Off Market Properties - Things To Consider
You may have heard the term thrown around, but what constitutes an off market property? It refers to a property being sold without any public advertising. When we say ‘public advertising’ we mean it hasn't been uploaded to any online portals, which costs the vendor thousands of dollars.
There are two main categories of off market property.
Those where the vendor has no intention of ever taking their property ‘to market’. Unless these vendors sell off market via the real estate agents buyer network or on their own, they simply won't sell. This is a true off market opportunity.
Then there are those where the vendor is hoping to sell off market to avoid advertising costs, pre-sale works, open for inspections and the auction process in general. These properties are usually referred to as ‘pre market’. This property is typically sent to buyers within the agent’s database and an inspection is held for any interested parties a week or so before works and or advertising commences. If no acceptable offers are received, this vendor is usually already committed to taking the property to market
So whether they are truly off market, or if they’re pre-market, the beauty of these opportunities is the lack of competition. You are negotiating with the vendor at their reserve price, not at an inflated price set by the market and competition
Though they can present good value, there are some important things to consider when you purchase off market.
Don’t rush it. Do your due diligence, especially on planning applications in the surrounding area. We have heard of buyers being so ecstatic about an off market ‘deal’, that they have skipped the due diligence all together, only to find when they move in that a 7 storey tower is going up next door. Likely something the vendors knew about, and why it was sold off market in the first place.
Know your property values. This one is tricky because a lot of buyers rely on the ‘social proof’ of an on-market property for pricing expectations. Without that to guide you, you’ll need to get a little more mathematical. Make sure you research recent sales, and work out what YOU think it’s worth, what the vendor is asking is obviously important but you don’t need to jump straight in at the asking price.
Ugly isn’t necessarily a bad thing! You need to remember, these properties have not gone on the presale works conveyer belt. You are seeing it raw, ‘warts and all’. This is precisely what we LOVE about them. You see the cracks in the paint which gives you an indication of the sub floor condition, or any new or old water damage which may need immediate attention, which means $$$ spent up front. You see it in it’s true natural state which is helpful. But ugly.
Vendors often choose to sell off market because they want a hassle free sale. So dont expect when you ask if things are working, if broken fixtures or fittings will be replaced or removed prior to settlement to get a positive answer. As we said, these ones are warts and all and are sold that way.
Settlement periods can be dealmakers in these negotiations. Some vendors selling off market may be in financial distress, and a quick turn around in the sale can carry more weight than the sale price believe it or not.
Off markets are sold like a private sale, meaning they’re not unconditional. So you can make your offer subject to finance or building inspection, and come to an agreement on price before these are completed.
So why would vendors choose to sell their property off market?
The sheer cost of selling. Pre-sale works suggested by agents can often be 10s of thousands. Marketing costs can be up to $20k and professional styling can be up to $10k. Most of these costs are now payable up front too
Some are extremely private and may feel uncomfortable with neighbors inspecting every corner of their home, they might be happy to sell for $50k less to keep their privacy intact!
Deceased estates are often sold off market because the family doesn’t want to pay for the pre-sale works and associated marketing costs.
Some vendors want to test the market with a dream price to see if they’ll be able to get it. They’re not keen to sell otherwise.
Just like on market property, there’s only a small portion of off market property we’ll actually consider for clients. We guarantee that we can get our clients access to more of these off market options than they can themselves, our agent relationships are the reason we get them, and these have been built after over 10+ years in the industry.
So if you’re out there looking and not finding what you want, it might be worth giving us a call!
Thanks for reading.
Tabitha