If you hang around property developers for long, you'll likely hear them talk in awed whispers about the holy grail of buying property off-market.
Okay, maybe I'm exaggerating, but it's true that for many developers, buying off-market is definitely a goal.
Let's deep dive into what an off-market sale actually is, and whether it's a goal you should have as a newbie property developer.
At a very general level, an off-market property is available for sale but is not publicly advertised or listed on common real estate platforms. The sale is usually arranged privately between the seller and the buyer, sometimes with the help of real estate agents, brokers, or other intermediaries.
Already I'm going to be a little nitpicky and make it clear there are 2 distinct types of off-market sales, but let's start with the most obvious question - what's in it for you?
Benefits of Buying Off-Market
The most obvious one - less competition. With fewer buyers aware of the property, you may face less bidding pressure, leading to a better price or terms.
Motivated sellers might also be open to negotiating price or terms in a way that wouldn't happen in a hot, public market. Also, without the layers of a highly publicized listing and an agent in the middle, negotiations can be more personal and flexible.
Approaching sellers off-market may give you the opportunity to secure hidden gems or special investment opportunities not seen by anyone else.
But on the downside, locating off-market properties requires more time, effort, and insider knowledge than just scrolling through online listings.
Back to my prior point about there being two types of off-market sales, with the first one being...
Directly With The Seller
In this scenario, you, as the buyer, approach the seller directly. There are countless ways of doing this, from knocking on their door to chatting to a mate at the local footy club.
In my opinion, this is a true off-market sale. It's likely the seller wasn't planning to sell, or if they'd had a vague idea of selling, hadn't done anything about it.
I love buying properties this way. You get to bypass all the nonsense that often goes on with real estate agents, and it makes it easier to find a way to give the sellers exactly what they need.
Through An Agent
This is where a lot of the hype comes into off-market sales. It seems that recently every man and his dog is giving buyers the "exclusive" opportunity to access these listings.
Realistically, I think these should be called pre-market listings. The sellers have already made the decision to sell, but the agent is choosing to put out the feelers to see the level of interest in the property before going through all the rigmarole of a formal listing.
Are you starting to understand why agents love these? They have the chance to sell the property with minimal time and effort, and bank the commission faster. Ka-ching!
Okay, to be fair, this has always gone on, particularly when you're talking about a site with development potential. It used to be that you needed to be on the agent's call list. He'd get a site with development potential, and immediately start ringing all the people on his call list. The best sites were frequently snapped up before anybody who wasn't on that golden list got a chance.
Don't get me wrong, those golden call lists still exist. Maybe it's simply a case of developers being a bit thin on the ground over the covid years, and so agents are still trying to get the quick sale in a tougher market with different methods.
Now we understand what is meant by an off-market sale, there's a really important question that's almost certainly popped into your mind.
Why Would A Seller Choose to Sell Off-Market?
For sellers, selling off-market can help avoid the costs associated with traditional listings, such as marketing, staging, and professional photography.
There's also the advantage of a quick and quiet sale, bypassing the delays and hassle of open inspections and broad advertising. Off-market transactions allow sellers to have complete control over who views the property and the terms under which it is shown.
Certain sellers who are thinking of selling prefer to test the market discreetly to gauge buyer interest or pricing without officially listing the property.
And for high-profile individuals or people with personal reasons to maintain their privacy and avoid public exposure, selling off-market is a great choice.
In the scenario where you approach the seller directly, there's also the fact that you're in a much better position to be flexible with your offer, helping the seller achieve their goals in relation to the sale.
For example, they may feel their current property is too big for them to maintain, but they don't want to move out of the area. Maybe you can negotiate for them to receive one of the finished homes in exchange for terms that benefit you. The possibilities are endless.
Keys To Buying Off-Market
The first step is to identify what exactly you're looking for. Just saying you're looking for a development site is too vague. How big does the site need to be? Frontage? Zoning? Specific pocket of the suburb? If you're sourcing these yourself, you then know which properties to target. And agents will love you if you can give them really specific criteria.
If you're not comfortable with approaching property owners directly, you will need to get really good at networking. Word of mouth through friends, family, or local community groups can lead to off-market opportunities.
Some real estate agents specialize in off-market deals or may be aware of upcoming listings not yet on the market. Certain websites and private networks also cater specifically to off-market properties.
If you're okay with talking directly to the property owner, then you can contact them directly to express interest in buying their property. You can do this by finding properties that match your criteria with online tools, or scouting your neighbourhood looking for distressed or vacant properties.
When dealing with owners, communicate clearly and respectfully. Make sure to highlight why your offer is appealing, especially if they hadn’t been actively considering selling. Be ready to discuss price, contingencies, early access if needed, settlement timelines, and potential seller needs.
Things To Remember
Even if the deal is private, due diligence is crucial. Conduct a building and pest inspection if you're retaining the house, have a lawyer review the contract, check zoning and permits, and make sure you've done the due diligence and feasibility on your intended strategy.
You’ll also need financing. Work with a lender or broker who is familiar with off-market purchases.
Buying a property off-market can be a strategic and rewarding way to acquire property development sites. The process requires more initiative, patience, and relationship building, but it can lead to less competition, better prices, and access to exclusive properties.
