Would-be homebuyers often fall into the trap of thinking off-market properties are the holy grail of real estate and offer the very best opportunity to get a bargain. At the same time, many buyers also assume the role of a buyers agent is simply to bring them off-market opportunities and nothing else.
In reality, when vendors look to sell their property, they will always be trying to get the best possible outcome which generally means the maximum value they can. A good agent will also be helping them achieve this as well. The idea that you’re getting exclusive rights to a property when a property is being sold off-market is also not true.
So with that in mind what is the benefit of buying off-market and is it really a competitive advantage when searching for a home?
Pros of off-market deals
More optionality: One major advantage of off-markets is more options for your consideration as part of your property search. And when it comes to searching, it’s better to over-search than under-search as you’re always learning an extra thing or two whenever you’re inspecting. And who doesn’t like more options? You never know when a home is going to strike a cord and you’re going to fall head over heels for it – yes that can happen!
Ahead of the offer race: Another advantage of off-market properties, especially for those that have vendors that are adamant in going live on market, is that you get a competitive advantage by way of time if you like the property. How ‘time’ can be leveraged is by getting all your ducks in a row (in terms of finances, research on the property etc.) to be able to be the first to bid and bid strong. This can sometimes be the winning ingredient to the sale of a home.
Less competition: Naturally, if you feel that the expectation of the seller may be under the market due to an ill-informed agent (yes this can sometimes happen), then you may want to put forward a strong offer so you don’t have to bid (at auction) on the open market. This can sometimes work well, however, does require a good understanding of the market price for the home to be able to identify a good deal.
You can save the vendor thousands in staging/campaigning costs: This is serious leverage when it comes to negotiating off-market. Besides, if you’re successful with the campaign, arguably you would be paying for staging as the purchaser since you would have paid a premium for the property as a result.
However, it’s not all rosy with off-markets. There are also some you should also consider.
Cons of off-market deals
There’s more than just off-market properties: The off-market property tends to be off the brief – so you need to keep an open mind on what’s being presented.
First appearances: If you are unable to look past the state of the home without staging, you may be unable to truly appreciate the full potential of the home and may disregard the property from your search entirely.
Inflating seller expectations: Prior experience has shown that sellers can get greedy if they see they’re already getting prospects through the door without a campaign. This may ironically encourage them to enter the active market so they can seek a better price as they flirt with the idea that ‘if I’m getting the strength in offer now, imagine what I’d get in the open market?!’
With an open mind, the pros can outway the cons in most instances. However, if you’re aware of the cons of off-markets, you’ll be in a more informed position to navigate the opportunity off-markets present and be in a better position and add value to your journey to purchasing a property.