Looking at listings online through MLS and other listing platforms is the most common place for investors to scour the market for a potential deal. However, not every property that is sold on the market is listed and advertised to the public. Deals that aren’t listed online are called off market deals or pocket listings; these properties have the potential to be very lucrative for those who know how to find them.
In 2019, MLS Statement 8.0 Clear Cooperation Policy was put in place by the National Association of Realtors. The goal of this policy was to create some regulations on pocket listings/off market deals. The policy requires that brokers list a property on MLS within one day of marketing to the public; this includes posting it online, putting up yard signs, sending out flyers, or any digital communication. However, to compromise, brokers can limit who can see these listings on MLS, and can choose to only show a listing to their clients.
Despite these regulations, pocket listings are still abundant and serve as a great way for investors to locate lucrative deals. However, because these listings aren’t being shown to the public, finding them is much more time and effort consuming. While there are many ways to get your eyes on some off market deals, the most effective way to make this happen consistently and with longevity is through networking. There are four kinds of people that will be helpful to know throughout your search for a deal:
Seasoned brokers have vast lists of people they do business with, both on the buying side and the selling side. This means that the firm will likely have some off market listings already in hand or on the horizon. So connecting with brokers and brokerage firms that do business in your target areas is vital for your success. These firms, though, often make it very easy to get connected by doing events and luncheons and sending out newsletters and new listings to those on their email list. Once you’ve connected with some brokerage firms and you start getting embedded in their system, you’ll start to catch wind of the kinds of listings they’re getting. Eventually, as you do business with them, you’ll start to hear about new pocket listings earlier and earlier.
Building relationships with other investors is another great way to find some off market deals. Whether an investor is selling their property and you hear the first wind of it or an investor has found a deal and needs a couple of partners, there are opportunities to be had when networking with other investors.
Builders and Contractors are in the weeds of this business on a daily basis; they have a first hand look at what’s going on with investors and their properties. Having a network of contractors is beneficial, further than just having a team of people to work on your property. You may be able to get some insight on any distressed investors that will potentially be selling a property soon.
Wholesalers are out making cold calls and scouring for potential sellers constantly, and networking with these wholesalers can be a lucrative way to find potential deals. Though you’re going to be paying a little bit of a premium on a wholesale property, you are not having to do all of the leg work required to find the initial seller.