Properties listed as “off-market” are not publicly listed for sale. However, that doesn’t mean you can’t buy off-market properties. If you know how to find off-market properties, you may discover a large and lucrative real estate investment.
What’s the best way to find off-market sales? Are there any advantages to searching off-market property sales for investment opportunities? This article will answer these questions and many more.
What does off-market mean?
“Off-market” has two meanings. The first means that the property is for sale but not listed on the MLS by the agent. Or simply not sold.
Buying a home off the market happens more often than you might think. for example, National Association of Realtors (NAR) report around 10% of home sales Occurs when not listed on the Multiple Listing Service (MLS). Off-market sales are usually common in hot markets where demand greatly exceeds supply.
Benefits of buying an off-market home
Searching the real estate market for off-market homes expands the web of investment opportunities. Real estate investors should seek out off-market properties for several reasons.
- Off-market prices are better negotiable as there is less competition.
- In general, the lower the competition, the more likely the offer will win.
- Other, more favorable terms can usually be negotiated that are not always available in the market.
Cons of buying an off-market home
Off-market real estate deals can be lucrative, but there are some drawbacks to going the off-market route.
- Closing time may be longer. First, you need to find a property. Then convince the seller with a compelling offer. Overall, off-market properties can take significantly longer to close than on-market properties.
- Some off-market search services include a fee, which can increase in cost over time. Probably not a deal breaker, but something to consider.
Why are sellers leaving the market?
Privacy, potential savings, and price testing are three reasons sellers commonly choose the off-market route. The out-of-market listing process also allows sellers to reach out to the right buyer or buyer’s agent to get interest only from willing parties. Sellers can also save on marketing costs, listing fees, and staging costs.
How to find off-market homes
The best way to find off-market properties for sale is through a reputable off-market listing platform. Some websites specialize in off-market real estate sales, while others, like Zillow, “Sale by Owner” (FSBO) sale. Other ways to find off-market listings are property auction websites, Facebook marketplaces, or Craigslist. Of course, you can also find potential sellers the old fashioned way of knocking on doors or looking for prospects on the phone.
Another way to find off-market real estate listings is to network with agents and other investors. The more specific your requirements, the more likely you are to find the perfect investment property.
Here are some other ideas for finding great deals on off-market property searches.
- Drive around your neighborhood and look for a yard sign that says “for sale by owner.”
- Use direct marketing campaigns.
- Network with listing agents that specialize in non-MLS properties.
- Build a professional network of wholesalers, contractors and investors using real estate forums such as: bigger pocket.
- Search public records for properties at risk of foreclosure.
Related: 6 hacks to find profitable off-market real estate deals
how to approach sellers
If you are actively looking for off-market properties, there are several ways to approach potential sellers. For example, you can print high-quality, postcard-sized flyers for your direct mail marketing campaigns. In some markets, real estate investors go door to door and ask homeowners in person.
Another option for meeting with sellers is to search for distressed properties in your neighborhood. These could be abandoned homes or foreclosures. Then you can track down the owner with a little research at the county records office or online.
Some investors manage to write a personal letter to the home owner with a solid and attractive offer to buy the home.
It is also good to remember that some off-market sellers are facing financial difficulties and may be facing foreclosure. So it’s important to empathize with the seller, as they can be under a lot of stress.
When negotiating with sellers, a strategic approach can help close off-market deals. Here are some tips for successful negotiations.
- Familiarize yourself with your local housing market to determine if it’s a seller’s or buyer’s market.
- Savvy buyers offer higher down payments to stand out from the competition.
- Prepare for counteroffers until you are confident that the seller will not be swayed by your position.
- Remember, low-priced offers that are well below fair market value can be hostile or insulting to the seller.
- Negotiate sales contract contingencies. This allows you to protect your contract if your home has a low appraisal value or if a home inspection reveals serious problems with your property.
- Get your finances in order with either a pre-approval letter or cash to buy a home.
- We work with realtors to finalize deals and negotiate the nuances of purchase agreements.
Off-market properties can offer endless investment opportunities if you know where to find them. Therefore, it makes sense to include searching for off-market homes as part of your real estate investment strategy.
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Note by BiggerPockets: These are opinions written by the authors and do not necessarily represent the opinions of BiggerPockets.