In this week’s episode #68 of the Property Planner, Buyer and Professor Podcast, the team discuss “Off the market properties – everything you need to know”, as Dave, Cate and Pete take you through:
- What are off-markets? In a nutshell, off-market properties are properties that are up for sale without public advertising or marketing.
- The difference between off-markets and pre-markets. Don’t get sucked into the real estate agent’s ‘pre-market’ vortex. A genuine ‘off market’ is not the same as a ‘pre-market’. The Property Buyer explains the difference.
- Why would a vendor choose to sell off-market? The trio discuss the different motivations behind a vendor’s decision to sell their property ‘off-market’.
- How do you find off-market opportunities? Anyone can be privy to an off-market opportunity, but if the property is not publicly advertised, how do you know about it? The Property Buyer shares her tips on how to put your best foot forward with real estate agents and get in the know.
- The importance of rapid decision making. Off-market opportunities are often time sensitive and require quick and decisive action on the part of purchasers. If a good off-market opportunity lands in your lap, now is not the time to equivocate! The Property Planner and Buyer explain the methods used to make decisions fast.
- Are all off-markets good opportunities? A critical mistake is thinking that all off-markets are great opportunities. This is not true. All off-markets are not the holy grail. The Property Buyer shares how to spot the genuine opportunities from the time-wasters.
- Off-market discounting. Many purchasers incorrectly believe that an off-market sale is an opportunity to get a discount on a property. But the reality for most off-market’s is that you need to be prepared to pay what the property is worth.
- And of course, our “gold nuggets”!
- What are off markets?
- In a nutshell, off-market properties are properties that are up for sale without public advertising or marketing.
- Often, “off-market” means “pre-market” in the sense that the property simply hasn’t been listed anywhere yet.
- There are also some true “off-market” opportunities where the vendor doesn’t want to make the sale of their property public knowledge.
- Having the opportunity to inspect and make an offer on an off-market property can be a huge advantage for the right buyer. Let’s look into how they work and where to find them.
- Difference between off-market and pre-market
- Where people can get stuck is where they think they’re looking at an off-market, but in fact they’re looking at a pre-market. It can be a fishing expedition where an agent sucks someone into their vortex and are simply trying to find out what someone will pay and the vendor can use it to set their reserve.
- A pre-market is a property that has been shown to you selectively, but it is destined to hit the market.
- Why do off-market properties exist?
- Properties are sold this way if vendors needed to sell as soon as possible
- 90% of the time – someone has purchased and they need to sell their existing property within a certain timeframe so they can settle on both the purchase and the sale on the same day.
- The property owner is an investor with difficult tenants occupying the property who do not present the property well – buyer’s agents can look past this when an off-market is presented to them.
- High profile owners who want to keep it secret.
- Or as a result of financial difficulties or a change in living arrangements (divorce). A home being sold under these sorts of conditions is known as “distressed property”.
- Where do you find off-market opportunities?
- Anyone can be privy to an off-market opportunity (not just buyer’s agents).
- A real estate agent is more likely to talk to you about off-market opportunities where they have seen you bid for a property and miss-out. If you’ve been going to open for inspections for 12 months and haven’t made any moves, they’re unlikely to bring off-market properties to your attention.
- Buyer’s agents have the best chance of receiving off-market opportunities, as they are doing regular business with them. Knowing a good buyer’s agent can get you connected to off-market properties.
- You should introduce yourself to all of the real estate agents operating in your preferred location. Tell them your price range (roughly) and your brief. Be-friend the agents and ask them to add you to any email lists they send out.
- What percentage of properties being sold are off-markets?
- For an agent 26% of acquisitions – roughly a quarter of properties they’ve purchased for two years running has been off-market opportunity.
- It’s very rare for someone who is not working with a BA to purchase well off-market.
- This is generally because of the conditions that agents need to sell under – very quickly. They could be sending out feelers on Tuesday because the property must be sold by Friday.
- What happens if the real estate agent doesn’t contact you?
- The agent only has one chance to show the buyer through, maybe two and they will go with the buyer who’s the best bet. The buyer who is wasting time, taking too long to make a decision, isn’t serious, is looking for a unicorn – is not going to be top of the list.
- Vendors sign a ‘general authority’ rather than an exclusive authority – if they are really desperate to sell. This means that they may be working with more than 1 real estate agent to get their property sold. The agents will be scrambling to make the sale first.
- The importance of making rapid decisions
- This is a great example of why quick decision making is critical – know the market value, your price point, have your pre-approval in place. And if you don’t have that in place, get your property plan and see a buyer’s agent.
- Making a fast decision is difficult for a lot of people – when you have a criteria set, your must have and nice to haves. If the must have boxes are not ticked, then move on.
- Good off markets v bad off-markets
- Off-markets are not the holy grail, you can have:
- Genuinely motivated vendors – with fair and reasonable price expectation, then it’s a good off-market.
- It could be someone who is pie in the sky and tight with willingness to spend money on a marketing campaign. They think their house is worth more than it is and don’t want to spend a dollar on a marketing campaign. These are handed to hungry, young and inexperienced agents who are just happy to get a listing and are a waste of time.
- Discounting and off-markets
- You can sometimes get a discount if you move fast, there is huge time pressure and not much competition. But most of the time, you need to be prepared to pay what the property is worth. The bonus is that you’re paying what the property is worth and not a 5% premium in the face of tough competition at auction/private sale.
Cate Bakos – The Property Buyer’s Golden nugget: if you miss out on the property of your dreams or you get pipped at auction, be nice to the agent. The number of times I’ve had an opportunity the same day to look at an off-market that’s in the same block or same street, that’s a better property for the price tag that you’re looking for. If you’re nice to the agent, you’re memorable.
Peter Koulizos – The Property Professor’s Golden nugget: not all off-market opportunities are real opportunities. Do your research and come to the table prepared.