(MCT)—House hunters frustrated with the market’s supply of homes have shifted their search from the streets to underground.
More buyers are targeting homes that haven’t yet hit the market, a trend agents say will grow as inventory shrinks and the mismatch of what’s available and what’s desired continues.
Such back-pocket deals used to involve mostly luxury homes where buyers and sellers wanted to keep the sale hush-hush. But lower-priced houses are becoming a bigger part of the mix because even those are in short supply.
Working behind the scenes gives buyers access to the deep well of homeowners who would like to sell, but don’t think the market is healthy enough to list. Agents say they identify these sellers through referrals, as well as track those who listed their homes but backed out when they couldn’t sell. There are also buyers who work with agents to make unsolicited bids on homes they think fit their needs.
“There is a shadow market out there with a lot of people who want to sell,” says Joe Grunnet, a broker in Minneapolis. Homeowners “just don’t know they can sell in this market. They still think the world is coming to an end.”
Housing experts say there is a robust stash of homes that aren’t on the Multiple Listing Service. CoreLogic says that for every two houses available in the United States in January, there was one in the “shadow,” or not yet on the market. There’s also a deep overhang of prospective sellers who have already decided to rent their homes rather than sell.
Mike Blood, who struggled to find a $150,000 to $200,000 home in the northern suburbs, recently caught a break. He spotted a construction dumpster in front of a house in Blaine, Minn., that he saw during an earlier hunt.
After learning that it was being readied for resale, he and his agent made an offer even though the home was months from being listed.
“I was so frustrated,” says Blood, who expects to close on the home next month. “And felt like I didn’t have anything to lose.”
Blood didn’t disclose the purchase price. He said he looked at about 60 homes, but they needed too much work or he got outbid.
Grunnet, whose firm specializes in sales and rentals of urban condos, said the stock of available units downtown is so tight that he often runs down the list of owners who are renting out their units to see whether they would sell.
During the first four months of this year, he said his brokerage has already sold more off-market properties than in the previous three years combined.
For Alison and Fred Parks, the decision not to list was a way to test the market and avoid having strangers traipsing through their $1 million-plus condo near the Mississippi River in downtown Minneapolis.
“We’re private people, living in a popular neighborhood,” they said.
The Parkses contacted Cindy Froid, a local agent who says that, on average, 30 to 40 percent of her deals come together before a public listing.
The couple gave Froid three months to sell, and it ended up selling within days to someone who already lived in the neighborhood for the full list price of $1.4 million.
Unusually low inventory is forcing Froid to get more creative in her efforts to reach prospective sellers. “It is a function of necessity,” she said. “It’s hunting and gathering. If it’s not online, I’m going to try to find it for you.”
Graham Smith, the agent who helped Blood, said that in some ways these premarket deals are simply a return to the basics.
“It’s good old-fashioned networking, that’s all it is,” he said. “It’s just using the tools available today to make it easier and more efficient to sell houses.”
©2012 the Star Tribune (Minneapolis)
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