Jamie Dawkins looks up from his screen and frowns.
57 Pin Hope Avenue?
It’s perfect. And it’s in his price range.
But he won’t let himself get excited. Not this time.
Why? Because after months spent searching property websites, he knows where this is heading.
He goes along to the viewing. Jostles with what seems like half of Sydney. Sees the competition drive up the price. And feels hope drain away.
He’s desperate to escape this cycle of raised hopes and crushing disappointment.
“What more can I do?” he wonders. “How am I ever going to beat the crowd?”
How to Get a Headstart
Jamie’s not alone. Many buyers rely entirely on property websites. They miss the fact that many of the best properties are never even listed.
At Hunter James, more than 60% of the properties we buy are not publicly on the market.
Why? Because it means we often get to see the best options first – before they’re marketed to the masses online.
Searching off-market gives you some significant advantages. Not only can you assess the whole market, but you face less competition. This in turn gives you more room to negotiate on price and terms. And you can arrange a private inspection (so no more jam-packed open homes).
Like to know how you can locate these invisible off-market properties? Let me explain.
Why Buying Off-market is a Win for Everyone
Generally, a property is considered off-market when it’s not publicly advertised as being for sale. There are four categories of off-market properties:
Pre-market: Usually this is when a property is coming to market but needs to be prepared and photographed. Sometimes timing plays a part. For instance, a listing may be delayed until after Christmas because so many people go away or have their focus elsewhere.
Private sale: No agents involved and never on the market. Usually, this is because the vendor is trying to avoid paying commission to a selling agent, or they have been directly approached.
Silent sale: This is when a sale is made via an agent’s database only. There is no intention to market the property publicly. This is a popular option for people who want discretion.
Post-market: The property was previously for sale but didn’t sell and was withdrawn. However, the owner remains open to selling.
So what’s in it for vendors? Why don’t they just market their property as widely as possible? Aren’t they better off trying to fuel competition?
Actually, off-market deals can be good for vendors, too:
- They attract qualified buyers.
- They’re convenient. A vendor won’t have strangers traipsing through their home several times a week (many of whom are nosey neighbours or tyre-kickers).
- They’re discreet – an important factor for celebrities and other high-profile figures, or people selling because of financial strain, divorce, or death.
- They’re less expensive. No need to spend thousands on marketing or styling. And if it’s a private sale, there’s no agent’s commission to pay.
- They give vendors the chance to test the market without their listing going stale.
- They can be quicker to conclude than a typical sales campaign.
What to Watch Out for When Buying Off-market
As with online searching, off-market searching has potential pitfalls. If you know about them, however, you can minimise problems or avoid them altogether.
So keep in mind:
- Vendors sometimes test the market with an unrealistically high price or are only willing to sell if a certain price is achieved.
- The lack of a sales campaign deadline (an auction date, for instance) reduces the pressure on vendors and can make them unmotivated or indecisive.
- The absence of a selling agent often means a vendor has no trusted advisor to educate them and keep their expectations in check.
- No photos or floor plans can make visualising a property difficult.
- Hidden agendas – such as structural defects (e.g. rising damp, termites, subsidence), impending high special levies, or even the scene of a murder/suicide.
Just because a property is off-market doesn’t make it a good buy. It must be independently evaluated, as you would do with any on-market property.
But searching off-market does deliver rewards. As I mentioned, 60% of the properties we buy for our clients are not publicly listed.
Gems are waiting to be found.
How to Track Down Off-market Properties
Finding those hidden gems involves some digging. It’s important to be proactive and build relationships. Here’s how you maximise your chances of discovering the best properties that aren’t yet on the market:
Research agents’ market share: Who has the sales momentum? Who has the best track record for the type of property and location you’re looking at? There’s a good chance they have been invited to appraise properties that are yet to be listed.
Let agents know you’re looking: Speak to them regularly so you’re at the front of their mind. As a minimum, make sure you’re on their database of buyers.
Get them on your side: Ask agents what properties they have appraised recently. Could they approach any vendors on your behalf? Take advantage of their existing relationships with potential vendors and their knowledge of who may or may not be open to selling. For a selling agent, it’s much easier to win a listing when you have a highly-qualified buyer lined up.
Approach property managers: Contact those who have a portfolio of tenanted properties which may be suitable. If you’re willing to wait until the end of the tenancy to move in, you can potentially save yourself tens, if not hundreds of thousands.
Flush out the would-be sellers: Identify likely properties based on land size and style on a street-by-street basis. Professional property data provides the fastest and easiest way to do this. Then go door-knocking or letterbox-dropping to flush out private sale opportunities.
It’s hard work but it’s worth it. However, good buyers’ agents can and will do all this and more for you. And what’s equally important is that they’re often approached directly by private sellers who want to avoid paying selling agents’ fees.
Break Away From the Crowd
The masses stare at their screens, waiting for the market to come to them. They’ll continue to struggle with the cycle of hope and despair.
But you know how to escape it now.
So take a break from the screen.
Go do some digging.
And discover those gems no one knows about yet.