Off Market Real Estate Deals Vs. The MLS

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Have you ever considered the differences between off market real estate deals and the MLS?

Finding a real estate deal to “run with” in a market as competitive as today’s is no small task. However, there are things you can do and simple tricks you can implement to place the odds in your favor. Most notably, real estate is a numbers game. Simply increasing your buying options can go a long way in making sure you get the deal you want, but I digress. What does increasing the buyer pool mean in 2017?

If you want to increase the amount of viable options you have to choose from for you next deal, may I recommend considering both off market real estate deals and those on the MLS? While they are both essentially the same thing, there are subtle difference worth accounting for.

I want to make it abundantly clear: I am not advocating for one over the other, nor am I suggesting that you ignore either. In reality, both off market real estate deals and those found on the MLS are equally important for investors to acknowledge. When all is said and done, a deal is a deal, no matter where it comes from. I simply what you to recognize each as a viable option moving forward. And, in order to do so, you must first be able to differentiate between the two. For it’s only in knowing the differences that exist between off market properties and those on the MLS that you’ll be able to take advantage of each in a way that benefits your business.

Off Market Real Estate Deals Vs. The MLS

Finding deals on the mls

On Market Properties (The MLS)

The multiple listing service, otherwise known as the MLS, is essentially what most people are referring to when they discuss properties that are “on the market.” In fact, it may be easier to think of the MLS as the “official” real estate market, in that it’s the one database fully endorsed by the National Association of Realtors (NAR). And while the endorsement of the MLS by America’s largest trade association involved in all aspects of the residential and commercial real estate industries doesn’t make it official, it may as well be. If for nothing else, you won’t find a more comprehensive, reputable gathering of property information anywhere else in the country.

But what exactly is the MLS? What makes it such a powerful tool for those with access to it? In short, the MLS isn’t a single database, but rather an amalgamation of approximately 700 different regional databases spanning the whole of the United States. Quite simply, it’s the most exhaustive collection of housing databases sanctioned by those with boots on the ground. Homes are therefore reported on properly and easily searchable. What else could you ask for?

It’s worth noting, however, that home sellers are not permitted to post directly to the MLS. As it turns out, access to the database is strictly limited to licensed agents and brokers that have elected to pay for an exclusive membership. It’s only once these licensed agents and brokers find themselves with a client that the magic happens. It’s the agent’s responsibility — once their services have been enlisted by a seller, of course — to gather the appropriate information pertaining to a subject property and post a listing on the MLS. That’s an important distinction to make: the agent or broker is posting the seller’s home on the MLS on the owner’s behalf.

Off Market Real Estate Deals (Everything Else)

The MLS is entrenched as our country’s greatest real estate search tool. It has the power to find homes based on very specific criteria in just about any market, but I digress. As I alluded to previously, the MLS is reserved for those that want to work with licensed agents and brokers.

But what about those sellers that elect to go about the selling process alone? What about those owners looking to sell that have essentially written off the idea of working with licensed brokers and agents? Where do their properties end up? As you may have already guessed, those homes that don’t end up on the MLS are essentially what we in the business refer to as off market real estate deals. Quite simply, if a home for sale is not on the MLS, it’s “off the market.” But again, what exactly does that mean?

In the event sellers choose to forgo enlisting the services of an agent or broker, they are left with a secondary, but nonetheless viable selling option: the for sale by owner (FSBO) route. As its name suggest, FSBO means the owners are taking on the responsibility of selling the home themselves. Instead of the home being listed in a huge database like the MLS, the fate of the home is solely on the shoulders of the owner. In the right hands, an FSBO is an intriguing proposition. However, selling a home is no small task. If you choose to go this route, be sure you know what you are doing.

Off Market Real Estate Deals Vs. The MLS

Again, don’t hurt your business by limiting your search platforms to either off market real estate deals or those that can be found on the MLS. In theory, the investors that stand the best chance at landing their next deal are the ones choosing form the largest pool of prospective properties. And what better way to give yourself the best odds of finding a deal than to target both on and off market properties?

The Pros Of Off Market Real Estate Deals

  • Less Competition: The mere fact that off market real estate deals aren’t on the MLS implies an inherently smaller degree of exposure. As a result, it’s safe to assume fewer buyers will be vying over the same property.
  • Better Deals: Since off market real estate deals aren’t typically handled by someone with experience selling a home, it stands to reason they don’t know how to fetch top dollar. What’s more, their inexperience could be your greatest benefit, as homes sold by their respective owners sell for an average of $39,000 less than those on the MLS.

The Cons Of Off Market Real Estate Deals

  • Harder To Find: Approximately eight percent of today’s homes are FSBO. That means that the pool of homes you have to choose from in this category is a lot smaller, and therefore harder to find. What’s more, they aren’t advertised remotely to the same extent as their MLS counterparts.
  • Dealing Straight With The Seller: That’s not to say all sellers aren’t experienced in selling, but it’s safe to assume the process will be more drawn out if they aren’t assisted by a professional broker or agent.

The Pros Of MLS Real Estate Deals

  • Easier To Find: Not surprisingly, those properties listed on the MLS are much more accessible to anyone looking for a property in a specific region.
  • Accurate Information: Homes listed on the MLS are curated by licensed brokers and agents, so there is a better chance that the information provided is accurate.

The Cons Of MLS Real Estate Deals

  • More Competition: Understandably so, properties listed on the MLS are seen by more prospective buyers than those off the market. As a result, increased exposure will certainly result in more competition.
  • Higher Prices: More competition inherently results in higher prices. The more people that see the home and the more interest that is garnered, the more you will likely have to pay.

The differences between off market real estate deals and those found on the MLS are glaring. However, I implore you to look past the differences and take each platform for what it is: an opportunity to find a deal. If for nothing else, it’s only when you increase your options that you will seemingly place the odds of getting your next deal in your favor.