If you are new to property selling, you must have heard the term off-market and wondered what exactly it is. While it may sound complex, it isn’t. It is quite similar to normal property selling also known as open market property selling. However, there is just one difference. Marketing or public advertising efforts are not made to support the sale.
In the case of normal property selling privately or through auctions, real estate agents or owners market the property in multiple ways. These include listing the property on websites, advertising in newspapers, rolling out pamphlets etc.
Off-market selling on the other hand does not involve any real-estate marketing campaigns. These transactions, simply involve an agent who is responsible for contacting the buyers directly. He/she finds the details of these buyers from a database or a list of people that may have recently contacted to buy a new property and had similar criteria.
Benefits of buying off-market properties:
- Not much competition: Off-market deals do not receive as much attention as the open-market ones do. This gives you the advantage to score great prices before the public knows.
- Easier negotiations: Off-market properties do not have a huge buyer-base, so it is easier to negotiate on these properties. Such transactions are not possible in the open market.
- Win-win for both buyer and seller: Sometimes buyers are on a hunt for a quick exit from a property. This may be due to a financial crunch or other personal reasons. This brings to the forefront, unique opportunities that can ensure good margins for the investor and quick sales for the seller.
Why do people choose to sell or buy off-market?
By now you must be wondering how does off-market work. Off-market property transactions are based on the strong relationships of owners with real estate agents in the area.
What is in off-market for the buyer:
Those who buy through off-market have the advantage that the local agents inform them about the available property before it comes to the market or anyone else knows about it. However, for this purpose, the buyers need to maintain a relationship with the agents. The agents must know the buyer’s requirements to match them to the right home.
This can save a lot of research time. For instance, if as a buyer you are looking for a 2BHK with a huge balcony and a park in the vicinity, the agent will only show you properties matching these criteria.
So, once the agent is informed of such a property, they will contact you and other people from the database who have similar requirements.
How does off-market benefit the seller:
The off-market mode of property selling is more common in the case of high-profile sales that amount to high values. This is because the sellers do not wish to advertise publicly. There may be multiple reasons why sellers sell off-market. They are enlisted below:
- Reduced or no void period:
Most agents advise that tenants vacate the property before it is put up for sale. This is because empty properties look better and one can take good marketing photographs after professional cleaning and service jobs. Also, when the prospective buyers make visits, it isn’t an inconvenience to the tenants.
The problem however is that in case there is a delay in sales, the costs add up and the owner needs to bear the expenditure.
These issues are eliminated in case of off-market sales where details can be sent to buyers without telling the tenants to vacate. If the buyer doesn’t object, the tenants can stay till the property is sold.
Off-market protects the owners from the expenses of a long void-period.
- No marketing/advertising cost:
Off-market selling saves the sellers from marketing costs too. In the case of open-market selling, one needs to spend on professional photographers, floor plans, home reports and sales schedules. These expenses are not low. Add to it the time involved in arranging the property, it delays the sale significantly.
None of these marketing materials is useful in case of off-market sales. A few professional photographs are all you need to send to prospective buyers.
- Getting the price seller has in mind:
In the case of open-market selling, you can either set a minimum price or a fixed price. In case the minimum price is set, it may go up if multiple prospective buyers are there. This, however, is not a guarantee of a high sales price.
In the case of off-market selling, there is no obligation to sell below a price you have in mind because you will still have tenants paying rent.
- Opportunity to sell quickly:
The sale time is nearly 3-4 weeks in case of open market selling. This includes the gap between advertising the property and finalizing a deal.
In the case of off-market, the details will be shared with people who are actively looking to buy. This crowd targeting will save the seller from multiple visits and facilitate quick and sure sales.
How to find off-market properties?
Investors are up for several benefits in the case of off-market property deals. However, finding off-market properties is a challenge. Here are the best ways in which investors can identify off-market properties that are up for sale:
- Build a Network: Most investors in real-estate use this strategy to generate leads. It works well with off-market properties too. While it may seem time-consuming, it gets easier with time. Visit real estate events or join groups through social media or local bulletin boards.
- Stay in touch with agents: If you have identified a market of interest, it is a good idea to connect with real- estate agents. They often know which properties will go up for sale. Make a list of realtors in that area and contact them through phone or email. Do not be quick to strike off agents that cannot help you now as they may help you in future. Leave your contact details so they can contact you in future.
- Market through direct emails to owners: This is one of the most effective ways to crack an off-market deal. Once the home seller is identified, send them a postcard to express interest in buying their home. Many owners make up their mind to sell their house if they come across an attractive offer even if they hadn’t thought of it earlier.
- Word of mouth: The old school way of getting recognized by word of mouth is the best when it comes to scoring an off-market property.
It is a personal decision to choose off-market or not. Both open and off-market transactions have their benefits. It is a good idea to think and decide what works for you best before making the final choice.