Tips for Finding a Home in a Seller's Market

Tips for Finding a Home in a Seller’s Market

Buying a home in a sellers’ market can be tough. With more buyers than properties, bidding wars are common. In that competitive environment, it can take longer to find a home and get an accepted offer. Although it will take work on your end, there are ways to avoid the real estate feeding frenzy. 

Read on to learn how to find motivated sellers and buy a house in a hot market.

Types of Real Estate Listings

First, let’s discuss the different types of real estate listings. There are several. It’s good to know what they are and the difference between them. Here’s the list. We’ll go into more detail below. 

• MLS Real Estate Listings 
• Exclusive Real Estate Listings
• Off-Market Listings
• Expired Real Estate Listings
• For Sale by Owner (FSBO)

MLS Real Estate Listings

You’ve probably heard of the MLS, but maybe you weren’t quite sure what it was. The multiple listing service is a database that real estate brokers use to list the properties they’re selling for clients. This database enables other realtors to search for and show these properties to their clients. Although only licensed agents have direct access to the MLS, you can see the listings on an agent’s website and aggregate sites like:

• Zillow
• Trulia
• Redfin
• Realtor.com

When searching for listings yourself, it’s wise to utilize more than one platform. That’s because each site is a bit different. Some keep their listings up even after they’ve been sold. That’s because Zillow, Trulia, and Redfin are lead generating sites. They want to get as many visitors as possible to submit their contact data. 

Keep in mind that each site gets updated at different times, so be sure to watch as many as you can. These sites also have phone apps so you can easily view new listings. 

Here’s a quick tip - when searching, vary your search parameters. For example, change the price range or expand the location to see if anything else comes up.

Exclusive Real Estate Listings

What is an exclusive real estate listing? Sometimes a buyer hires a single real estate broker to represent them and sell their property. That one broker is the only realtor that can show, market, and sell the property. 

Compare that to an open listing where other real estate agents can find a buyer and receive a commission if they sell the property. 

Buyers may prefer an exclusive listing because they’re working with a single broker rather than several. Although there could be less exposure, in a hot market, it might not matter. Exclusive listings are more prominent for larger estates and for sellers that want additional privacy. 

If you’re looking for a unique property, such as a luxury estate or horse property, consider finding an agent specializing in that type of real estate. Then, ask them if they have any exclusive listings that might fit your needs. 

Folger, Jean. “Exclusive Listing.” Investopedia, Investopedia, 19 May 2021, www.investopedia.com/terms/e/exclusive-listing.asp. 

Off-Market Listings 

Off-market listings are sometimes referred to as pocket listings because the realtor keeps the listing “hidden in their pocket.” These listings can also be referred to as – unlisted homes for sale. 

What is an off-market listing? No matter what you call them – off-market, unlisted, or pocket listings, these properties are not on the Multiple Listing Service (MLS). The listing agent isn’t advertising or sharing the listing with the general public. That means there’s less competition for the select buyers who are told about the property. 

Not only are these properties kept off the MLS – but they are also not shared with other realtors. That way, the listing agent can receive a double commission (both listing and selling). 

Understandably, pocket listings are popular with realtors wanting to maximize their commissions. But in February 2021, new real estate rules severely restricted that practice. If a realtor is a member of the National Association of Realtors (NAR), they are obligated to list the property on the MLS within one business day (Saturday and Sunday excluded). If an agent is not part of NAR, they are not bound by this rule. 

Regardless of the specific listing rules, if you’re wondering how to find unlisted properties for sale, work with a well-connected realtor. It’s always smart to work with a full-time agent who is very active. They may know who is getting ready to sell their home – especially if they have a large database and stay in contact with their past customers. 

“MLS Clear Cooperation Policy.” www.nar.realtor, www.nar.realtor/about-nar/policies/mls-clear-cooperation-policy.

Expired Real Estate Listings 

When a seller hires a realtor, it’s for a specific period. If the property doesn’t sell within that timeframe, the homeowner can either renew the contract or let it expire. If the contract expires – so does the listing. 

A licensed realtor with access to the MLS, can search the database for expired listings. If you’re not finding a home or there’s too much competition, have your realtor search the expired real estate listings. This type of search can be done anytime, including in a slower buyer’s market. Sometimes searching expired listings can pull up just the type of property you’ve been looking for but haven’t been able to find. 

Go through the expired list and see if any of them look promising. If you find some possibilities, have your agent contact the homeowner to see if they’d be interested in selling. 

