Off-Market Properties: Are They the Best Option? Pros, Cons, and 5 Essential Buying Tips

The property market offers various channels, from auctions to off-market deals. Off-market properties promise exclusivity and privacy but don’t always guarantee a sound investment. Read our blog to learn more.

Why is that?

In this blog, get ready to uncover the pros and cons of off-market properties and five invaluable buying tips to guide you through this intriguing purchasing option.

The Pros of Buying Off-Market Properties

Less Competition And More Room For Negotiation

The key benefits of buying off-market are reduced competition and better strategic negotiation. This quieter approach can alleviate pressure and anxiety for buyers, especially compared to public auctions, where bidding wars can escalate emotions, inflate prices, and complicate talks. Unlike a bustling open market where properties attract a crowd of eager buyers, off-market opportunities cater to a more selective audience. With fewer potential competitors in the pool, you have more time to thoroughly assess the property and negotiate for a better price without the looming threat of being outbid. 

Faster Buying Process

Unlike traditional sales with lengthy marketing campaigns, off-market transactions skip public advertising. This can be favourable if you seek a quicker and more streamlined purchasing process.

The Cons of Buying Off-Market Properties

Properties may not be presented in their best light

One common challenge buyers often face with off-market properties is the absence of floor plans and professional photos. Since the properties are not publicly listed, sellers usually skip these marketing steps to save costs. The lack of visual and structural information can make it difficult for potential buyers to assess the property’s conditions and layout without in-person inspections. Therefore, to avoid missing crucial information that would help with decision-making, investing additional time and effort in uncovering essential details is worthwhile.

You may rush into a deal and overpay 

In some cases, sales agents avoid listing their properties online because the vendors aim for a higher-than-market sale price. They target their database clients with off-market offers, hoping to find someone eager or desperate enough to make a purchase. Impulsive buyers who lack experience might rush into these “deals” without thoroughly investigating the property’s true value and end up overpaying.

You may end up with a property that fails due diligence

Sometimes, people choose to sell their properties off-market because some features of the properties may turn experienced buyers off. The features can include locating on busy roads, near bus stops or roundabouts (noise), in flood-prone areas, or with smaller plots of land, etc. They would fail experienced buyers, including InvestorKit’s due diligence checks, and would take longer to sell. It would reflect poorly on the properties, wasting marketing expenses and everyone’s time if the agents took them online and only attracted a handful of potential buyers. Therefore, your chance of coming across a property failing due diligence in off-market opportunities is higher than usual.

5 Tips on How to Find and Buy Off-Market Properties

If you want to try the off-market channel, It’s essential to take a proactive approach, exercise careful consideration, and conduct thorough due diligence. Below are five key recommendations to help you fully capitalise on the benefits of off-market opportunities and avoid common pitfalls from hasty decision-making or lack of information:

• 14 Connects: Don’t make just one or two calls and call it a day. If you’re serious about off-market opportunities, you need to make MANY connections. Through our experience interacting with sales agents thousands of times a month, we’ve found that, on average, you can get one qualified (passing due diligence checks) off-market property in 14 “connects”. By “connects”, we mean conversations: they can be phone calls, texts, WhatsApp messages, emails, etc., but the other parties’ replies are essential. Making just a few connections could bring you off-market properties, but your chance of getting a good-quality house would be low.   
• Who and when to contact: Contact property managers as well as sales agents, as they have broad connections to potential sellers and can help link you with suitable vendors or their sales agents. This is also an excellent way to learn about the local area and upcoming events. It’s better to reach out early to mid-week as they have more availability and time to respond to your inquiry during this time than later in the week.

• Special clauses and paying for information: To ensure you get all the necessary information and avoid hidden details, you can negotiate with the seller to include clauses in the contract allowing your inspection(s) in person. If you’re serious about a place where floor plans are unavailable, you can also offer to pay for the floor plans.
• Comparable sales: To avoid overpaying, remember to use the comparable sales valuation method. Comparing your target property with properties with similar characteristics will give you an idea of the property’s actual value, helping you make a more informed decision, increasing your negotiating power and avoiding overpaying.
• Open to cosmetic improvements: Many properties go off-market because they’re not in the best condition and/or are under-rented. Don’t reject them right away because, with a bit of cosmetic renovation, such as a new dishwasher, new blinds/carpets, or repainting the walls, you can immediately improve the property’s presentability and rent. However, it’s important to factor your renovation costs into your purchasing price.

This blog is inspired by an episode of InvestorKit Podcast: How Does Buying Off-Market Actually Work? Lets Find Out! – With Arjun Paliwal. Check out podcast shows for more practical tips like this!

If you’re enticed by the idea of off-market opportunities but find yourself too busy to connect with so many sales agents or do all the due diligence work, we’re here to help! The InvestorKit team has close connections with more than a thousand sales agents across the nation, making hundreds of calls each day to source off-market properties. As a result, 60-70% of our purchases are made through the off-market channel. The rest 30-40% are from public listings – We search each buying region’s for-sale listings up to 3 times a day so as not to miss any potential opportunities. Would like your searching and purchasing process to be efficient and stress-free? Chat with us by clicking here and requesting your 15-minute FREE no-obligation discovery call!