Why Are Home Listings Disappearing? Some Sold Pre-MLS
Properties are being sold before they hit the market in California, with some agents double-ending deals.
In recent times, I have received complaints from numerous frustrated column readers and home seekers who have been desperately searching for properties to buy, only to find that the properties they have their sights on are sold before they even hit the market. After conducting some research, I discovered that in certain cases, listing agents are engaging in double-ending deals, whereby they secure a buyer and seller under contract before publishing a listing on the multiple listing service (MLS).
So, the question arises: how can homebuyers take advantage of off-market or pre-market properties before they are locked up? To answer this question, it is important to understand the speed at which the market is moving. Todd Teta, a licensed real estate broker and chief product and technology officer at ATTOM Data Solutions, analyzed MLS data for all residential closed sales in Los Angeles, Orange, Riverside, San Bernardino, and San Diego counties from January 21 to July 21. He specifically looked at homes that were on the market for one day or less before going under contract.
Out of the 68,175 sales in these five counties, 4,053 or 5.9% of those sales were on the market for less than a day. San Diego County led the charge with 7.3% or 880 homes being sold before ever hitting the MLS. Orange County followed closely behind with 6.93% of homes, while Los Angeles County had 5.61% or 1,298 pre-market sales. Riverside County showed 5.3% or 722 off-market deals, and San Bernardino County had 4.82% or 432 properties sold ahead of the MLS.
However, delving deeper into the data reveals that selling properties quickly does not necessarily result in the highest prices. In San Diego County, for example, the median sales price for a property on the market for less than one day was $814,500, compared to $830,000 for a property listed on the MLS for nine days. Similarly, in San Bernardino County, the median price of $470,000 for properties sold without market exposure was $20,000 cheaper than the $490,000 median for homes listed for 27 days on the MLS.
On the other hand, deals in Los Angeles and Orange counties were more favorable for sellers when homes were sold before hitting the open market. Todd Teta advises homebuyers to ensure that their agent has connections to this part of the market, as communicating and exposing oneself as an eager and well-qualified buyer to other agents with listing leads can make a significant difference in securing the first shot at a property.
An example of this is Diane, a client of mine who was clear about the type of home she wanted in Corona Del Mar. She contacted five real estate agents, two of whom she knew socially and three from previous dealings. One of those agents, Kimberlee Drake, had exactly what Diane was looking for and managed to secure the home for her before it even hit the market. According to Drake, some sellers prefer privacy and do not want potential buyers coming in and touching their things. Additionally, buyers benefit from not having to compete with others, as only one person ends up getting the property.
Between 1.4% and 2.6% of homes on the market for two days or less were double-ended with the listing agent representing both the seller and buyer in July, according to Art Carter, CEO of California Regional MLS. Many real estate professionals have a network of trusted agents they consult before listing a property on the MLS. Phil Immel, a broker associate at Sotheby's International, is one such professional who has a network of 25 agents he reaches out to regarding listings that are not yet on the MLS. Immel emphasizes the importance of working with experienced and trustworthy agents who have a track record of successful transactions.
In conclusion, my best advice for homebuyers is to network and spread the word about what they are looking to purchase before it hits the market, if possible. It is also crucial to obtain a pre-approval letter from a reputable lender and have the mortgage loan originator communicate with real estate professionals to establish that the buyer is well-qualified and ready to make a purchase. By following these strategies, homebuyers can increase their chances of securing off-market or pre-market properties.