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In this week’s episode, Dave, Cate and Pete take you through:
Why do vendors sell off-market?
- Private situation/private person.
- Crazy offer from a buyer, (sometimes an underbidder from a nearby property).
- Very short time frame – too short for an auction.
- Bad/non-compliant tenant in an investment property.
- Trying to save advertising costs.
- Tough property to sell and wanting to avoid a campaign that ‘cooks’ the property.
How have off market property alerts changed over time?
- What has made them more mainstream?
- This has become more trendy because of the perception that you can getter a better deal on an off market property.
- It’s become a marketing tool for real estate agents, especially with proliferation of buyer’s agents.
- Agents used to go directly to the advocates, or to a buyer that they were very familiar with who has been active in the market and missed out – someone who can make a quick decision and have money.
- They are now using it as a selling tool for their agency – exciting off market opportunity text message going out to their database.
- Almost any old Joe is getting those messages. Some agents will have a section on their website for off-markets.
- Not as aggressively a sellers market anymore (not a buyer’s market just yet). A lot of vendors who were committed were caught out. Campaign that unfortunately was running through when covid broke. We saw a lot of them pushing forward with desperate motivated off markets. The quality of off-markets and discounting was stronger back then. The recent off markets are an indication of a market that’s losing the heat. People don’t want to take their property to market. There’s nothing harsher than watching your property pass in on auction day. That vendor will just want a private off-market.
The importance of comparable sales
- You get excited by an off market opportunity, and some people may not do the comparable sales.
- The market is cooling, it won’t go backwards, but it will be easier to buy at auction.
- Do your research.
- Cate – One in four are purchased off market – one in eight properties reviewed are off markets.
What defines a bad off-market?
- If the property has a compromise that’s obvious (main road or trainline, opposite school, next to service station)
- If the property is really badly presented, looks like a diamond in the rough, that can be a great thing.
- Price expectation – be clear with the agent on the price tag. If the agent gives a range, it’s probably a pre-market, not an off-market. Or the vendor wants something a lot higher.
- Agents will call all of them off-market. Ask if this one is potentially going to auction, is it a pre-market or off-market.
- The agent will be really clear about the date or the term for a genuine off-market
How does seasonality change off-market supply?
- You find that the best off-markets are someone who has committed financially and they have to sell. Closely followed by a landlord in distress with a difficult tenant. That’s where the high quality markets come from, very rare to get a secret sale from a media personality.
- When will these deals come about?
- They usually follow a selling season, like a late title wave. The follow on, immediately after someone has made a purchase, late spring into summer and late autumn.
- They may only have to open the door twice.
Why are buyers so keen to field off-markets?
- When listings are thin on the ground, they are getting more opportunity
- If it’s an exclusive conversation with someone who’s motivated to sell, it’s a great opportunity to purchase without competition.
- Delusional reason is that they think that an off market will be a brilliant opportunity to get a discounted price – ensure the property hasn’t got fundamental flaws or is over-priced.