How to Spot a Valuable Off-market Property

By Munro Donen, Director & Principal, Propertybuyer East propertybuyer.com.au

The basics of buying a property are reasonably simple. The challenge is getting the most favourable overall result from the buying process. For example, price is important but often the best outcomes relate to the contract’s conditions. By using contract conditions to your advantage, it’s possible to make your offer more attractive than others, particularly in a competitive market.

Buyers' agents hear from clients all the time that they only want to access off-market property. These clients assume that when something is off market, it must always be a bargain!

This simply isn't true. Not all off-market property is the same.

In my experience, off-market deals fall into three groups.

Pre-market Property 

Firstly, there's pre-market property. This is where a motivated vendor is committed to selling. Buyers’ agents should have access to these listings long before they are open to market which is a distinct advantage in a fast-moving market with low stock levels.

Real Off-market Listings 

Then there are real off-market listings. This is where a vendor doesn't want to spend any money on marketing, so they ask their agent to sell it quietly. Agents will always contact buyers' agents in their network about these homes because they want to secure a sale with the least amount of work. These vendors also don’t want hordes of people coming through their properties at an open home. They are private and want to sell quietly to qualified buyers.

Opportunistic Seller 

The third type of off-market is the opportunistic seller. This is where the owner is offered a crazy price for their home by a buyer. It's a deal so good, they can't say no.

Why a Buyers’ Agent Is Key to Off-Market Success

Off-market properties can be great opportunities if you understand the market, how to identify good value and have the skills of a buyers' agent. We know what to do, when to do it and, more importantly, how to best secure the property.

We know how to find Off-market properties. These are ones where there's a motivated seller with realistic price expectations. The property must also match the buyer's need, after it has been fully vetted by us. If there's genuine urgency from the seller, then we have the right essentials for an off-market opportunity worthy of our client's time.

Buyers' agents deal with selling agents as professional peers. We know how to ask the right questions and get the right information. We can draw on our other contacts in the local network to get additional information about properties too.

We can also spot poor off-market offerings. These are ones where the seller is just testing the market with an unrealistic inflated price. Sometimes it's also just an agent drumming up hype before they go to a full listing.

I've been involved in a lot of off-market deals throughout my career. Each one showed why having an experienced buyers' agent like me will improve the client's outcomes in securing a property.

Case Study: When Waiting Saved Our Client Over $300K 

I had a full-service client sign on with us after they'd had two fruitless years of looking for a home. They had very specific requirements and couldn't find a home to match them.

We found an off-market opportunity that was ideal. The owner was self-selling and wouldn't accept less than $4.2 million. I checked the comparable sales and knew the home was worth $3.6 to $3.8 million. I also discovered through my network that the sale was related to a divorce, so I knew it would need to go to market eventually.

So, I let the property go to the open market rather than try to secure it beforehand as an off-market deal. As expected, it went to a sales agent, and they called to ask my opinion of value.

I was in the box seat. It was unlikely to get what the owner said they wanted.

After undertaking due diligence, my client was comfortable to pay $3.8 million, but I knew I could do better.

After two open homes the agent said they had interest at $3.5 million to $3.55 million, but the seller wanted $4 million and was sticking to guns.

So, I put an offer in at $3.5 million, knowing this would help condition the owner back toward market value. The agent then told me $3.8 would secure it, I replied that my client could go to $3.6M.

In the end, we reached agreement at $3.67 million – saving my client $130,000 on what would have been their top offer, and over $300,000 saved by not buying it off-market.

This is how buyers’ agents save you money and secure your dream home/investment property. We get inside information when properties are offered as off-market.

So don't be fooled when you receive an email that says you are receiving an "off-market opportunity" because I guarantee, that listing has already been seen by several buyers' agents, and thousands of other buyers on the agent’s data base.

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