How to buy an off-market property
By many accounts 2023 has been a relatively quiet year in terms of activity on the Australian property market. At least, so far.
A recent report published by PropTrack revealed that sellers weren't rushing to put their homes on the market at the start of winter, with the number of new listings across the country down 14.8% in June compared to the same time in 2022.
For those looking to sell, a lack of supply can be beneficial if there's buyer demand. But the opposite can be true for buyers. In a tight market, every available property can be crucial.
It's possible that some buyers are missing out on a number of homes that aren't - often by design - as visible as others though: off-market properties.
Rhett Dallwitz, the chief executive of Listing Loop, an online marketplace for off-market properties, says that their research indicates that the off-market category accounts for around 20% of available properties in the country.
"In Australia we have approximately 140,000-145,000 properties for sale right now on the market. What we're saying though is that there's another 30,000 or so right now that are being promoted off-market that a lot of consumers just aren't aware of."
What are off-market properties?
Now, the term off-market might sound nonsensical. After all, if a property isn't on the market, is it even for sale?
What it really refers to is properties that aren't currently being pushed out to the wider public via a full marketing campaign: one with a listing on Domain or realestate.com.au, photography, styling and a placard out the front. However, they are still for sale.
As Dallwitz explains, one of the reasons for this is simply because the process of marketing a property takes time. So homes that are intended to be advertised with a full campaign, but haven't yet hit the market, are known as pre-market properties.
"The agent may have every intent to take it to market, but there is a gap from the date the vendor signed the contract to preparing the property for sale - it can take 12 to 14 days, and in some agencies in New South Wales the average is 21 days.
"So that's valuable time within the authority period when a real estate agent could be selling the property, or creating competitive tension for when they actually go and officially list it."
Then there are actual off-market properties. These are properties that, for a variety of reasons, aren't listed as publicly.
"Our view of an off-market property is one which is for sale, but it might be a vendor who is high-net-worth, a celebrity, someone going through a personal matter such as a divorce or someone who just wants privacy," says Dallwitz.
"It could also be someone that just can't afford the expensive advertising required to sell a property, or it might be someone who would move if they were offered a dream price for their property, but they're not fully committed to selling at this point."
The advantages of buying off-market
Having access to a larger pool of properties is likely to be a plus for many buyers - especially when supply in the market is low.
Beyond that, another potential bonus comes with the prospect of less competition says Michelle May, the principal at Sydney-based firm Michelle May Buyers Agents.
"With genuine off-markets, and the ones that we do buy, we're generally the first and only people to see it. So we can completely control the outcome of that if it's the right property. And with the lack of stock we have year on year, that's a massive advantage."
May warns that less competition doesn't necessarily translate to bargain prices for off-market buyers though.
"With off-market properties, because you are in the driver's seat and you may be the first or second person to see it, you may be put in a position where you are made to pay a premium. So you then have to consider whether that's actually worth your while."
In fact, May says that some selling agents will initially go off-market with a property at a much higher price, purely to appease a vendor with unrealistic price expectations. And if there's no interest, it will then be listed more widely at more realistic price.
"You've got to be careful as a buyer that you're not used as fodder by the agent to manage the vendor. You know, you may waste your time thinking you're going to snap up an opportunity, but really you are never going to buy it because the vendor wants way too much money."
How can buyers access off-market homes?
There are a couple of ways that prospective buyers can tap into off-market properties. One is employing a buyer's agent like May who has existing relationships with real estate agents and perhaps even some vendors in a particular area.
"We get off-market properties when vendors contact us directly because they don't want to use a sales agent, or when a sales agent contacts us because they know we have a buyer for it, but they haven't done any marketing yet," says May.
"We also send out our buyer briefs to agents and say, 'Hey, we've got a buyer looking for a two-bedroom apartment in Ashfield', and they then go through their database of vendors and potentially even go door knocking directly. So we can then put the deal together like that."
Then there are online platforms like Listing Loop which match buyers with sellers agents or vendors directly. As Dallwitz explains, accessing off-market properties via the Listing Loop platform does require a few steps to ensure that the sellers' privacy is maintained though.
"To access any of our off-market properties you've got to register with an email and valid mobile number which we verify."
"If you then want to see an off-market listing you must unlock it - so you can click on a listing, but you won't see the address or selling agent details until you unlock it. Once it's unlocked we'll then share the basic details of who's engaging with that listing so that the agent can take a proactive approach."
Of course, buyers can also do the legwork themselves by reaching out and building relationships with selling agents in the area they want to purchase in.
Is it worth the effort?
While the number of off-market properties for sale is not insignificant, they're still only likely to be a small fraction of the total market. So is the extra effort, and potential cost, involved with accessing these properties worth it?
Of course, that will come down to each individual buyer. But for May, even taking the time to get on a few local agents' lists could be worth it if it means you end up finding a great home that you wouldn't have seen otherwise.
"If you're serious about purchasing then make sure you're on all the agents' databases. While they're not genuine off-marketers as such, agents may actually then start contacting you about genuine properties that they haven't already sent out to everybody.
"Because how can you make a truly educated decision about the property that you do end up buying without seeing 100% of the ones that are for sale?
"Realistically, if whatever's on Domain and realestate.com.au is 80% of what you could buy, you may have made a different choice if you had actually pursued off-market listings as well."
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