To market, to market? The (not so) secret off-market property game
Whilst potential buyers trawl through listings on websites such as Domain or realestate.com.au looking for their new home, there is a whole other underground market bubbling away beneath the surface. Behind closed doors properties are changing hands out of the public eye in transactions known as off-market deals.
What exactly does off market mean?
Generally speaking, off-market means that the property is not available for sale on public websites such as realestate.com.au or Domain and that also includes the agent's own website. The property is essentially “off the grid” as it is not online whatsoever and there is no medium being used which would indicate to the public that the property is for sale. Simply, there is just an agreement made between the agent and the vendor or the vendor is selling themselves.
The details surrounding why a property is being offered off market can differ greatly and range from the allure of anonymity to a change in life circumstances that requires urgent attention. No matter what these details are though, the motivation is generally the same – the vendor is looking for a discreet and quick (if priced attractively) sale.
Why is off-market a valuable option?
At the moment, Australia/Sydney is experiencing a down market. The property offerings publicly advertised are limited and can be few and far between for many suburbs. Did you know that the ‘off market’ section of the real estate industry makes up around 30- 50% of Eastern suburbs properties sold alone.
Choice is one of the most important reasons to consider off-market property stock. There’s choice out there that you may not know about unless you tap into off-market opportunities. Finding the perfect home means you need to see ‘all’ of the property stock!
Off-market can also be a less competitive way to buy property, in many cases we are the first and only ones to see the property for our clients, thereby cutting out a potential bidding war.
There are different kinds of off markets...
Off market is a buzzword at the moment but let's be clear here, there are different kinds of off-markets.
There is the TRUE OFF-MARKET property, where the vendor has no real intentions to have the property listed publicly and is keen to pursue a “hush-hush” sale. Agents typically only contact buyers agents or ‘hot’ buyers on their database.
And then there is:
The PRE-MARKET property. This property is not listed publicly but this is the wolf in sheep's clothing. This piece of real estate is waving its off-market flag, but has all the inclinations of switching teams to be publicly listed if, and when need be. Typically this property is advertised discreetly on agents’ websites and only buyers on their database will receive the information via an email for example. Two weeks is generally the timeline for pre-markets before the agent may decide to go ahead with a full online campaign, thereby alerting all the other buyers out there, trawling the real estate portals. The course of action depends on buyer feedback and the level of interest in terms of value i.e. if they get the right price, they will sell there and then, if not, it will go to market.
How do you find off-market?
There is a lot of emphasis at this point on the “who you know” and the relationships you form in order to successfully get your foot in the proverbial door of your off-market home.
If you are ballsy enough you could approach the vendor (the person that owns the house) yourself. You just never know your luck!
It also pays to make friends with your local real estate agent. When you are on the merry-go-round of looking for a property chances are you have gotten to know the listing agents in the suburb. A good agent is always trying to sell and if they are attuned to what you are looking for, they will more than likely be happy to flick through their little black book of off-market delights to try and help you get the property you are after. Agents have taken to sending out their off-market properties to their select database of potential clients so it could pay off to see yourself on this list.
Most importantly, working as a buyers agents eliminates all of the above off your to-do list as they do all the leg work for you.
There is a specific order for real estate agents for off-market stock:
1.Buyers agents are always the first ones to become privy to what is about to drop on the market
2. They then approach their database about the sale before they put the listing;
3. ‘On the Market’, this means the online world will now know about this sale!
Engaging the services of a buyer’s agent gets you the equivalent of a fast-pass. You by-pass all the other house hunters scouring the internet for home listings, you jump ahead of the agent’s database and land firmly at the top of the queue.
What are the challenges you need to know about?
It is really important as a potential buyer to understand the challenges which may come with pursuing a property which is off-market, especially if you are handling the purchase of the property on your own. Whether a true off the market or a pre-market estate, there are key considerations you need to make as a buyer dabbling in this underground space:
In a lot of cases the negotiations with the agent and vendor can be longer and more tedious. There may be additional contract clauses surrounding longer settlements for example or release of deposit clauses which need to be navigated. Don’t forget that you are up against experienced negotiators who do this every day, selling agents are expertly trained in objection handling, so be aware that for every objection they will likely have a counter.
Pricing is always a huge consideration when looking to put down money on a home, but when playing the off-market field, this bat can swing both ways. It is important to ascertain if the seller is motivated and keen for an actual sale or if they are leveraging a dry well in terms of what stock is on the market in the hopes of securing a dream price, which is way out of line with what the property is actually worth.
Is this house going to sell in the off-market period or is this just the teaser before it goes on the market? Once again, it’s all about the motivation, as you need to not only get an understanding of what the sellers intentions and motivations are, but also those of the listing agent. It is important to know the play before you make an offer on the property but it was never going to be accepted anyway.
The benefits of working with a buyer’s agent for off-market property purchase
You are able to see everything that is for sale, with access to a 100% of the selling market.
It takes skill to buy off market properties successfully. A buyer’s agent can lead their client through the complexities and negotiations of an off-market property purchase. An experienced buyer’s agent who has a long standing relationship with the real estate agent, and therefore knows how they work, will have much better odds of closing the deal.
Working with a buyer’s agent puts you ahead of the game with priority access to the properties when they first become available and sound knowledge and advice through the whole purchase process. More importantly, they will have the processes in place to get you ready as soon as possible. They will collate all your due diligence, such as pricing/DA checks/ contract review etc in a very short period of time so you have all the relevant information in front of you. Only then can you confidently decide if this is still the right property for you.