Why off-market is on the money
July 19, 2018 / Written by Rich Harvey
There’s a catchphrase in real estate – you can’t sell a secret. With this mantra in mind, many vendors spend big to advertise their listing far and wide, all in an effort to elevate the competition and push up the price.
On the face of it, it seems the only way sane to market a property, right?
I beg to differ.
There’s an underground bazaar of bricks and mortar where homes trade – often at multi-million dollar prices – without ever appearing on a listing portal.
Welcome to the world of the off-market deal.
What is off-market?
Off-market deals are ones which trade without ever being publically advertised for sale. They’re secret opportunities that take place behind closed doors for a variety of reasons that benefit both sellers and buyers.
Imagine you’re a high-profile businessman, politician, actor or even an everyday Aussie who has no interest in spotlighting your dealings. Why would you want to share pictures, floor plans and the address of your home with the world? What would be the benefit of everyone knowing how much you’re asking for your home and what you eventually got?
Buyers are as prone to needing secrecy as sellers too.
There was a recent high-profile celebrity example illustrating how a very public property transaction can go a little awry, particularly when there’s a lot of pomp and pressure around the purchase.
For beloved Australian comedian and broadcaster Dave ‘Hughsey’ Hughes there was something about a home in the reality television series The Block that grabbed his attention. It was stunning for sure, with furnishings, fixtures and features that painted the property in its best light.
In addition, the show generates excessive hype to help bring in viewers. It’s the sort of high exposure for a home that you’d rarely see in normal auction marketing campaign.
During a fierce five-way bidding war, tension was high, hearts were racing and the TV cameras rolled. In the end, Hughsey walked away the winner, paying $3.06 million for the five-bedder. He even surprised his wife, Holly... she had no idea he was bidding!
On the day, he was happy to pose for congratulatory back slapping with a champagne bottle.
In the weeks that followed, attention surrounding the purchase hit fever pitch. He spoke later about how upset his wife was to have an intensely personal (and for her, unexpected) milestone make headlines around the country. He said even more annoying was the string of strangers berating him for spending too much.
While the event made for great television, and Hughsey seems able to laugh off the event, it’s an excellent illustration of why quietly going about your business might be best for some buyers.
Is it just about discretion?
Apart from privacy there are other reasons buyers and sellers might choose to trade off market.
Some sellers are simply looking for a fast, no-fuss sale. Price might not be the only motivation, so the vendor sees an opportunity to move quickly without the hassle of a drawn-out marketing campaign and the headache of open home inspections.
If you’ve ever sold a house yourself, enduring people trudging through every Saturday, preparing for an auction or negotiation… you’ll understand why it’s appealing to be able to skip the whole thing.
The seller can also save big money by avoiding a costly marketing campaign. Vendors have been known to spend tens-of-thousands of dollars in advertising. A small fortune that could have been ‘wriggle room’ in a quiet negotiation.
In addition, some sellers believe off-market helps them achieve a price premium. These vendors think if the perfect purchaser falls in love with the home and has plenty of funds, they’ll be prepared to pay a premium just to keep the listing from going public.
Why buy this way?
Apart from privacy, the most notable benefit to house hunters is that a low-profile sale sees less competition. Logic dictates you should, therefore, be able to secure the property at a discount.
In my experience, this is a fair assumption in most cases.
Off-market purchasing can save you a significant amount of cash. You only have to attend a few open home inspections in prime suburbs to see how much excitement a great abode can generate. Apart from those who attend in person, there are the literally thousands of online property hunters who know about the sale.
The interest drummed up can create a competitive frenzy. Just think about recent stories from Sydney and Melbourne where quality property was selling under the hammer for well above reserve.
Off-market deals tend to be more level-headed affairs without the emotion and mayhem of an on-the-market situation, presenting buyers the chance to negotiate terms without having to look over their shoulder.
I’m sold! How do I find them?
Off-market property is a great way to purchase, but there is a sting in the tail for the average punter – they’re incredibly difficult to unearth.
I’ve seen it first-hand. Buyers who were devastated to discover their dream house had quietly traded without them even realising the owner was ready to sell.
Some buyers try and take a proactive approach to off-market. They’ll letterbox drop to advertise their interest and hope an owner will agree to deal with them directly. The downside to this approach is you come across as an eager purchaser, and this will just put up the asking price.
Other buyers will try and approach local agents to unearth homes before they list publically. This is a hugely time intensive exercise that is wrought with heartbreak. Many times, you might also be used to ‘test the market’, because the owner and agent get to see what you’re prepared to offer before they go and tell everyone else the home’s up for sale.
Sound a bit tough? There is a solution.
Your buyers’ agent
Buying off-market is a fantastic option, but it’s one that’s pretty hard to do on your own. Why? Well, how do you find them without insider knowledge, top notch industry contacts and a wealth of experience?
As a buyers’ agent, I have constant dialogue a huge network of agent and owners. I’ve spent years working on these relationships and those in my network know when they have a hot prospect, I won’t waste their time.
In fact, most agents call me first when they have a listing worthy of attention.
These agents are aware I’ve got clients who are primed to purchase and approved to move. If they have a property that will suits our needs and the price is right, a deal will be done.
Buyers agents like myself also know how to determine a property’s value and can advise you on how to lock down a purchase before it hits the portals.
Taking on a buyers’ agent means you are shown behind the velvet rope of off-market selling, and we’re there to guide you every step of the way.
Want to crack the hidden market, pay the right price, save time and money and relieve the house hunting stress? Contact us.