResiClub that these types of sales are happening more often in his area: “I don’t think the importance of off-market data can be underestimated,” Stowell said. “A lot of Austin’s off-market trades can scare you. I would say 40% of homes over $2 million are listed on the MLS.”