If your agent doesn’t find many listings, consider expanding the perimeter of your search or even property type. For example, instead of searching for single-family homes, consider townhomes, condos, or even duplexes.  

For Sale by Owner (FSBO) 

You can also target FSBOs. These sellers have chosen not to list through a realtor and may not be willing to work with one. Instead, they want to work directly with the buyer. That way, they avoid paying a commission. There are several sites you can keep an eye on, including FSBO.com, ForSaleByOwner.com, Craigslist, and Facebook Marketplace. 

Even though they’re selling their home themselves, homeowners can list on Zillow, Trulia, and Redfin. When searching, use the filter and click FSBO (it might be a little hard to find). Make sure to keep an eye on FSBO listing because, in most cases, your realtor won’t. That’s because many homeowners selling their houses themselves won’t pay a real estate sales commission. 

A word of caution when viewing Craigslist and Facebook Marketplace – watch out for scams.

Steps to Protect Yourself from Online Real Estate Scams 

Online scams are becoming more prevalent than ever. And sophisticated fraudsters can be very believable. Some shoppers skip Craigslist and Facebook Marketplace altogether. But, if you do check out the ads, be prepared to do some significant vetting. Here are our top tips: 

• Typos and bad grammar in an ad are a red flag. They could be a sign of someone out of the country posing as a local homeowner. 
• An underpriced property is another red flag. Those “too good to be true” ads are written to hook a sucker. 
• Verify the owner via public records right away. 
• Research the owner online before any meeting, check out any social media profiles. 
• Research the property’s history if possible. See if it’s listed on Zillow, Trulia, or Redfin. 
• Check out the house before meeting the owner in person. Doing a drive-by is helpful. 
• Are the images posted online of the actual property? Fake pictures of a different property are a common practice of fraudsters.
• Talk to the neighbors to make sure you’re talking to the actual owner. See if they know anything about the owner or property. 
• Call the local police department to ensure there aren’t any scams they’re aware of in that neighborhood
• Always meet in person – no Zoom calls or FaceTime.
• Although you can communicate via email - don’t agree to anything or give out any personal information. It’s too easy for scammers to hide behind an email address. 
• If everything checks out so far, meet with the owner. But don’t go alone. Arrive early and park in a safe spot, so you’re not pinned in.
• Don’t give out any personal data besides your name initially. 
• Don’t pay for anything until you’ve confirmed ownership and have a signed contract.
• Don’t wire money – wire fraud is one of the biggest scams out there. And once your money is gone – it’s gone. 
• Have any contracts reviewed by a real estate attorney.

“5 Tips on Avoiding Craigslist Real Estate Scams.” We Buy Ugly Houses®, 27 Feb. 2018, www.webuyuglyhouses.com/blog/avoid-craigslist-real-estate-scam/. 

More Ways to Find Homes for Sale 

Even if you’re working with a realtor, you can still search on your own. If you’re extremely determined and motivated – contact potential sellers who don’t have their home for sale. Sometimes a homeowner is more willing to talk to an individual rather than a realtor. 

Plus, in a red-hot sellers’ market, your agent may be very busy. So, it’s helpful if you can do some digging on your own. Here are some more tips for finding a home to buy while avoiding the competition.  

Reach Out to Friends, Family, & Associates 

Make sure your friends, family, and acquaintances know you’re looking to buy a house. Ask about upcoming homes for sale in their neighborhood. Also, see if they know of any vacant or rundown properties that might be options. 

Put a posting on your social media and ask your friends to let you know if they hear of anything. 

Contact professionals you know that might hear of properties coming on the market. Some of the best professions to contact are contractors, CPAs, and estate attorneys.

Deep Dive Online Listings  

Take a look at a property you wouldn’t normally consider. You might uncover a hidden gem. Here’s what to look for: 

• Big price drop – if you see a home that has a significant price drop, know that the seller is motivated. Maybe they’re relocating to another state, or it’s a divorce situation, and they need to liquidate. 
• Multiple price drops – that means they either listed too high or are motivated to sell – or both. 
• Listed for a long time – doesn’t necessarily mean there’s something wrong with the property. It could be the home fell out of escrow multiple times through no fault of the sellers. 
• Unlisted and relisted – check out the price history of the home (towards the bottom of the listing). You can see when a house was bought, sold, listing removed, etc. Knowing this data can help in negotiating. 

