Off-market properties have been around for decades, however it is only in recent years that the term “off-market” has become increasingly and more widely known by the general home buying public.
In this article we will go behind the scenes of the off market property market and let you in on a couple of industry secrets that your buyer advocate uses to help their clients find the right property.
What is an off-market property?
If you’re not familiar with the term, off market properties refer to those that will not be advertised to the general public. They will be sold through a sales agent’s network, including buyer advocates.
Why do people sell their properties off-market?
There are a number of reasons owners choose to sell their properties off-market. They generally have good reasons to forgo the open houses, sales boards, online listings, staging, professional photos and weeks of an active sales campaign.
In many cases, the owners don’t want others, including neighbours, friends and other agents to know they are selling.
Their reasoning could include a relationship break up, work transfer, downsizing, pandemic related financial stress, having another child or moving into care.
Some owners just want to avoid having to keep the house ‘inspection ready’ all the time while juggling kids, pets and working from the home office on top of school runs, kids sport, housework and gardening.
What are the benefits of selling property off-market?
A major benefit of selling off market is the added privacy and security that owners enjoy through private inspections for only one or two highly vetted buyers.
A seller can literally sell their property with just one inspection, a few buyers and all within 24 hours without having to prepare their home for sale or invest money in a marketing campaign.
Other than privacy and a huge reduction in the number of people traipsing through the home, the other advantages to owners is the cost savings. With no marketing, staging and professional photos to pay for, the owner can save up to $20,000 in sales costs.
In the case of selling investment properties, the issue of access with tenants is now more complex than ever. Off market campaigns means the sales agent can set an agreed amount of inspections with the tenants, reducing the owners penalty costs to the tenant and ensuring a smooth process for all concerned.
The owners may also dictate that the property is not to be sold to developers, thereby helping to preserve the community they are leaving.
Most sales agents have a ready list of 2-5 A-list buyers, including buyer advocates who will be in contact with sales agents when they have buyers for specific suburbs or housing types.
How do buyer agents get off-market properties?
A large part of a buyer advocate’s work is dedicated to making and retaining professional relationships with sales agents across a wide range of areas. This relationship leads to the buyer advocate being added to an email list dedicated to off market and pre market listings on a regular basis.
Some agents will keep an advocate only list as well as a general list. Advocates aren’t interested in fake off-market properties that go out to the agents’ entire database.
Occasionally, owners will contact us directly looking to sell their property to one of our clients. This can be a very quick and easy way to sell if the buyer advocate has a client whose needs are a perfect match.
Like other industries, many buyer advocates are friendly rivals who often co opt to support each other. This includes acting on behalf of each other at auctions, inspecting properties for one another and sharing off market listings if the property is not a match to their own clients.
Is it a good idea to buy off-market properties?
Not every off market property is a great buy. It is only a good buy if it meets your needs, including your budget and the property is a genuine off-market property.
Genuine off market properties generally attract far less competition which in hot property markets, can save the buyer money. Generally only three or four parties are aware of the property and only one or two may submit an offer.
There is no point in buying an off-market property just because it is off-market.
We see buyers with blinkers on, only wanting to purchase off-market properties, and ignoring an excellent property that is currently available on the market. This is a mistake. Buyers should be willing to consider all suitable options no matter how the property is being made available for sale.
In some markets a buyer will save more money buying a property at auction or on the open market than in an off-market setting.
There is a skill and art to qualifying and sorting the fake off-markets and the genuine opportunities. Even we get caught out occasionally by agents wasting our time because they lack experience dealing with advocates.
Our final thoughts on buying Off-market Properties
Off-market opportunities have proven to be the ideal property for many of our past clients to purchase. However, many more off market properties were not a match for any of our clients and we could access better options that had made it to the market.
Don’t get too caught up in the current excitement around off-market properties. We estimate that 72-75% of them do not represent good value for money. A good advocate will be able to sort the good from the bad and let you know if you could get a better deal buying on market or off.
Despite the advantages for buyer advocates to have access to off market properties, they only work for our clients when they are evaluated to be the right house in the right area of a suburb and at the appropriate price based on thorough due diligence and market intelligence.
Recent Comments