Here’s the thing, off-market properties are very much sought out due to the lack of information on the MLS. This means that fewer people know about those properties, and there are more opportunities for those that do.
If you’re an experienced real estate investor, then you know that one of the best ways to find unlisted inventory is through networking. You may have a solid network of agents and brokers who can help you get your foot in the door with sellers who are not active in listing their properties.
But what if you want to take your search for off market properties one step further? Here are some useful tips for finding even more unlisted real estate inventory.
What Are off Market Properties and Why Should You Care About Them?
Off market properties are those that are for sale but are not active on the market for sale or aren’t listed on different listing services. They may be available for purchase through other channels, such as networking or direct contact with the seller.
You could also think of sales like this as pocket sales. What that means is that the listing is being offered through private channels (a figurative pocket) instead of the MLS.
There are various reasons why off market properties can be appealing to investors. First, an off market property is often cheaper than its listed counterparts. This is because there is often less competition for off market properties, and sellers may be more willing to negotiate on price.
They are also often easier to close on than listed properties. Since there is usually less demand for these types of properties, buyers have more leverage in negotiations and can often get a deal done in more of a quick way than they would with a property listed on the MLS.
Off market properties offer investors a greater degree of anonymity. When you buy a property off market, the seller is not likely to know who you are or how you found out about the property. This can be an advantage if you’re looking to keep your investing activities confidential.
Additionally, these properties often come with less red tape. Since they’re not being marketed, there’s a good chance that the seller won’t have gone through the process of getting the property appraised and inspected.
Although, this isn’t always the case, so keep that in mind. However, if so, this can save you time and money when you go to close on the property.
How Do You Find off Market Properties in Your Area of Interest?
So, you’re wondering, how to find off market properties. There are a few things that you can do to find off market properties for sale. If you were looking for strategic methods, one of the most popular options is to talk to well-connected real estate agents.
Networking is one of the best ways to get the scoop about new off market listings. Since we want to span beyond only networking, let’s take a look at some other options.
Work With the USPS or Order An O&E
Additionally, you can search for abandoned properties by using data from the US Postal Service, or searching for properties through county records. Another option would be to order an owner and encumbrances (O&E) from a title company. This will allow you to find out who owns the property currently and what their mailing address is.
This report helps you to verify who the current owner of the property is from the last purchase to the current effective date that’s listed in the property records.
Work With Homebuilders
If you weren’t already aware, you can work with home builders to find out more about hidden property inventory. Lots of builders aren’t listing their inventory on the MLS. As we discussed earlier, this is a good thing because you’ll have less competition, because fewer people will know about the property.
Speaking in terms of strategy, homebuilders do this on purpose so that they don’t over supply the market. If you want to work with a homebuilder, pay attention to where new developments are popping up and even reach out to builders and contractor companies.
Check Out Expired Listings
Another great option that often goes overlooked would be to prospect expired listings. Just because a listing expired, that doesn’t mean that the property was sold. This is actually a low-cost and quick way to generate appointments for listings.
Don’t Overlook Pre-foreclosures
Joining in on the “often goes overlooked club”, pre-foreclosures is another great option and opportunity to get potential listings. With this, properties are also not going to be listed on the MLS, which gives you more opportunity to search for pre-foreclosures without racing with others.
You can also help homeowners turn those pre-foreclosures into listings that could benefit you as an agent.
Develop Useful Relationships
Additionally, if you haven’t thought to do it yet developing relationships with credit unions, and banks in your area could be another open door to finding off market listings. The thing is, what many agents don’t realize is that when you work with a bank or a credit union, you may be opening an opportunity to connect with buyers that are applying for mortgages.
What this means for you is that you have qualified buyer leads. Your relationship with the credit union, or bank can drive this traffic to you. This is especially true if someone’s mortgage is going into default and the help of a real estate professional could help determine value, or to prepare for a foreclosure.
