Trying to Find That Perfect Home? They Aren’t Always on the MLS

We’ve heard the stories about people who managed to make an offer on a house before it officially went up for sale, beating out all the other would-be buyers and scoring the home of their dreams. In a fast-paced market, where houses often sell in less than a day, and buyers have to be prepared to make top-dollar offers in what often turns into a bidding war, staying on top of both current homes for sale and potential up-and-coming listings can be one of the best ways to find the house you want. But if you don’t know how to buy a house before it’s listed on the MLS (multiple listing service), then you’ll miss out on this chance.

How do you buy a house before it’s listed on the MLS? And what is the process when it comes to buying? Most importantly, how can your real estate agent help you facilitate buying a house before it’s listed for sale?

We researched the ins and outs of what you, as a buyer, should know when it comes to purchasing a home before it’s listed on the MLS. We spoke with top real estate agents about buying a house before the “for sale” signs go up, where to look for those potential sales, as well as seeking insight from other real estate professionals.

Here’s our breakdown of everything you need to know about finding one of these sometimes elusive (but possibly perfect for you!) off-market homes.

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What is the MLS, and how does it work?

The MLS, or multiple listing service, is a marketplace specifically for selling homes. The MLS is used by real estate professionals to showcase homes for sellers and find homes for buyers, with the intent of displaying houses for sale to the widest possible pool of qualified buyers.

Originally developed in the 1800s by real estate brokers, the concept was born when brokers would gather together to share information about listed properties, eventually agreeing to pay for each other’s help in selling homes and finding buyers.

Sam DeBord, CEO of Real Estate Standards Organization (RESO), a company that creates the standards for interoperability and efficiency for MLS sites, real estate agents, and consumer websites, defines today’s modern MLS as a brokerage cooperative.

“Brokers and agents agree to help sell each other’s client listings,” he says. “All buyers and sellers are exposed to one another, creating the most potential value for consumers.”

There are over 500 MLS databases in existence around the U.S., providing agents with the ability to share information about listed properties with other brokers, and giving both buyers and sellers wider opportunities.

The MLS is also there to maintain the integrity of home sales and purchases. “When putting a home on the MLS, an agent must research the market, create a comparative market analysis (CMA), and ensure that the seller understands the process, costs, and possibilities,” says DeBord.

“The agent will follow the rules of the MLS for transparency, consistency, and honesty to the public, and generate the most possible exposure for that listing.”

All publicly listed properties can be found on the MLS, from single-family homes and condos to foreclosures or pre-foreclosures. The MLS does not show FSBO homes (properties that are for sale by the owner), nor does it show homes that haven’t officially been listed for sale.

The database provides a wealth of information, such as the home price, property details like the square footage, property tax amounts, and contact information for the listing agent.

The MLS is only available to licensed agents, however. As a buyer, you won’t have access to the MLS and its listings without help from your real estate agent.

What is an off-market listing, and why would a seller want to go this route?

Simply put, an off-market listing, commonly referred to as a “pocket” listing, is one that hasn’t been put on the MLS. That means that not only is it inaccessible to many buyers, but their agents might not know about it, either.

While it makes sense for a motivated seller to list their house on the MLS as soon as possible, there are some situations where a seller wouldn’t want to put their home on the database. Pocket listings exist to accommodate those needs.

Privacy

Chicago agent David Dominguez says there are several reasons a seller might not want their home on the MLS.

“What I’ve been seeing is that people are concerned about privacy and comfort,” he says. “If a person is a celebrity or an executive, they don’t want their property out there on the market.” Some sellers also don’t want so many people going through their house.”

Living conditions

In some circumstances, sellers might actually find themselves in a position where they are embarrassed about their home’s condition.

“Maybe it’s a hoarder situation,” explains Virginia agent Jenny Maraghy, a 12-year veteran of the industry. “The seller wants or needs to sell, but they’re embarrassed to have the house open to the general public.”

Investors with tenants

For sellers who are looking to put a rental property on the market, they may be concerned about tenants finding out that the property is for sale. Having tenants in place, especially long-term ones, can be a strong selling point for rental properties, and sellers aren’t going to want to disrupt that edge.

“Investors who have tenants in place often don’t want the property on the open market,” says Maraghy. “They aren’t willing to upset the tenants or have them get nervous about it being sold.”

Unusual or unique properties

Living in a home that is notable (or notorious) in some way can also bring sellers some potentially unwanted attention.

Houses that have historical significance, are purported to be haunted, or were once owned by someone famous might bring in a lot of curious window shoppers as opposed to serious buyers. Homes that are considered unique on the market in other ways, such as a specific architectural design that might only appeal to a certain type of buyer, might be another reason sellers don’t want to put the house on the MLS in order to avoid a surplus of “lookie-loos.”

Pocket listings and the National Association of Realtors®

In late 2019, the National Association of Realtors® (NAR) voted to prevent agents and brokers from keeping listings off the MLS, a reinforcement of NAR’s requirements that properties be listed on MLS within one business day of being marketed to the public.

Per NAR, agents can post a home as “coming soon” — but if they do so, the home must be put on the MLS within a certain number of hours. This is intended to keep information on available homes accurate, and to avoid any potential legal or ethical ramifications that might arise, such as a breach of the agent’s duties or violations of the Fair Housing Act.

Sellers desiring privacy or concerned about health issues can still sell a house off the MLS under the new NAR policy, but the property cannot be advertised publicly in any way, which can make it even more difficult for qualified buyers to find the home.