What are they and how do you find them?

Real estate properties listed as “off-market” are not publicly listed for sale. However, this does not mean that you cannot buy an off-market property. If you know how to find off-market properties, you can find a great and lucrative real estate investment.

What is the best way to locate off-market sales? Are there advantages to looking for off-market property sales for investment opportunities? What should you keep in mind while buying an off-market property? This article answers these questions and many more.

What does off-market mean?

“Off-market” can mean two things. One, it means the property is for sale but is not listed on the MLS by an agent. Or, it’s not for sale.

Buying a home off-market happens more often than you might think. For example, the National Association of Realtors (NAR) reports that about 10% of home sales occur without being listed on the Multiple Listing Service (MLS). Generally, off-market sales are common in hot markets where demand vastly exceeds supply, meaning a home can sell easily without going out to the public for sale.

Advantages of Buying an Off-Market Home

Searching the real estate markets for off-market homes widens the net for investment opportunities. Real estate investors should seek out off-market properties for a few reasons:

• Off-market prices can be better negotiated due to less competition.
• Less competition, in general, equals a better chance for your proposal to win.
• You can usually negotiate other, more favorable terms that aren’t always available in the market.

Disadvantages of Buying an Off-Market Home

While an off-market real estate deal can be lucrative, there are some disadvantages to going down the off-market route.

• Closing time may be longer. For one, you have to find property. Then, persuade the seller with a compelling offer. Overall, off-market homes can take significantly longer to close than on-market listings.
• Some off-market search services involve fees that can get expensive over time. Probably not a deal breaker, but something to consider.

Why do sellers go off-market?

The three reasons sellers typically choose the off-market route are privacy, potential savings, and price testing. In addition, the off-market listing process ensures that sellers can reach the right buyers or buyer’s agents and receive interest only from motivated parties. Sellers can also save money on marketing costs, listing fees, and staging.

How to Find Off-Market Homes

The best way to find off-market properties for sale is to use a reputable off-market listing platform. Some websites specialize in off-market real estate sales, while others, such as Zillow, have listings for “for sale by owner” (FSBO) sales. Other ways to find off-market listings are real estate auction websites, Facebook Marketplace or Craigslist. Of course, you can also go the old fashioned way of door knocking or making phone calls to find potential vendors.

Another way to find off-market real estate listings is to network with agents and other investors. The more specific you are with your needs, the more likely you are to find the right investment property for you.

Here are some other ideas for finding great deals in your off-market property search:

• Drive through neighborhoods looking for “For Sale by Owner” yard signs.
• Use direct marketing campaigns.
• Network with listing agents specializing in non-MLS properties.
• Build a professional network of wholesalers, contractors and investors using real estate forums like Bigger Pockets.
• Search public records for properties threatened with foreclosure.

Connected, Six hacks for finding profitable off-market real estate deals

how to contact seller

If you are actively looking for an off-market property, there are several ways to contact a potential seller. For example, you can print high-quality postcard-sized flyers for a direct mail marketing campaign. In some markets, real estate investors go door to door and ask the homeowners directly.

Another option for meeting with sellers is to search for distressed properties in the neighborhood. These can be abandoned homes or foreclosures. You can then locate the owner by doing a little research at the county records office or online.

Some investors have had success writing a personal letter to the homeowner with a solid, attractive offer to purchase the home.

It’s also good to remember that some off-market sellers are experiencing financial hardship and facing foreclosure. Therefore, it is important to empathize with the seller as they must be going through a lot of stress.

conversation tips

When negotiating with a seller, a strategic approach can help you strike an off-market deal. Here are some negotiation tips to be successful:

• Have a good idea of ​​local housing market conditions to determine whether it’s a seller’s market or a buyer’s market.
• Knowledgeable buyers offer higher payouts to stand out from the competition.
• Be prepared to make a counter offer until you are sure the seller will not budge from his position.
• Remember, a lowball offer significantly below fair market value may anger or offend the seller.
• Negotiate contingencies in the sales contract. This protects you in the transaction if the home’s appraisal is low or if a home inspection finds major problems with the property.
• Maintain your financial health with either a pre-approval letter or cash to buy a home.
• Work with a real estate agent to finalize the deal and negotiate the specifics in the purchase contract.

final thoughts

Off-market properties can provide endless investment opportunities if you know where to find them. Therefore, it makes sense to include looking for off-market homes as part of your real estate investment strategy.

Note by BiggerPockets: These are the views expressed by the author and do not necessarily represent the views of BigPockets.