How to Buy That Dream Home Even if It's Off Market

When looking for homes to buy, you might assume your options are limited to properties that are listed for sale publicly. It’s possible, however, to purchase a home that’s not technically on the market. This isn’t necessarily the easiest path to homeownership as you first have to find a property owner who’s willing to sell, then meet their desired price. But knowing how to buy a house that’s not on the market could give you an edge when the competition for properties is stiff.

If you are planning to buy a home, a financial advisor can help you create a financial plan for your needs and goals. 

What Does “Not on the Market” Mean?

When a home is not on the market that means it’s not listed for sale anywhere. Specifically, it’s not listed on the Multiple Listing Service (MLS), which is a database that collects information about homes for sale. Real estate agents and brokers use the MLS to help their clients find properties to purchase.

Not on the market is synonymous with “off-market” or “unlisted.” If a home is not on the market, the owner is not actively trying to sell it. That doesn’t mean, however, that a buyer can’t make an offer on the property.

Off the market isn’t the same as pending. When a home is listed with a status of pending, it means that a buyer has made an offer and the seller has accepted it. You could also make an offer on a pending property, but the odds of it being accepted are slim if the buyer has few evident obstacles to securing a mortgage.

Why Buy a House That’s Not Listed for Sale?

Finding the right property can be one of the most stressful parts of home buying. It’s entirely possible that you’ll spend hours scouring homes listed for sale and not find one that checks all of your boxes. Going off the beaten path to look for unlisted homes may turn up properties that are closer to what you’re looking for.

Aside from that, there’s another good reason to consider off-market homes: less competition. In a seller’s market, low inventories and high demand can send home prices skyrocketing. It can also make it more difficult to get a seller to even consider your offer if they’re being bombarded with offers from dozens of other buyers. And a buyer who’s able to offer cash for a home may trump all others.

Looking for unlisted homes that are not on the market can drastically cut down on the competition. You may have to work a little harder to find a home in order to make an offer. But you also don’t have to worry about that offer being lost in the shuffle.

Where to Find Homes Not on the Market

If you’d like to buy a home that’s not listed, hiring a qualified real estate agent can be a huge help. An experienced agent who knows the local market well may be able to help you find off-market homes that you can make a bid on and guide you through the process of connecting with the owner.

Your agent also needs to be willing to do a little more work to identify homes that, while not for sale, could be purchased at a price you can afford. That means sifting through MLS listings to look for:

• Expired listings. An expired listing means the homeowner has listed the home for sale at some point but it failed to sell.

• Canceled listings. When a listing is canceled, the homeowner has taken the property off the market.

• Withdrawn listings. A withdrawn listing is off the market but the seller may still be under contract with a real estate agent.

• Coming soon listings. Coming soon listings are properties that will be on the market at some point but haven’t been listed yet.

With expired and canceled listings, it’s possible that the seller may be planning to re-list at some point. Those kinds of listings can present opportunities if the homeowner hasn’t changed their mind about selling but hasn’t gotten around to putting the home on the market yet.

Sellers can withdraw listings if they decide they no longer want to sell the home. Your agent can reach out to the seller’s agent or the seller themselves if they have no agent to gauge how receptive they might be to receiving an offer.

Coming soon listings offer a chance for your agent to get in ahead of the crowd with an offer. Keep in mind that in a hot market, these listings may get a lot of offers right off the bat and the home might sell quickly.

Aside from the MLS, there are other ways to find off-the-market homes. For example, your agent might comb through property tax records to look for individuals who own multiple properties. They may have a vacant home that they might be willing to entertain an offer for.

Agents can also send out mailers to prospective sellers or even go door to door to reach out to owners. Meanwhile, you can reach out through your network of friends, family members and coworkers to see if they know anyone who might be interested in selling a home that’s not on the market. It’s possible that you might be able to find a home through simple word of mouth.

How to Buy a House Not on the Market

Once you find a home that you’d like to make an offer on, the next step is presenting your offer to the property owner. This is where a good real estate agent can be crucial. Your agent can connect with the homeowner first to find out if they’d be receptive to an offer. If they are, they can help you put together an offer package that might sway the owner to sell.

Remember that a homeowner isn’t obligated to accept so it’s important to make your offer as attractive as possible. That might include offering a larger earnest money deposit or letting the seller name their price. If you’ve already been pre-approved for a mortgage or you have the assets to pay in cash, it may be worth noting that in the offer letter.

You may have to repeat this process many times over before you find a homeowner who’s willing to sell. When drafting an offer for a house that’s not on the market, your agent may advise you to include certain contingencies. For example, the offer may be contingent on the appraisal and/or the home inspection.

Getting a home that’s not on the market inspected is important, as it can help to uncover any flaws or defects that might put you off buying. You don’t want to get locked into an offer on a home that has a cracked foundation or leaky roof, for instance.

If a homeowner accepts your offer, the rest of the home buying process should move along as usual. You’ll need to apply for a mortgage, get the home appraised, complete all necessary inspections and once you’re given the green light, prepare for closing. At this point, you’ll need to provide your down payment and closing cost funds and sign all the final paperwork for the loan.

Bottom Line

There’s no real secret to how to buy a house not on the market but it does help to know what to expect. The biggest challenge is usually finding a homeowner who’s willing to sell an unlisted home. Having an agent on your side can make the process much easier to navigate and potentially improve your odds of success.

Mortgage Planning Tips

• Consider talking to your financial advisor about whether you’re financially prepared to buy a home and how to establish a realistic home buying budget. If you don’t have a financial advisor yet, finding one doesn’t have to be complicated. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

• One of the most important steps in buying a home is researching mortgage options. Whether you choose a conventional loan, FHA loan, VA loan or USDA loan can influence how much you need to put down, what you’ll need to pay at closing and what credit score or income requirements you have to meet to qualify.

Photo credit: ©iStock.com/Inside Creative House, ©iStock.com/gorodenkoff, ©iStock.com/fizkes

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