Have you been browsing properties online and come across one that says it is "off market?" If so, have you come across any properties with such signs as this on them that indicate it could be for sale but not listed for sale on an agency site.
Property listed as off market typically indicates it's not for sale or no longer for sale, although this could also signify that negotiations for its sale are underway.
Real estate brokers and investors looking for deals outside the open market should explore off market properties as an effective means of finding deals they won't find otherwise.
What is it?
"Off market" property investments involve properties not publicly listed for sale on national real estate listing services. Investors who pursue off-market deals tend to do it without engaging a real estate broker, utilizing their own strategies for finding these assets themselves: this might include finding undervalued or overlooked properties, working with local brokers to identify off-market listings and even looking into auctions as potential sources.
When referring to properties as being off market, this typically indicates that the owner has either removed their listing from sale, is no longer accepting offers on it, or has not listed it for sale in the first place.
One reason is that off-market commercial properties tend to offer lower risk profiles than listed ones, giving investors greater return on their investments when purchasing one off market. Furthermore, such properties usually feature more flexible terms and conditions tailored specifically to individual purchasers' needs.
Off-market commercial property sales may also offer sellers the advantage of being completed faster due to reduced competition for off-market properties, and an opportunity to negotiate with a smaller pool of potential buyers.
Why Do Commercial Real Estate Professionals Seek Off-Market Properties?
Commercial real estate professionals, including brokers and developers, are always on the lookout for lucrative opportunities that often aren't listed on listing databases. Off-market properties are considered the "hidden gems" of the real estate market, offering significant cash flow potential. There are several strategies to uncover these properties:
- Networking: Leveraging industry connections and simply asking around can yield valuable leads.
- Specialized Websites: Utilizing websites dedicated to off-market property searches can streamline the discovery process.
- Online Databases: Exploring databases specifically focused on off-market properties can also be fruitful.
Brokers often have deep knowledge of their local markets and can discover off-market opportunities through their extensive networks. They can also facilitate negotiations by helping to establish prices acceptable to sellers.
Advantages of Off-Market Properties
- Cost Efficiency: Buyers can often purchase off-market properties for less, as sellers aren't receiving multiple competing offers. This is particularly advantageous in hot markets, reducing the stress and costs associated with competitive bidding.
- Simplified Negotiations: Sellers of off-market properties may not be in a rush to sell, allowing for more straightforward and flexible negotiations, which can be beneficial for long-term investment strategies.
- Exclusive Opportunities: Off-market properties often include probate sales, for sale by owner (FSBO) listings, and other unique opportunities. Probate properties are sold after an owner's passing, and FSBO properties are sold directly by the owner without an agent, often staying off-market to avoid drawing excessive attention.
How do brokers go finding off market properties?
Finding off-market properties often relies on the expertise and connections of real estate brokers. These brokers build relationships with property owners who may not be actively listing their properties for sale. Many of these relationships begin with a simple phone call, where brokers introduce themselves and discuss potential opportunities.
Brokers use advanced tools like Plotzy, Landvision, and other CRE (Commercial Real Estate) platforms to identify parcels that might meet the needs of their buyers. They then contact the property owners and start building a relationship, which can lead to the possibility of purchasing the property off-market, either in the short term or the long term.
Other Methods and Reasons for Off-Market Sales
- Networking and Auctions: Brokers also find off-market properties through their professional networks and by attending real estate auctions hosted by banks or financial institutions. While auctions can offer great deals, they require thorough research and careful navigation to avoid pitfalls.
- Seller Motivations: Property owners might choose to sell off-market for various reasons:Privacy: Some sellers prefer to keep their transactions private, especially in cases of divorce, financial hardship, or for high-profile individuals seeking anonymity.Cost and Convenience: Avoiding the expenses and hassle of listing on a platform can be appealing.Higher Selling Price: Some believe they can achieve a higher price without the competition of the open market.
- Pocket Listings: In some cases, sellers may engage in pocket listings. This practice involves testing the market discreetly to understand the property’s value and sale potential before deciding whether to list it publicly. While legal, pocket listings can be contentious as they may violate the real estate brokers' code of ethics.
What are the benefits of finding off market properties?
Owners might choose to sell their properties off-market for various reasons, such as maintaining privacy or reducing costs associated with real estate commissions. Additionally, they may prefer to avoid the inconvenience of dealing with numerous potential buyers who are not serious about making an offer.
For commercial real estate professionals, including brokers and developers, off-market properties offer several significant benefits:
- Favorable Pricing: Off-market sales often result in more favorable prices for buyers, as there is less competition compared to properties listed publicly. This can be particularly advantageous in hot real estate markets with limited inventory and high competition.
- Access to Exclusive Opportunities: Off-market properties are typically known to brokers and real estate professionals with deep knowledge and connections in the area. These properties may include raw land or commercial spaces that are not actively marketed but are available for the right buyer.
- Streamlined Transactions: Sellers of off-market properties might be more flexible and open to negotiations, making the transaction process smoother and quicker. This can be beneficial for both short-term deals and long-term investments.
- Discreet Transactions: For property owners, selling off-market can help maintain privacy and confidentiality, which is particularly important for high-profile clients or those dealing with sensitive situations like financial hardship or divorce.
Off-market sales are more common than one might think. According to industry data, a significant percentage of commercial property transactions occur off-market, especially in competitive markets where buyers are eager to secure properties quickly and discreetly.
By leveraging tools like Plotzy, Landvision, and other CRE platforms, brokers can identify and pursue these hidden opportunities, creating valuable deals for their clients and themselves
