Off-market listings have become the talk of the town. Recently, we received an enquiry from a potential client who was interested in our services as he navigates his property search. He wasn’t overly concerned about assistance with negotiation, bidding and searching, but was curious if we could help with sourcing off market properties.
A significant number of potential clients enquire about the full range of services we offer throughout the assignment, with a large proportion specifically asking about off market properties. And why not?
Many Buyers Advocates proudly display their ‘percentage of off-markets’ as a badge of honour. For the inexperienced property buyer, this hidden treasure trove can seem very enticing.
Off-market properties certainly have their place and can be fantastic opportunities. However, they can also pose risks. Not all are a worthy purchase, and this can be for a variety of reasons.
Before we allow a client to get excited about, it’s crucial to understand the different categories of off-market listings. We’ve previously blogged about the two broad categories; situational and optimistic. No one really wants to deal with a vendor whose motivation to sell is based on irrational greed. An optimistic vendor hoping to get an exorbitant price for their property, and who otherwise isn’t interested in selling, is not the type of vendor we prefer to do business with.
Common situations that lead to a genuine, situational off-market sale include:
- A vendor who has just purchased (or is planning an imminent purchase) and needs their sale and purchase dates to align to meet their financial obligations at settlement, and they have determined that they don’t have enough time for an auction or regular sale campaign.
- A motivated vendor who is trying to sell a tenanted property that is either difficult to advertise or doesn’t present well.
- A vendor who has very specific requirements that requires unusual terms (such as an arrangement to continue renting their own property for a period of time after settlement).
- A vendor who wants a particularly anonymous sale for privacy/sensitivity reasons.
- A vendor who is unwilling to have multiple buyers walking through their property for personal reasons.
The first two situations are the most common reasons for a quality, and fairly-priced off-market listing.
In the months leading up to the spring market, however, we are less likely to meet vendors who have just purchased.
They are typically more prevalent following a spring market. November, December, January, and May, June are our common months for off-market sellers who have just signed a sale contract.
Active buyers are desperate for off-markets around August and early September, because stock levels are low and they are feeling the drought.
While we’ve categorised off-markets into two camps, there is another type that I haven’t touched on. The mirage off-market. The listing that is going to come to market soon, but the savvy agents pitch as off-market to see if a willing buyer is prepared to pay a premium for it.
The way to identify such a listing is usually by the quoted price. If the agent quotes a range, it’s important to ask if the property is destined for a future campaign or an auction before getting too excited. Many agencies ‘float’ a listing as off-market, only to convert to a campaign if generous offers don’t emerge and with lower listing numbers than previous years, most agents are eager to run some campaigns and to get their boards up in the streets.
We receive many off-market listings, as do most Buyers Agency businesses. From quiet SMS messages to bulk-advocate emails, we comfortably field over a hundred off-market listings in a week. Yet, when we assess how many of these listings are actually investment-grade assets, the ratio is low. From main roads to insufficient floor areas for lender appeal, awkward floor plans to overpriced stock, our rate of off-market inspection activity isn’t as high as you might think.
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