Off-Market Properties: What Are They And How Do You Find Them?

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Real estate properties listed as “off-market” are not publicly listed for sale. However, that does not mean that you cannot buy off-market properties. You may discover a great and lucrative real estate investment if you know how to find off-market properties. 

What is the best way to find off-market sales? Are there advantages to searching off-market property sales for investment opportunities? What should you be careful of when buying a property off-market? This article answers these questions and many more. 

What Does Off-Market Mean?

“Off-market” can mean two things. One, it means that the property is for sale, but not listed on the MLS by an agent. Or, it’s simply not for sale.

Buying houses off-market happens more often than you might think. For example, the National Association of Realtors (NAR) reports that around 10% of home sales occur without them being listed on the Multiple Listing Service (MLS). Typically, off-market sales are common in hot markets where demand outweighs supply heavily, meaning that a home can sell easily without ever going to the public for sale.

Pros of Buying an Off-Market Home

Searching real estate markets for off-market homes widens the net of investment opportunities. Real estate investors should look for off-market properties for a few reasons:

• Off-market prices can be negotiated better due to less competition.
• Lower competition, in general, equals a better chance of your offer winning.
• You can typically negotiate other, more favorable terms that aren’t always available on-market.

Cons of Buying an Off-Market Home

While an off-market real estate deal can be lucrative, there are a few disadvantages to going down the off-market route.

• Closing times may be longer. For one, you have to find the property. Then, convince the seller with a compelling offer. Overall, it might take significantly longer to close on an off-market home than an on-market listing.
• Some off-market search services include fees that can become costly over time. Probably not a deal breaker, but something to consider.

Why Do Sellers Go Off-Market?

The three reasons sellers typically choose the off-market route are privacy, potential savings, and price testing. Also, the off-market listing process ensures sellers can reach the right buyer or buyer’s agents and only get interest from motivated parties. Sellers can also save money on marketing costs, listing fees, and staging. 

How to Find Off-Market Homes

The best way to find off-market properties for sale is to use a reputable off-market listing platform. Some websites specialize in off-market real estate sales, whereas others, like Zillow, have listings for “for sale by owner” (FSBO) sales. Other ways to find off-market listings are real estate auction websites, Facebook Marketplace, or Craigslist. Of course, you can also go the old-fashioned route of door-knocking or phone prospecting to find potential sellers.

Another way to find off-market real estate listings is to network with agents and other investors. The more specific you are with your requirements, the greater your chance of finding the perfect investment property. 

Here are a few other ideas for finding great deals in your off-market property search:

• Drive through neighborhoods looking for yard signs “For Sale By Owner.”
• Use a direct marketing campaign.
• Network with listing agents specializing in non-MLS properties.
• Build a professional network of wholesalers, contractors, and investors using real estate forums like BiggerPockets.
• Search public records for properties threatened with foreclosure.

Related: Six hacks for finding profitable off-market real estate deals

How to Approach a Seller

There are several ways to approach a potential seller if you are actively looking for an off-market property. For example, you could print high-quality postcard-size flyers for a direct mail marketing campaign. In some markets, real estate investors go door-to-door and ask homeowners directly.

Another option for meeting with sellers is to search for distressed properties in a neighborhood. These could be abandoned homes or foreclosures. You could then track down the owner with a little investigation at the county records office or online. 

Some investors have success writing a personalized letter to the homeowner with a solid, attractive offer to buy the home. 

It is also good to remember that some off-market sellers are facing financial hardship and may be facing foreclosure. Therefore, it’s important to be empathetic with the seller as they may be going through a lot of stress. 

Tips on Negotiating

When negotiating with the seller, a strategic approach may help you land the off-market deal. Here are a few negotiating tips to be successful: 

• Have a good idea of local housing market conditions to determine if it’s a seller’s or buyer’s market. 
• Savvy buyers offer higher down payments to stand out from the competition.
• Be ready to counteroffer until you are sure the seller won’t budge on their position. 
• Remember, a lowball offer significantly below fair market value could antagonize or insult the seller.
• Negotiate contingencies in the sale contract. This protects you in the deal if the home appraisal is low or a home inspection finds major issues with the property.
• Have your finances in order with either a pre-approval letter or cash to buy the home. 
• Work with a real estate agent to finalize the deal and negotiate nuances in the purchase contract.

Final Thoughts

Off-market properties can offer endless investment opportunities if you know where to find them. Therefore, it makes sense to include looking for off-market homes as part of your real estate investment strategy.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.