With the right approach, buying off-market can provide you with a significant edge.
Okay, maybe I'm exaggerating, but it's true that for many developers, buying off-market is definitely a goal.
Let's deep dive into what an off-market sale actually is, and whether it's a goal you should have as a newbie property developer.
At a very general level, an off-market property is available for sale but is not publicly advertised or listed on common real estate platforms. The sale is usually arranged privately between the seller and the buyer, sometimes with the help of real estate agents, brokers, or other intermediaries.
Already I'm going to be a little nitpicky and make it clear there are 2 distinct types of off-market sales, but let's start with the most obvious question - what's in it for you?
Benefits of Buying Off-Market
The most obvious one - less competition. With fewer buyers aware of the property, you may face less bidding pressure, leading to a better price or terms.
Motivated sellers might also be open to negotiating price or terms in a way that wouldn't happen in a hot, public market. Also, without the layers of a highly publicized listing and an agent in the middle, negotiations can be more personal and flexible.Approaching sellers off-market may give you the opportunity to secure hidden gems or special investment opportunities not seen by anyone else.
But on the downside, locating off-market properties requires more time, effort, and insider knowledge than just scrolling through online listings.
Back to my prior point about there being two types of off-market sales, with the first one being...
Directly With The Seller
In this scenario, you, as the buyer, approach the seller directly. There are countless ways of doing this, from knocking on their door to chatting to a mate at the local footy club.
In my opinion, this is a true off-market sale. It's likely the seller wasn't planning to sell, or if they'd had a vague idea of selling, hadn't done anything about it.
I love buying properties this way. You get to bypass all the nonsense that often goes on with real estate agents, and it makes it easier to find a way to give the sellers exactly what they need.
Through An Agent
This is where a lot of the hype comes into off-market sales. It seems that recently every man and his dog is giving buyers the "exclusive" opportunity to access these listings.
Realistically, I think these should be called pre-market listings. The sellers have already made the decision to sell, but the agent is choosing to put out the feelers to see the level of interest in the property before going through all the rigmarole of a formal listing.
Are you starting to understand why agents love these? They have the chance to sell the property with minimal time and effort, and bank the commission faster. Ka-ching!
Okay, to be fair, this has always gone on, particularly when you're talking about a site with development potential. It used to be that you needed to be on the agent's call list. He'd get a site with development potential, and immediately start ringing all the people on his call list. The best sites were frequently snapped up before anybody who wasn't on that golden list got a chance.
Don't get me wrong, those golden call lists still exist. Maybe it's simply a case of developers being a bit thin on the ground over the covid years, and so agents are still trying to get the quick sale in a tougher market with different methods.
Now we understand what is meant by an off-market sale, there's a really important question that's almost certainly popped into your mind.
Why Would A Seller Choose to Sell Off-Market?
For sellers, selling off-market can help avoid the costs associated with traditional listings, such as marketing, staging, and professional photography.
There's also the advantage of a quick and quiet sale, bypassing the delays and hassle of open inspections and broad advertising. Off-market transactions allow sellers to have complete control over who views the property and the terms under which it is shown.
Certain sellers who are thinking of selling prefer to test the market discreetly to gauge buyer interest or pricing without officially listing the property.
And for high-profile individuals or people with personal reasons to maintain their privacy and avoid public exposure, selling off-market is a great choice.
In the scenario where you approach the seller directly, there's also the fact that you're in a much better position to be flexible with your offer, helping the seller achieve their goals in relation to the sale.
For example, they may feel their current property is too big for them to maintain, but they don't want to move out of the area. Maybe you can negotiate for them to receive one of the finished homes in exchange for terms that benefit you. The possibilities are endless.
Keys To Buying Off-Market
The first step is to identify what exactly you're looking for. Just saying you're looking for a development site is too vague. How big does the site need to be? Frontage? Zoning? Specific pocket of the suburb? If you're sourcing these yourself, you then know which properties to target. And agents will love you if you can give them really specific criteria.If you're not comfortable with approaching property owners directly, you will need to get really good at networking. Word of mouth through friends, family, or local community groups can lead to off-market opportunities.
Some real estate agents specialize in off-market deals or may be aware of upcoming listings not yet on the market. Certain websites and private networks also cater specifically to off-market properties.
If you're okay with talking directly to the property owner, then you can contact them directly to express interest in buying their property. You can do this by finding properties that match your criteria with online tools, or scouting your neighbourhood looking for distressed or vacant properties.
When dealing with owners, communicate clearly and respectfully. Make sure to highlight why your offer is appealing, especially if they hadn’t been actively considering selling. Be ready to discuss price, contingencies, early access if needed, settlement timelines, and potential seller needs.
Things To Remember
Even if the deal is private, due diligence is crucial. Conduct a building and pest inspection if you're retaining the house, have a lawyer review the contract, check zoning and permits, and make sure you've done the due diligence and feasibility on your intended strategy.
You’ll also need financing. Work with a lender or broker who is familiar with off-market purchases.
Buying a property off-market can be a strategic and rewarding way to acquire property development sites. The process requires more initiative, patience, and relationship building, but it can lead to less competition, better prices, and access to exclusive properties.
With the right approach, buying off-market can provide you with a significant edge.
