- People sell off-market for a variety of reasons
- Some sellers value privacy over price
- A property might not be off-market after all
The nirvana of property investment has long been considered off-market deals.
The supposed removal of competition means that buyers often feel they can pick up a property for a better price than it would have achieved on the open market.
This may or may not be the case depending on the market cycle as well as whether the buyer is able to determine whether the off-market property is an opportunity or a threat to their finances.
When markets are running hot, as they are now in most locations around the nation, it begs the question: why would a vendor choose to sell their property off-market?
There are a number of reasons to do so, even in rising markets, which buyers need to understand before they submit an offer or choose to pass.
One of the most common reasons for a property to sell off-market is because of the privacy considerations of the vendor.
Sometimes sellers just don’t want anyone else to know they are offloading a property because of their unique circumstances, which could be divorce, death of a family member, or financial distress.
Indeed, every buyer should attempt to understand the vendor’s motivations regardless of whether the property is being sold on or off-the-market so they can craft the best offer possible.
Often times a quick off-market sale can be the best outcome for a vendor rather than the highest price.
Selling property is an expensive exercise, which is why most people don’t do it very often.
On top of the sales commission, there are extensive marketing costs that often run in the many thousands of dollars that usually must be paid upfront.
Some sellers simply don’t have the funds to finance these costs, or they are not interested in having people traipse through their home every Saturday for weeks on end.
This can be one of the reasons why someone would choose to sell their property off-market, even when they might be able to achieve a higher sale price.
Another reason why a property might be marketed off-market is because the agent and the vendor are trying to ascertain the likely sales price.
In fast-moving markets or for unique properties, it can be difficult for some agents to calculate what the likely sales price will be.
But by offering the property “off-market” to a database of buyers, agents can better understand the possible price range of the property.
Often, they will then use this as the price guide when they list the property on the market – because it was never really an off-market opportunity in the first place.
This scenario can easily trip up less experienced buyers and investors, who may get hot under the collar about something that didn’t really exist or, worse still, overpay for a property because of the perceived “opportunity”.
Sometimes a property can be promoted as off-market to create more interest in it because it’s actually a little problematic.
Perhaps it has some structural, cosmetic, or geographical issues, which would reduce the number of buyers interested in it on the market.
By marketing it as off-market, this can create additional interest in a property that may have struggled to attract buyers under normal circumstances.
Unfortunately, this situation can trip up novice buyers and investors who may not know the right questions to ask to ascertain whether the property is an opportunity or a lemon.
Power of networks
True, off-market opportunities continue to exist in hot market conditions, but they are not easy to discover nor to source.
It takes a long time to develop significant relationships with sales agents in a variety of locations around the nation.
Over time, these agents come to trust professional buyers’ agents who work for qualified buyers that are ready to purchase.
This means that we often have the first opportunity to learn about upcoming listings, which might suit our clients’ property investment goals.
There is no question that off-market properties exist in every type of market – the hard part is always learning about them in the first place.