Over the past 12 months, we’ve seen more interest in buying and selling property off-market.
What is an Off-Market Sale?
An off-market sale is a transaction without the property being listed on one of the major real estate portals. In the truest sense, an off-market deal could involve no sales agent, and a buyer approaches a vendor directly or vice versa. However, in recent times, an off-market sale is more of a ‘pre-listing, whereby a sales agent will contact their list of active buyers and try to broker a deal before the property lists on a real estate portal.
This was popular in the early stages of COVID when vendors were unsure whether it was worth paying the hefty listing fees when many were not confident in the property market, and buyers were few and far between. Since then, we’ve continued to see many off-market sales, but it has increasingly been because of the state of the property market. With low-interest record rates and a host of government incentives over the past six months, buyers have needed to act quickly and decisively to secure a property, thanks to a lack of listings. Many deals are being struck before they see the light of day to the broader public.
When Should You Consider Selling Off-Market?
When we look at off-market sales, the most obvious question is why the vendor would want to sell their property without listing it. The reason comes down to why the individual wants to sell and also the type of property. Generally speaking, selling a property off-market in the current environment usually involves having a sales agent directly contact some interested buyers. The advantage of this to the vendor is speed, but it might come at a price. If the vendor knows the price he wants and a buyer is ready to go, both parties win, and the transaction can happen quickly.
If a vendor needs to sell a property quickly for personal or financial reasons, an off-market sale might be a quick option to make that happen. However, it should be noted that this is probably not the way to sell your property if you are looking for top dollar. For the most part, if you have a property that is appealing to owner-occupiers and is in an area seeing strong demand, then usually, a process like an auction will give you the best result. This is why auctions are common for in-demand regions like the Eastern Suburbs of Sydney.
The property is advertised widely at the auction, aiming to attract as many potential bidders as possible. When you get several interested parties, particularly owner-occupiers, you stand the best chance of increasing the sales price either at auction or by private treaty. Conversely, a vendor might sell their property off-market and still get top dollar. An excellent example of this might be a block with development potential. For the most part, a developer will know the exact price a property is worth, and they can’t pay more than that simply because that would prevent them from getting finance. Development finance is often based on the profit margin of the deal itself.
Most owner-occupiers want a move-in-ready property and don’t want to spend tens of thousands of dollars on top of the purchase price. In the example of a development block, contacting developers directly and brokering a deal off-market makes sense. Similarly, a property in very poor condition that needs significant renovation might only appeal to investors and be a candidate for an off-market sale.y properties
When Should You Consider Buying Off-Market?
Looking to buy off-market is a good strategy if you’re an investor or a savvy owner-occupier. Buying off-market is more likely to get you a better price simply because you face less competition. However, that’s not to say there is no competition. You can only reduce your competitors by buying a property in the true sense of an off-market transaction and speaking with a homeowner directly. Even iif an agent is selling a property ass a pre-listing, they are likely talking to multiple interested buyers. This might mean writing them a letter or even dropping a note in their mailbox. If you don’t want to go that far, the least you should be doing is getting on the mailing list of the leading real estate agents in the area you are looking to buy. They will often send out details of their upcoming listings. If you know your budget and can act fast, buying a property before anyone else’s, is often possible.