Consider a Fixer 

Love home makeover programs? If you’re handy, a fixer might be an option. Drive around neighborhoods you’d like to live in. Look for vacant or distressed properties. Ask the neighbors if they know anything about the home – if it’s vacant or a rental. Then check out the county records for ownership information. Contact the owner to see if they’d consider selling. 

Unless you have a contractor in the family or enough money for the upgrades, stick to cosmetic fixers. Stay away from properties with significant dry rot, bad roofs, and foundation issues. Look for unkept, dated, and ugly – but not falling down!

Take a Drive in Your Target Neighborhoods

Spend time driving around looking for homes that are unkept or may be vacant. Watch for piled-up newspapers and a neglected yard and lawn. 

If you see residents out and about in their yards or washing their cars, stop and strike up a conversation. Ask them if they know of anyone in the neighborhood who might be interested in selling their home. 

Make a List of Potential Sellers  

Finding motivated sellers can be hard and sometimes tedious work. But if you’re determined to avoid bidding wars, it’s worth it. As you’re driving around and checking out neighborhoods, make notes of potential properties with addresses and any data you discover. Also, take photos, so you remember the house. 

When you go online or visit the county for ownership information, make special note of any:

• Absentee owners
• Out-of-state owners
• Properties with liens (property tax, federal tax, and mechanics liens)

Find a Foreclosure 

Shopping for foreclosures can take time, but it’s worth it when you locate a property you’re interested in. HUD has several sites that list their foreclosures, including Fannie Mae’s HomePath. For home shoppers looking for a primary residence, HomePath’s First Look program gives them an opportunity to view upcoming foreclosures before investors. 

You can also search government websites and public records for the areas you’re interested in. 

“Homes for Sale: HUD.gov / U.S. Department of Housing and Urban Development (HUD).” Homes for Sale | HUD.gov / U.S. Department of Housing and Urban Development (HUD), www.hud.gov/topics/homes_for_sale.

“Find a Home During First Look.” HomePath.com – Find a Home during First Look, www.homepath.com/firstlook-program.html.

Foreclosure & Eviction Moratoriums

Since COVID, there has been a moratorium of foreclosures and evictions at the county, state, and federal levels. Fannie Mae and Freddie Mac have extended their moratoriums also. As COVID winds down and the country gets back to normal, these temporary holds may soon vanish. 

No one can predict what will happen with real estate. But the end of moratoriums could mean more properties for sale in the future. Watch for:

• Foreclosures – we may be seeing more soon, but like in the crash of 2008 and 2009, banks may keep them on their books for a while and not flood the market. 
• Rental properties – some landlords may decide to sell rather than keep renting out their properties.
• Bankruptcies – both personal and business BKs could increase.

With the inventory shortage of 2020 and into 2021, additional properties for sale could swing the market from a seller’s market to a buyer’s market. Many experts aren’t expecting a crash but instead are predicting a dip in prices. 

Up and Coming Neighborhoods  

One of the most enjoyable things about shopping for real estate is investigating up-and-coming markets. Depending upon the locations you’re checking out, you may find some interesting neighborhoods within cities that are being transformed from commercial and industrial into mixed-use properties. 

Mixed-use properties house residential, retail, office space, and marketplace. These “work and play hubs” are appreciated for their convenience. Many of these neighborhoods are highly walkable. Some great examples of this type of properties are in: 

• The riverfront in Downtown Memphis, TN 
• Port Covington in Baltimore, MD
• The Gulch in Atlanta, GA 
• Schuylkill Yards in Philadelphia, PA
• Water Street in Tampa, FL
• River District in Chicago, IL

Cowin, Laurie. “6 Mega Mixed-Use Projects across the country.” Construction Dive, 6 Nov. 2018, www.constructiondive.com/news/6-mega-mixed-use-projects-across-the-country/541441/.

Expand Your Search Area

Have you always lived in the city because of your job, but now will be working remotely? If so, consider buying a home in a small town, either in the same state or a completely different part of the country. Once you know you won’t have to come into the office, your target area could expand. That could be the case even if you only have to come into the office a few times a month. 

Before making plans, check with your HR department to confirm working remote is permanent. Also, confirm your salary will stay the same. For example, if you currently live in California and are planning on moving to a less expensive state, you wouldn’t want to move and have your income lowered unexpectedly. 

And probably the most important tip of all - before you start shopping, make sure you have your finances lined up. Once you have a pre-approval letter in hand, you’re on your way to finding your new home. Good luck and happy hunting!