If you’re in the hunt for a home, you’ve probably seen or heard the term ‘off-market’ purchase. People often have a lot of misconceptions about what this really means. In this Q&A, Michael Salvartsis, Director and Principal Buyers’ Agent at Real Property Buyers, addresses some of the myths and realities about buying off market.
What does ‘off-market’ mean?
Essentially, off-market opportunity refers to when a property is being put up for sale, but there is no public advertising or marketing to help bring buyers in.
So, does that mean there’s no real estate agent involved?
No, and this is a common misunderstanding. Most people who are thinking of selling their home will engage a selling agent to help them. So, even when a property is off-market, there is usually a real estate agent appointed by the seller. But not everyone wants to pay for advertising or marketing campaigns. They may prefer that the selling agent use their networks to source potential buyers first, before listing the property.
On a few occasions, a buyers’ agent may be the first one to identify a potential property. For example, if I have a client who is looking in a very specific area or for property in a certain building, I may go there myself and do some research to ascertain whether any of the current residents have any intention of selling. If a seller is found this way, we make sure to connect them with a reputable selling agent that we trust to represent them, so there’s no conflict of interest.
What are the advantages to sellers of going for an off-market sale?
Selling off-market can save the vendor money and time. If someone needs to sell urgently, for example due to a recent death or divorce, off-market can be a way to transfer the property quickly with minimal fuss.
If there is high interest in property in your area (maybe because another sale attracted lots of potential buyers or due to some other increase in desirability), an off-market sale may yield a higher price than at another time.
Another advantage is if you want to maintain privacy. There are fewer people viewing the home and you have more control over when potential buyers come to the property to inspect it.
What are the advantages for buyers?
There is obviously less competition, especially if you compare buying off-market to going to auction. The emotion of knowing you have competition for a property often leads people to spend over their limit, so there’s less of that when you buy off-market.
You may also get a reduced price, particularly if the seller is interested in a quick sale.
Off-market purchases are also good if you don’t want people to know you’re in the market.
What about disadvantages for buyers?
I think the most important thing to remember is that just because you are buying off-market, that doesn’t mean you’ll buy the property at a low price. Off-market properties can still be overvalued by the seller. You really need to do your homework and come to the negotiating table with all the facts.
You also need to be prepared to move quickly. It could be because the seller wants a quick sale or simply because the agent is looking to list the property in the next week. This means you need to have your finance pre-approved so there’s no danger of the seller losing confidence.
Finally, it’s important to remember that off-market properties are not always easy to come by. It takes a lot of research, networking and negotiating. If you are really interested in buying off-market, I strongly recommend engaging a buyers’ agent to do the leg-work for you. Not only will they be able to use their networks to contact selling agents, they also have more experience at valuing property and negotiating deals.