I got asked a question yesterday: “Does NPB have access to off-market properties?”
Well, this has to be one of the most common questions that a buyer’s advocate gets asked, so I was not surprised at the question.
What surprised me was the tone of astonishment that the prospective buyer displayed when I shared my thoughts about this with them. Given that astonishment, it’s evident that there are buyers advocates around that emphasise the importance of off-market properties and how they buy “over 70% of their deals” this way.
So, let me take a little time to express my views on this, but first, I’d like to ask you:
If you were about to sell your property, would you want it exposed to one individual buyer, or would you want it to reach 20-30 groups of qualified, finance-approved home buyers? And remember, this larger group would also likely include individual buyers…
Let’s take a moment and examine this process a little closer.
Understanding Off-Market Property Sales
In simple terms, an off-market property sale happens when a property is sold without being publicly advertised. This approach is often used by real estate agents during the pre-launch phase, where they privately reach out to potential buyers and offer them the chance to inspect and consider the property before it’s widely marketed.
While off-market sales can save on advertising costs and potentially reduce the number of days a property is on the market (something agents love to brag about), the benefits to the vendor and seller are less certain.
Yes, some sellers have valid reasons for choosing this route, but the reduced exposure often limits competition, which can impact the final sale price. For buyers, the chance to score a bargain in an off-market deal is few and far between.
So, while off-market sales may sound appealing, it’s worth asking:
Are buyers genuinely finding hidden gems when buying off-market, or is this just another marketing tactic for a quick sale?
Potential Reasons for an Off-Market Sale
Now, I agree that at times, there are genuine reasons why some sellers request their sales agent to make an off-market listing:
- Privacy is a major concern as they don’t want the neighbours or other family members to know until the actual sale happens,
- Financial pressure, which has created the need for a quick sale,
- Divorce, death or change in personal circumstances,
- Nervousness or anxiety about auctions or crowds of potential buyers tramping through their property,
- Saving on agency marketing and advertising costs.
While I believe selling a property off-market is counterproductive, they are reasons nonetheless and must be duly considered.
But these reasons aside, what does it mean when a sales agent tells you they have an off-market property for you in the first place?
Examining Off-Market Properties
Let me explain it like this:
NPB Brisbane comes across two types of what I call “off-market” transactions:
- Re-market properties — We get to inspect and make an offer on a property before it hits the internet and the general public; this is where we have the most opportunities at National Property Buyers.
- Off-market properties — For whatever reason, the vendor doesn’t want to make the sale of their property public knowledge.
So, how do they generally work, and why would a sales agent want to sell properties this way?
How Off-Market Properties Work
It works a bit like this… When a selling agent lists a new property for sale, there’s actually about a week before it’s ready to launch on public real estate websites.
During this first week, the sales agent has a number of tasks to complete to prepare for the public launch of the property listing to the online portals:
- Photographs need to be scheduled.
- Property inspections are to be conducted.
- The staging of the property has to be coordinated.
- Floor plans need to be drawn.
- The marketing spiel has to be written and approved by the vendor
Another internal factor at this point is that the sales agent is thinking about the dollar value and the distribution of the sales commissions within the office.
You see… most selling agents would prefer to keep the entire sales commission for themselves rather than sharing it with other agents in their office.
So what do they do?
Well…when they find off-market properties, they don’t let the other real estate agents in their office know for a few days. Instead, on the 1st day, they call their personal “A-grade” buyers and offer them the opportunity to purchase this great new property they’ve just listed for sale.
If this doesn’t generate any positive interest, they call their “B Grade” buyers. After the first few days, it becomes time to announce the property to the other sales agents in their office, and these agents do the same.
And if it doesn’t sell after this first week, then the property gets listed on the Internet, and then YOU find out about it online.
So, how do you get on the speed dial of these sales agents and find off-market properties?
How to Become an “A-Grade” Buyer
I’ve been a trusted buyer’s agent for over 17 years now, and in that time, I cultivated a database of sales agents who know the value of my clients through the deals we have done together historically.
