In any property cycle there are winners and there are losers. In a moving market it can be very challenging to secure your desired property in the suburb of your choice. Why? Simply because the competition can be too much and some people either give up or compromise on their choice!
So what can you do about it? And is there a better way?
I want to shed light on a term many people aren’t familiar with – “off market properties”. As the name suggests, these properties are for sale, however they won’t appear on the internet, on the local paper, and they won’t have a board out the front with a ‘For Sale’ sign.
Off market properties are more common than you think. But like anything in life, you don’t know what you don’t know, until you know it! Hopefully the information below will help you better understand this concept and how it all works. Once you know what you don’t know, you can use it as your secret weapon!
“Off market” properties – What are they? And do they really exist?
The obvious questions you may be asking right now are:
- What is an “off market” property?
- Why would anyone want to sell this way?
- Are off market properties really around in this moving market?
- Why should I consider buying in this way?
To help you better understand the concept “off market” properties, it works like this.
A selling agent signs up a new property and there’s usually about a two week time lag before it hits the Internet and the local papers (i.e. before the property hits the market). During this time photographs are taken, floor plans are drawn, and the advertising wording is written up and approved by the Vendor.
If you think about it, most listing agents would prefer to keep their whole selling commission for themselves rather than sharing it with other agents in the office. You see if another agent within the office sells the property, the commission is shared with the listing agent as well as the selling agent. It’s just the way it works!
As soon as the listing agent signs up the property, he or she has a very strong motivation to sell the property as fast as possible before their office colleagues get to know about it. At this point most listing agents will call around their “good clients” and their “favourite Buyers Agents” and offer this great new property that is about to hit the market.
Once a few days have passed, the listing agent has to share their new listing with their office colleagues, and then every agent from the same office does the same – they call their top clients and favourite Buyers Agents!
If no sale is made from these phone calls, the property will eventually get listed to the market via the Internet, print media, sales board is erected, and so on… which is when you find out about it.
So the question begs, how do you get on the speed dial of these estate agents?
This is tough when you are an everyday person buying a home or investment property.
You’re probably only going to deal with selling agents a few times in your life, therefore you are unlikely to be on the agents’ speed dial. Agreed?
If you think about it, “top clients” would be in regular contact with the Agent as they transact frequently on the property market. Also “Buyers Agents” are transacting with Agents on a regular basis (daily in some cases) and therefore Buyers Agents are likely to be on the Agents speed dial. Of course it’s all about relationships and just like “favourite clients”, Agents also have “favourite Buyers Agents”. The trick is to know who!
Properties that are sold (transacted) off market will benefit you in many ways. Here are some of the main advantages to you:
- Less competition
- Lower purchase price (resultant from little or no competition)
- Less anxiety to the buyer as these are sold privately and not at auction
- Opportunity to conduct more thorough due diligence on the property
- More flexible settlement terms (this is important if you are yet to sell your home)
- Less stress
I have personally bought properties off market and I can tell you from experience, it’s a real winning strategy. The secret is “who” you know!
In a moving market, a Buyers Agent is the best person you can have on your team. The investment made by you (i.e. the fee you pay) will more than pay for itself as you will benefit from buying your desired property at a lower price, particularly if it’s an off market opportunity.
I wrote a blog a few months back outlining the key reasons you should consider using a Professional to help you secure the right home or the right investment property. This is more relevant today in a moving market.
Of course there are also circumstances where a Vendor contacts an Agent and requests to sell their property “off market”, with no Internet or print marketing, and without a sale board out the front of the property. These private sales are classed as “off market” properties.
There are genuine reasons with this selling strategy for the Vendor. Here are the most common reasons I have come across in speaking with clients over the years:
- Financial pressure and the need for a fast result
- Not wanting the neighbours to know
- Don’t want family knowing until the move happens
- Not in a hurry to sell
- To save on marketing and advertising cost
- Nervous about auctions
- Fear of not selling and the property getting “stuck” on the market
- Needing a quick sale
- Change of personal circumstances
Off market properties make up at least 25% of properties transacted. This hidden market is gold!
If you’re not on the Agent’s favourite client list, my advice is to engage a reputable Buyers Agent to give you the very best chance to secure your desired property at the best possible price. If you need a name, feel free to contact us and we’ll point you in the right direction.
Disclaimer: The Information is general in nature and does not take into account your particular investment objectives or financial situation. It does not constitute, and should not be relied on as, financial or investment advice or recommendations (expressed or implied) and is not an invitation to take up securities or other financial products or services. No decision should be made on the basis of the information without first seeking expert financial advice. Your full financial needs and requirements would need to be assessed prior to any offer or acceptance of a loan product. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.