Out of 68,175 sales in five Southern California counties, 4,053 or 5.9% were on the market for less than a day.
By JEFF LAZERSON | email@example.com | MortgageGrader.com | August 7, 2023
Article originally posted in Orange County Register on August 03, 2023.
Several frustrated readers and house hunters reached out to me recently with their complaints.
All were desperately seeking something to buy, but to their dismay, properties in their sights were sold before they hit the market.
I soon learned that in some cases, listing agents are double-ending deals — putting a buyer and seller under contract before publishing a listing on the multiple listing service or MLS.
So, how can homebuyers take advantage of off-market or pre-market properties before they get locked up?
First, a little perspective on how fast 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 Jan. 21 through July 21.
He compared six months of sales, looking at homes that were on the market for one day or less before going under contract.
Out of 68,175 sales in the 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 never hitting the MLS before being sold. Next up was Orange County with 6.93% of homes. Los Angeles County was next with 5.61% or 1,298 pre-market sales. Riverside County showed 5.3% or 722 off-market deals. Last was San Bernardino County with 4.82% or 432 properties sold ahead of the MLS.
But dig inside the data and we find that, for some deals, selling properties quickly doesn’t necessarily beget the highest prices.
In San Diego County, the median sales price for a property on the market for less than one day was $814,500 compared with $830,000 for a property on the MLS for nine days (using a six-month median), according to ATTOM’s analysis.
San Bernardino County’s median price of $470,000 without market exposure was $20,000 cheaper than the $490,000 median for homes listed for 27 days on the MLS properties.
Conversely, deals in Los Angeles and Orange counties were better for the sellers when homes sold before hitting the open market.
“Make sure your agent has connections to this part of the market,” said Teta. “Communicating and exposing you as an eager, well-qualified buyer to other agents with listing leads could make the difference in getting the first shot at a property.”
A client of mine named Diane (who asked not to use her last name because of privacy concerns) was clear-eyed about the type of home she was seeking in Corona Del Mar. She contacted five real estate agents, two of whom she knew socially and three from previous dealings.
One of those sales agents, Kimberlee Drake, “told me she had exactly what I wanted,” Diane told me, snagging a home for her before it ever hit the market.
“Some sellers prefer privacy. They don’t want people coming in, touching the walls, touching their things,” said Drake, who’s a broker associate at Compass. “For buyers, it is a way to not have to compete with other buyers. Only one person ends up getting the property. It’s not about double-ending. It’s about doing the best (for all concerned).”
Between 1.4% and 2.6% of homes on the market for two days or less were double-ended with the listing agent representing the seller and buyer for the month of July, according to Art Carter, CEO of California Regional MLS.
Many real estate professionals have a network of trusted agents they go to before launching a listing on the MLS. Phil Immel, a broker associate at Sotheby’s International, is one of them.
Immel, who refers buyers to me, said he has a network of 25 agents he likes to reach out to regarding listings that aren’t yet on the MLS. “It becomes a flawless transaction because of the sophistication of the agent,” said Immel. “These are people I’ve done multiple transactions with. Their word is good. Their clients are solid.”
My best advice for you as a homebuyer is to network. Spread the word with folks you know as to what you are looking to purchase before it hits the market, if possible.
If you need a mortgage, get a pre-approval letter upfront from a reputable lender. Have your mortgage loan originator call each real estate professional you are soliciting to be sure the agent understands you are well-qualified and ready to buy.
Freddie Mac rate news: The 30-year fixed rate averaged 6.9%, 9 basis points higher than last week. The 15-year fixed rate averaged 6.25%, 14 basis points higher than last week.
The Mortgage Bankers Association reported a 3% mortgage application decrease compared to last week.
Bottom line: Assuming a borrower gets the average 30-year fixed rate on a conforming $726,200 loan, last year’s payment was $889 less than this week’s payment of $4,783.
What I see: Locally, well-qualified borrowers can get the following fixed-rate mortgages with one point: A 30-year FHA at 6.5%, a 15-year conventional at 6.375%, a 30-year conventional at 6.75%, a 15-year conventional high balance at 7% ($726,201 to $1,089,300), a 30-year high balance conventional at 7.25% and a jumbo 30-year fixed at 7%.
Note: The 30-year FHA conforming loan is limited to loans of $644,000 in the Inland Empire and $726,200 in LA and Orange counties.
Eye catcher loan program of the week: A 30-year FHA fixed rate at 5.875% with 2 points cost.
Jeff Lazerson is a mortgage broker. He can be reached at 949-334-2424 or firstname.lastname@example.org. His website is www.mortgagegrader.com.
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Jeff Lazerson - Mortgage Columnist since 2011