Last month alone, we bought four properties PRE-market (meaning no one else knew about them), and a significant portion of the properties we buy for clients are bought this way.
During your lifetime, you’ll probably only ever deal with sales agents no more than two or three times maximum, so it’s tough to know what to do when you are a novice property investor or first-time home buyer.
The NPB Brisbane team was involved in over 80 property transactions last financial year alone. So, it`s assured that we are on the speed dial of most local real estate agents in the areas where we are active around the Brisbane markets.
This is a relationship that all of our clients benefit from – our TIME and EXPERIENCE in the marketplace.
Then there is an alternate reality… As I’ve already stated, we buy a lot of client properties pre-market, but on the other side of the coin, we liken ourselves to the “John West” of buyers advocates. In other words, we’re known for the properties that we REJECT!
The truth is…
Most off-market properties aren’t great deals at all!
Off-Market Websites
You might be wondering: Are there websites specifically for selling off-market properties? And doesn’t that contradict the idea of a private sale?
These websites aren’t very common, but they exist as a way for sellers to test the market while avoiding advertising fees. They are generally called quiet listings, and vendors typically create them at a lower price point. Buyers can register for free or for a small fee. Buyers often sign up for alerts for properties in their preferred areas, allowing them to stay informed about relevant opportunities.
While they may offer access to ‘off-market properties’, they also have limitations. The lack of public exposure means less competition, which could result in you missing out on properties that may otherwise have received higher offers.
Additionally, these listings are often less transparent, making it harder to gauge the true market value of the property. Without a local agent who understands the market and knows how to assess properties based on your preferences, buyers could end up overpaying for a property.
Why Off-Market Properties Are Rarely Worth It
What typically happens with off-market properties is that the prospective vendor will call in 2-3 sales agents to provide their opinions on the sales price they believe they will achieve.
Whilst the seasoned agent will demonstrate their quality in other ways, the not-so-seasoned agent will suggest and emphasise a sales price that is not what would usually have been considered.
In the industry, this is known as “buying the listing.” In other words, they entice the seller with an inflated price to get the listing and then slowly use the process to condition the vendor downwards to reach the real market price.
Since we’re on this sales agent’s “A Grade” buyer list, we are made aware of this opportunity, but when we are informed about the sales agent’s price expectations, we pass on it with the note to the sales agent that it was not suitable for us. What is also often a contributing factor to our rejection of most off-market properties is that when we spend the time to perform our desktop analysis on each opportunity, we find some irregularities with the property that do not quite cut it for us.
Yes, we set a high standard for our clients’ properties we purchase, so if they do not satisfy the preliminary tick boxes, we don’t move the process along any further.
Again, we are made aware of this opportunity because we are on this sales agent’s “A Grade” buyer list, but we passed on the listing with a note to the sales agent that it was not suitable for us and again, that’s okay because that’s what we do for our clients.
The Reality of Off-Market Listings
You see… the reality is that even if 20 properties are listed online every day in areas that we are actively looking into for our clients, it’s likely that very few are what NPB Brisbane considers as “OUR” grade.
In fact, out of every 20 off-market or advertised properties we see online, we would probably qualify only two or three as suitably qualified properties for our clients.
So, when I explained this to the inquirer yesterday who asked the original question, they hopefully began to see my point that off-market purchases are typically either “well overpriced” or “underpinned with some type of irregularities” and that they should not engage with a buyer’s agent who bought over 70% of their clients’ properties this way.
Get started with National Property Buyers, the agency Brisbane counts on for premium service.
We’re not saying off-market listings don’t have value, and we know some buyers and sellers have had positive experiences with them. However, more often than not, we see buyers paying more than they need to or sellers not getting the best price for their property. Our team is here to help you find the perfect property for the right price.
From selling your investment property to buying a new family home, the team at National Property Buyers can do it all, and we can’t wait to find you a property that ticks all your boxes.
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