The Risks of Buying Off-Market Without an Expert

An ‘off-market’ property that’s for sale, but not listed on the traditional real estate platforms so most people don’t know about it. The allure is that prices are often lower with less competition, which leads a lot of clients to ask us the same question: How many off markets will you show me?

The fact is, we can show clients off-market opportunities until the cows come home. But not all of them are good. In fact, we’d probably recommend only one in 10. And that’s because once we scratch the surface, we almost always find problems.

An off-market gem that turned out to be a lemon

Just this week, we received an off-market listing that initially seemed great. It’s a gorgeous, double-fronted, fully renovated property on McArthur Street, Malvern. With three bedrooms, two bathrooms and a second living area, it's priced in the mid to high $2ms. Most people would jump on it.

However, before we even left our desks, we discovered a 14-lot subdivision submitted to the council a year ago, right on its south boundary. Google Maps shows nothing has been built there yet, but a driveby has shown that in fact its been built. And while a development on a south boundary won't affect natural light, there could be overlooking issues (which there is) and construction noise (which there probably would have been!).

However, we did some more digging and uncovered the real deal breaker: a large block zoned commercial on its eastern boundary. And while there are no planning applications currently with the council, this is an immediate reason to not even inspect the property.

This sort of thing happens all the time

Sadly we see this all too often. A family member once bought an off-market property through a friend of a friend. They trusted the friend, so they skipped due diligence and allowed themselves to believe it was just a good deal. But as the old saying goes, "buyer beware."

Within a few months of moving in, construction began on the block next door. Unfortunately, they uncovered a planning permit too late and discovered their view would soon be obstructed by a giant block of flats.

But that’s not the only pitfall

Let's talk about pricing. Off-market sellers often try their luck with inflated asking prices, so you need to be confident in valuing real estate to avoid overpaying. It's crucial to drill down on value by examining comparable properties in the area. Consider factors like land size, location, orientation, and property condition in your comparisons.

We’re not trying to scare you

We’re just trying to help you go into off-market opportunities with your eyes wide open. Because seriously, a lot of them are lemons. 

Until next time