The difference between off-market and pre-market properties and the best way to access them
During a time when buying a home is challenging, one of the best ways to get ahead of the market – and other buyers - is to access off-market properties.
WHAT IS AN 'OFF-MARKET' PROPERTY?
Off-market properties are those properties that are not on the market. They are not listed with Real Estate Agents, not open for inspections and there is no marketing or listings on the common homes for sale websites.
It may even be the case that the owner may not even be aware that they will be selling until the right opportunity knocks on the door.
The market for potential 'for sale' homes is much larger than those properties officially 'on the market' – either with a real estate agent or privately.
There are two types of properties people call 'off-market':
Vendor Selling but not promoting online
This is where a homeowner signs an authority to sell with a Real Estate Agent. The Agent then sends the property out to their database, usually via email, which is likely thousands of people looking for properties.
It is actually a pre-market property, as there is a Real Estate Agent negotiating on behalf of sellers via creating competition within the potential buyers.
A homeowner would do this to try and make a quick sale, particularly if they are selling in a hot market. It also helps the seller save a lot of money on the marketing fees.
It can be very beneficial to take this approach.
There is nothing lost if it is unsuccessful, merely a change of tactics, to start selling in traditional marketing channels such as realestate.com.au, domain.com.au, homely.com.au etc.
While these pre-market properties may still have competition, it is undoubtedly a lot less than when a property comes on the market formally.
From the seller's perspective, it is a win-win if they manage to sell before going formally on the market, as they still benefit from the Real Estate Agent negotiating a top price for their property.
The property owner has no intent to sell
Let's talk about properties that are 'really' off-market. This is where the owner has no intent to sell; they have not signed an authority with an agent.
One of the activities that I will undertake for my clients is to find properties that meet my buyers' brief by door knocking and making direct approaches to homeowners.
While this might sound like an impossible task, and many property owners need to be approached, it is a very successful tactic. Vendors may not have formally decided to sell, but they are open to new opportunities.
It happens more often than you might think.
For example, in the past year, where Melbourne based homeowners have been subject to so many lockdowns, you can imagine how many conversations have taken place around 'thinking' about moving to QLD or somewhere else. Often, when a direct approach is made, people need the impetus. It can be seen as a way to change without the usual stress that may accompany the change.
For instance, to sell, you have to prepare your property for market, put it on the market, deal with opening the home for inspections, not to mention the savings in marketing costs and Real Estate Agents' fees.
HOW TO ACCESS PRE-MARKET AND OFF-MARKET PROPERTIES
1. Make yourself known to agents in the area you want to buy; One reason to contact agents is to ensure that you are on their database so that should any coming up property become available, you will be on the 'email list'. Please remember though that these properties are rather pre-market and Real Estate Agents are engaged to professionally negotiate the top price for their clients.
2. Engage a Buyer's Advocate to locate your perfect home; Accessing pre-market and off-market properties with a Buyer's Advocate gives you the best of both worlds. They will give you access to properties that Real Estate Agents have signed as 'pre-market', as they have connections and work hard to be networked with every Real Estate Agent in the area.
They can also do more by approaching homeowners directly on your behalf. You just need to sit back and let your Buyer's Advocate do all the work for you until they have a good candidate for you to inspect.
They will also take care of the negotiation part of the process to ensure you get the lowest possible price for the home and help with arranging the due diligence.
BENEFITS OF BUYING OFF-MARKET
The benefits of buying off-market are:
Less competition, in some cases none
Remember, if you are using a Buyer's Agent, you can have the Advocate do door to door searches where there is no competition, and be represented by a Licensed Estate Agent (make sure your Advocate is licensed).
A better chance to find the right home
The market for your 'perfect home' is technically more extensive than what's on the market, and a good Buyer's Advocate will be able to match your criteria to the homes in the area.
A chance to negotiate a better price as the seller has not had to incur marketing costs and a Real Estate Agent's fees.
If a vendor is selling off-market and if it is not listed online, the price to sell is not as competitive as what a listed home might be.
A faster process for finding a home.
For Marble St., our maximum time to find and buy a home for our clients is 35 days. This is far quicker than our clients were looking for themselves before engaging our service.
If you are interested in working with Marble St., please browse our case studies by the numbers to understand the savings in both time and money we can provide or feel free to get in touch.