What is an off-market property?
The long-term benefits that come with investing in brick and mortar make it a popular money-making venture. Provided you make an informed decision (a buyer’s agent can help here) it is generally seen as a safer long-term commitment rather than a short-term gamble.
In fact, CoreLogic RP Data recently released a report that showed how property prices have grown throughout Australia. Only twenty years ago, more than 95 per cent of homes (units and houses) sold for less than $400,000.
Conversely, in our capital cities over the 12 months to June 2015, just 25.1 per cent of home sales were under $400,000, while almost 15 per cent surpassed $1 million. It’s clear to see the main drivers of this growth have been Sydney and Melbourne, given they easily have the highest median property prices in the country.
This growth is great news for those who already own a piece of real estate. However, it can be a hurdle for those looking to enter the property market. After spending hours trawling through listings to find your ideal investment, you may be feeling a bit discouraged. Fortunately, what you see is not always what you can get.
“Fortunately, what you see is not always what you can get”
What am I not seeing?
An off-market sale (also known as a private sale) is a property that is in fact on the market or already been sold, but without advertising to the public. The most common reason for using this method to sell your home is the need for a quick sale or the desire for privacy around the transaction.
In terms of selling your property, it is far from ideal and is unlikely to yield the greatest price. However, it is a often a choice that must be made as the seller is left with no other option.
Therefore, they present a great opportunity for investors to make a good buy. Possible scenarios where this could prove to be a viable option include:
- Wanting to keep the home out of the public eye due to family or neighbourhood complications
- Aiming to keep under the radar due to a high profile
- A relationship or marriage breakdown (according to Mccrindle Research, 1 in 3 marriages end in divorce)
- Problems with finances could result in the need for a quick sale
- A deceased estate
- Employment changes
Despite there being a number of reasons for selling off-market, the one thing they all have in common is the need to sell without delay so that the vendors can get on with other higher priority matters in their lives.
OK, how do I find off-market property?
It’s important that you decide exactly what you’re after. This will make the ensuing search much easier, not only for you but also your buyer’s agent, as they are the ones who hold the keys to off-market property.
The right buyer’s agent will have strong relationships with a wide and far-reaching network of professionals in the real estate industry, which can offer you access to a vast selection of not only off-market property, but also real estate that hasn’t been put up for sale yet. In fact, at Cohen Handler – approximately 50% of our transactions in June – July 2015 were for off market properties.
Furthermore, using your searching profile as a guideline, a buyers agent will hunt through the market on your behalf, sourcing hidden gems and negotiating favourable purchase prices.
These sales are typically only obtainable for a short time and the winning strategy can often be simply being in the right place at the right time. While it can be very difficult to find off-market property, using a buyers agent will smooth the process and allow you to put your feet up.
A number of these homes could be for sale off-market, yet without a buyer’s agent you’d have no idea.
What are the key benefits of buying off-market property?
By meeting the needs of the vendor, you can be left in a more powerful position for negotiations. Here are a few of the chief advantages.
Due to the lack of advertising, there is often very little, if any competition. If the only people in the running for the home is you and your buyer’s agent, then you could potentially purchase the property for a significantly lower price than what it would garner on the open market.
Furthermore, even if your initial offer is below the market value of the home, there is a good chance that your deal will be accepted as the vendor is likely to be in a distressed position.
Given that the median property prices in Sydney and Melbourne are showing little signs of slowing, an off-market property could be your way onto the ladder.
Are there any drawbacks?
Nobody’s perfect, and the same goes for off-market property. They can sometimes be few and far between (depending on the skill of your buyers agent), giving you less choice in terms of location, features and quality.