Buying a home is a challenge these days for several reasons. First, mortgage loans are still expensive to sign. Although mortgage lenders have been lowering their rates since the start of 2024, the average rate on a 30-year home loan is still near 7%, per Freddie Mac. When you combine that with elevated home prices, it can lead to affordability issues.
Another problem is that there isn’t a lot of housing inventory to go around. As such, it’s still a pretty common thing to land in a situation where you’re just one of several interested buyers making an offer on the same home.
That’s why you may want to encourage your real estate agent to try to seek out homes for sale that haven’t yet been listed. And for clarity, when we talk about a home that’s not listed, we’re referring to a home that’s not on the MLS (multiple listing service).
The MLS is a marketplace for home sales. Real estate agents commonly list homes on the MLS for visibility so other agents and buyers can find out they exist.
You may be eager to buy a home that hasn’t yet been listed. But here are some benefits and drawbacks to going this route.
Pro No. 1: Being able to make an offer on a home before other buyers have seen it
Since housing inventory is lacking, there’s a lot of competition for homes these days. The upside of buying a home that’s not listed is the potential to get first dibs on making an offer. If you don’t have a bunch of competing buyers, you might pay less.
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Pro No. 2: Having more negotiating room
Sometimes, sellers are eager to entertain pre-listing offers for a reason. A seller may be willing to come down on price to get their home sold quickly and not have to deal with hosting open houses and interested buyers traipsing through their living space. So you might end up paying less for a home at a time when prices are expensive.
Con No. 1: You might end up overpaying
Sometimes, having competing offers on a home is a good thing, because it shows you what buyers are generally willing to pay. If there aren’t other offers because you’re looking at a home that’s not listed, you risk paying more than you should. Not only might that hurt you financially in general, but you could run into issues with your home appraisal — meaning, it may not appraise at a high enough price for your mortgage to go through.
Con No. 2: Your seller might have odd terms for closing
It’s one thing if you’re getting a sneak peek at a home before it’s listed publicly. But sometimes, sellers intentionally don’t want their homes listed on the MLS at all for different reasons. Those could include privacy or having very unique closing requirements — for example, wanting to find a buyer at present but not close for nine or 10 months. This isn’t always the case when you’re buying a home that hasn’t yet been listed, but it’s a point to consider nonetheless.
All told, if your real estate agent comes across a home that’s for sale but not yet listed — or if you hear about a potential home for sale through a friend or neighborhood chatter — there’s nothing wrong with checking it out. But be mindful of the pros and cons of buying a home before it’s listed. And definitely work with a real estate agent who knows the local market well when coming up with a purchase price. An agent should be able to warn you if you’re about to overpay.