If a property is sold without being listed or advertised on any of the major real estate portals, it is typically considered an off-market sale. There are two primary types of these transactions; a pre-market opportunity and a 'true' off-market opportunity. In a pre-market situation, an agent will connect with interested parties in the hope of receiving an offer before the property is promoted publicly or taken to auction. In a true off-market opportunity, the property in question is sold without any immediate plans to be placed on the market.
Off-market sales can be a great way to build an investment portfolio or streamline a selling process, but there are some risks involved.
For vendors, one of the main benefits of a silent sale is eluding the stress and inconvenience associated with a traditional property sale. You might have purchased a property for $250,000, but now it's worth $1,000,000. In most cases, an agent will push for an auction, especially in a booming market. An auction could get you $1,100,000, but it could also get you $900,000. However, if you choose to sell the property silently, you might secure a guaranteed $1,000,000 but without all the hassle involved in the selling and auction processes. It's similar to trading in your car rather than selling privately; many people would rather take the cash.
If you're thinking about purchasing property off-market, be sure to do your research, especially if you plan to handle the process yourself. There are many pitfalls for those who rush or those who bring emotion into the sale.
Depending on market conditions, it can be relatively difficult to secure an off-market property. In a booming market in a prime area, 95 per cent of real estate agents will push to take a property to auction. Even now with the market falling and properties not selling as quickly as they used to, it can still be challenging to secure a silent sale. Real estate agents in a slow market have fewer listings, and when they manage to acquire new business, they often work the listings harder, meaning they take it to auction and tell the world about it in the hope of getting other listings from buyers that are also sellers. It's vital to keep your head, be patient, and be sure to triple-check yourself at every milestone to ensure you're not short-changing yourself.
While off-market sales afford several advantages, they also present some additional risk. As a buyer, be wary that not all off-market properties are a good deal and they are not always great properties. In some situations, vendors will have unrealistic expectations. In this case, it's essential you exercise due diligence and make sure you're not paying too much and ensure the property really does tick all the boxes.
It's also important to be aware of buyer's agents' services if you are time-poor, or if you would like professional assistance to build your investment portfolio. A buyer's agent specialises in scoping out, evaluating and then purchasing properties on behalf of their client, a buyer or investor. There are many advantages to using a buyer's agent, the foremost being their industry and investment knowledge. A buyer's agent is a market expert and a skilled negotiator; they make their living buying competitively priced real estate and often specialise in off-market sales.
A buyer's agent can also give you access to off-market properties that you wouldn't find on your own, as buyer's agents are generally well-connected with real estate agents. Further, a real estate agent is far more likely to close a deal with a buyer's agent over someone new, as they know from previous transactions that the process will likely be smoother and quicker than if they were selling to a potential tyre kicker.
Provided you do your research and remain patient, in conjunction with utilising a reputable buyer's agent (should you choose this path), purchasing property off-market can be a cost-effective way to build an investment portfolio, especially during market uncertainty. Alternatively, a silent sale for vendors can streamline the selling process and speed up a sale.
Source - Chris Gray, CEO of Your Empire
www.yourempire.com.au,www.chrisgray.com.au