We often get asked by clients if it is a good idea to sell their property ‘ ‘off market”. We also get buyers asking us about buying a property “off market” all the time due to not being able to buy, or even find, the right property “on the market”.
In this blog, we will review the above queries and some key points to help you if you are considering whether to sell your property, and if an” off market” sale is right for you, and to help you if you are wanting to buy a property “off market”.
Before we dive in, allow us to clarify our meaning of “off market” to avoid any assumptions or misunderstanding. We use this term to refer to a property that is sold (or leased) without the property being publicly advertised as available.
To keep things simple, we will just focus on off market ‘sales’ in this blog. The principles are also very relatable to off market leasing transactions.
Let’s dive into the key points.
Why would you sell your property “off market”?
There are many reasons why people sell their properties off market and everyone’s circumstances and needs are individual, so the following should be considered general in nature and not as personalised advice.
A common and strong motivating reason can be as simple as money. As the old adage goes “money talks”. If a buyer wants or needs a property badly enough, and they have the available funds, they may be prepared to pay above the market value, sometimes well above, in order to entice the vendor to sell. In this instance, a buyer may use an agent to help them buy the property, or deal with the vendor directly, if they know them. The key to the outcome is to find the balance between the buyer’s motivation (how much they are prepared to pay) and the vendor’s motivation (how much they want in order to sell).
Another common reason why people sell their property off market is opportunism. We often have clients tell us they would be prepared to sell their property if a decent offer comes along, but they don’t want to actively market the property for sale. In other words, if the opportunity presents itself, they will consider selling, but they are not sufficiently motivated that they want to take the more formal step of putting the property “on the market”. This can be an attractive option for vendors as it leaves the door open for a potential sale without placing them in a position where they feel like there is a commitment or obligation on their part to sell. It offers a less pressured environment.
Lower costs is another reason that some vendors find as motivation to sell off market. As the property is off market, there is obviously no money spent on advertising the property, so this is an up front cost saving as, most commonly, marketing money is paid at the time the property is placed ‘on the market’. Depending on the situation, the commission payable on an off-market sale may also be cheaper than what would be payable for a normal sale campaign.
Pros and cons of selling “off market”
The pros
- Often, you will achieve an above market sale value
- Potentially lower costs, as we’ve already noted above
- Greater privacy, which may be important to some clients
- Less perceived pressure (or self-made pressure) to accept an offer
- As the vendor, you are generally in the stronger negotiation position
The cons
- The unknown of whether you may have achieved a better result by selling ‘on market’
- Commonly a longer process, as the only potential buyers are ones being actively pursued by the agent, rather than also benefiting from buyers enquiring from formal marketing
How do you buy a property “off market”?
The best thing you can do is to build a relationship with a good agent to help you. Cultivate a good relationship with your agent and make sure they understand what kind of property you need. If your agent has a solid understanding of your needs, then he or she is far more likely to find you a suitable off market opportunity for you.
It goes without saying that you should treat your agent well, and be respectful, but don’t be afraid to be the squeaky wheel in order to get the grease. Everyone today is busy, and sales agents are no exception. This is not to say that a good agent won’t be trying to find the right property for you ‘off market’, it’s just to remind us all to use common sense and understand that an agent, like any other profession, will be juggling priorities and demands. Considering that, it’s always a good idea to stay in touch with your agent from time to time to let them know you’re still on the hunt for a property and to see if they’ve had any success in finding you one.
Once you do find the right property, make sure you still complete your normal due diligence process (property inspections, including pest and building inspections, as may be necessary, strata report, if applicable, review of the Sale Contract etc) and avoid the temptation to just rush to the finishing line. You can still act quickly, but don’t rush and don’t skip important steps to make sure you are protected and that the decision to buy is the right decision.
Clearly, an important part of this process is the negotiation. You should be aware that in order to give the vendor sufficient motivation to sell, you may need to pay above the market value for the property. To help you in considering whether it is worth your while to pay over the odds for the property, you should consider your longer term objectives. If you are likely to be at the property for a prolonged period, a goodly number of years, the odds are pretty good that the value of the property will improve over that time, outpacing the premium that you paid at the time of purchase.
Pros and cons of buying “off market”
The pros
- Less competition with other prospective buyers, so less pressure
- Potential to buy below the market (depending on the vendor’s reasons for selling)
- You get to secure a property for your business (or personal) needs sooner than waiting for the right property to come ‘on market’
The cons
- As the buyer, you tend to be in the weaker negotiating position
- Risk of rushing into buying the wrong property for fear of missing out
- It is common to pay over the market value for a property when buying off market
If you have been searching for the right property unsuccessfully and would like us to help you find something, either off market or coming to market, get in touch with one of our agents today and let us know what you’re looking for, as we’d love to help you.
If you’re considering selling your property and want to know more about the potential to sell it off market and how we can help in that process, reach out to us for some obligation free advice to help you with your planning and to understand your options.
