Right now, with the lack of listings tying the real-estate market into knots, that underground market apparently is becoming increasing important in the Boulder Valley and surrounding areas.
“Some people call them ‘pocket listings,’ some people call them the ‘underground market,’ but it’s something that everyone is dealing with,” said Roger Walker, a broker associate with Re/Max Alliance on Walnut. “Hopefully they are all being dealt with ethically.”
A pocket listing simply is a real estate industry term denoting a property where a broker holds a signed listing contract with a seller but where it is never advertised nor entered into the Multiple Listing System, or where advertising is limited for an agreed-upon period of time.
To a large extent, the underground market is identifying potential listings by identifying homeowners who may soon want to sell, or to encourage homeowners considering a sale to move ahead in today’s market.
“This year we are seeing very strong demand for houses from buyers, and basically we don’t have a whole lot of inventory out there,” Walker said. Making things even worse, “some owners are hesitant to sell because they don’t have a place to buy,” Walker said. “Because of that, agents have buyers they are working with that they can’t find a house for, and we’ve had to become a little more creative about ways to find that house.”
Real-estate agents are, by matter of necessity, always seeking new listings or buyers — and newspapers are grateful for it. But when advertising alone won’t do the trick, such as in today’s market, most agents are more than willing to wear out their shoe leather and talk to most anyone who might know anyone at all with a home that might be for sale.
“You can find houses by word of mouth, or letters to specific subdivision buyers have identified an interest in. There are opportunities out there that are not published,” Walker said. “You’ve got to be creative; I try to do that with my newsletter.
“A lot of times it has to do with major life changes — graduation, empty nesters or babies on the way.”
In Louisville, often a tight market regardless of the climate in the rest of the Front Range, only 22 homes were listed that were not under contract as of mid-May, a fairly startling figure for a city of nearly 20,000 residents, said Stephanie Lyon, managing broker and owner of Trilogy Real Estate, 608 Main St., Louisville.
“I have not seen a market with this tight of inventory ever, and I’ve been licensed since 1989,” Lyon said. “Things are going on the market, and in one day I’m dropping everything to get my clients out there because they might be gone by the third day.
“Prices are up, days on market are down and inventory is down for all the towns,” she said.
Lyon agreed that agents have necessarily turned more to the underground market, although “pocket listings” might be a more appropriate term. Mostly, she said, these are potential sellers who don’t want to have a ton of traffic through their home for any number of reasons, or who are not in a particular hurry to sell their home.
“Maybe you have small children, or maybe a sick parent, or you just don’t want to deal with people stomping through your home,” she said. Often it comes down to the sellers not wanting to deal with multiple offers, biding their time until the right buyer comes along, or even homeowners who don’t want to sell to just anyone.
At any rate, it is a fine thing for a real estate agent to know about these listings in case the perfect client comes along.
“Some neighbors of mine just sold their home without listing it. They found someone at their church who wanted to buy it,” said Lyon, a Louisville resident.
Regardless, Lyon said, a lot more effort is being spent by agents trying to identify potential sellers.
“Brokers are writing letters to homeowners in a neighborhood where they have clients interested in buying — even forwarding unsolicited offers in there,” she said.
“But it usually comes down to networking with your fellow brokers to find opportunities out there, and just talking to everyone in your community who might know somebody.”
Not going through the Multiple Listing Services does cut down on the amount of time a seller has to dedicate to the process. The potential also exists that the seller would not receive a fair value for the home without multiple offers.
That risk is always there in any home sale, however, especially one listed as “for sale by owner.” With homeowners so concerned about sale prices getting back to the pre-housing bubble mark, it might be expected that some would be out there testing the waters — but that doesn’t seem to be the case.
“I haven’t necessarily seen more ‘for sale by owners’ out there,” Lyon said, “but I did see a listing that said, ‘listed for comparison only.’ ”