2 pros and cons of buying a home that hasn’t been listed yet

Buying a home these days is difficult for many reasons. First, mortgage loans are still expensive to sign. Although mortgage lenders are lowering rates starting in early 2024, the average rate on a 30-year home loan is still close to 7%, according to Freddie Mac. Combine this with rising home prices and affordability issues can arise.

Another problem is that there isn’t a lot of housing stock to go around. So it’s still very common to find yourself in a situation where you’re just one of several interested buyers making offers on the same home.

That’s why it’s a good idea to encourage your real estate agent to look for homes for sale that aren’t yet listed. To be clear, when we talk about unlisted homes, we mean homes that are not listed on the Multiple Listing Service (MLS).

MLS is a marketplace for selling homes. Real estate agents typically list their homes on the MLS for visibility so other agents and buyers will know that the home exists.

You may want to purchase a home that is not yet listed. However, there are some advantages and disadvantages to using this method.

Advantage 1: You can make an offer on your home before other buyers have seen it.

There is a lot of competition for housing these days due to a shortage of housing inventory. The advantage of buying an unlisted home is that you can research it first when it comes time to make an offer. If there aren’t many competing buyers, you might pay less.

Pro No. 2: More room for negotiation

Sometimes sellers want to receive a pre-listing offer for a reason. Sellers are willing to lower their prices to sell their homes quickly, host open houses, and not have to deal with interested buyers walking around their living spaces. So, you may end up paying less for your home during times of high prices.

Cons #1: You may end up overpaying

Sometimes it’s a good thing to have competing offers on your home. Because it shows how much a buyer is generally willing to pay. If you don’t have any other offers because you’re looking at a home that isn’t listed, you run the risk of paying more than you expected. Not only can this harm you financially in general, but it can also cause problems with your home’s valuation. This means your mortgage may not be appraised high enough to be processed.

Disadvantage 2: The seller’s closing terms may be strange.

It’s one thing to get a sneak peek at a home before it’s revealed to the public. However, sometimes sellers intentionally do not want their home listed on the MLS. even alittle For other reasons. This may include privacy or very unique finishing requirements. For example, you want to find a current buyer, but you don’t want to close for 9 or 10 months. This isn’t always the case when purchasing a home that isn’t yet listed, but it’s something to consider nonetheless.

If your real estate agent spots a home for sale but not yet listed, or if you hear about a home that may be for sale through a conversation with a friend or neighbor, there’s nothing wrong with checking it out. But keep in mind the pros and cons of buying a home before it’s listed. And when setting your purchase price, be sure to work with a real estate agent who knows the local market. Your agent should be able to warn you if you overpay.