Again, either way, this helps you get your foot in the door with more off market properties and opportunities to acquire them.
Think Outside The Box
You can also think outside of the box by looking to get more listings from bankruptcy, or even a state in probate. So, here’s the thing if you want to get listings from an estate and probate, there are different laws associated with this for each state.
Probate is the process after someone passes away. If you wanted to move forward with this opportunity, that process is ensuring that all debts owed get paid in full. You could reach out to the trustees directly or use a referral option to start developing relationships with the probate attorneys to see if the trustee would be interested in selling the property.
Additionally, getting listings from bankruptcy is another great option but it can be tricky. However, if you are familiar with working with bankruptcy attorneys this could be a very consistent and direct way to gain new listings.
Speaking of good ideas, using simple online resources can be as effective as any other option. There are multiple tools online that aren’t related to MLS listings that could be used.
For example, you could test the waters with craigslist or even online classifieds. You could even run searches based on listings specifically labeled as for sale by owner (FSBO).
As a main takeaway, you can start by working with homeowners directly, using online resources, or working with banks, or attorneys to acquire more off market listings. There are countless ways to go about this process, it will depend on what avenues you are and aren’t comfortable with, what is the most efficient for you, and how you conduct business.
What Are the Benefits of Investing in off Market Properties Compared to Traditional Listings or MLS-Based Investments?
Off market properties can be a great investment option for a variety of reasons. Here are a few of the benefits of investing in off market properties:
- Typically cheaper than listed properties with more room for haggling
- Oftentimes it’s easier to close on than listed properties
- As we mentioned, investors have a greater degree of anonymity
- Less upfront work that could take away from the purchase process
- Less initial competition
Although the home will be sold as is, this could be a good opportunity for the buyer versus a con
Keep in mind that off market properties may not be the right investment option for everyone. Do your research on the properties, and consult with the sellers if you want to make an offer. Oftentimes, sellers will be more open to negotiation if they are trying to sell quick.
Are There Any Risks Associated With Investing in off Market Properties?
Off market properties can be a great investment option, but there are a few risks to keep in mind. First, with off market properties yes, you’ll have less competition but you’ll be paying a premium for that reason.
Also, lenders may be hesitant to lend money for an off market property since they’re not as easy to sell as traditional listings. You could say that some properties may come with hidden damage. Since off market properties are not actively being marketed, sellers may be less likely to disclose any damage or necessary repairs.
Of course, you can alleviate this issue by having an inspection of the property done. So, be sure to have a qualified inspector take a look at an off market property before you make an offer.
How Do You Go About Negotiating an Offer on an off Market Property?
If you’re interested in making an offer on an off market property, there are a few things to keep in mind. If you are an experienced agent or broker you may have the upper hand here. You will be able to negotiate the best possible price for an off market property.
You also want to make sure that you’re prepared to put down a deposit. This is often 10% of the purchase price, but it may be more or less depending on the situation. As an agent, you know how this part of the process works so be prepared to close fast.
Off market properties are often sold as-is, so you’ll need to be prepared to make any necessary repairs or renovations and to bring in someone to perform an inspection if that wasn’t already done because most sellers will not do so if they are listing “off-market”.
Remember, off market properties are not as competitive as traditional listings, so you may be able to get a great deal on an off market property if you have the right negotiation skills and approach. You can also use this if you want to approach a homeowner who hasn’t listed their property on or off the market.
This is a good opportunity to develop and make an offer but with an approach that would interest the potential seller. That’s another way to secure the ability to find off-market listings as well.
Whether you’re looking for your first investment property or you’re a seasoned investor, off market properties can be a great option. By understanding the process of finding and negotiating an offer on an off market property, you can put yourself in a better position to find a great deal.
Get the Funding and Guidance You Need
Oftentimes, buyers look at off market properties as an additional source of inventory. The great thing is that you can avoid excessive competition, and even save on the commission if it’s lower.
Luckily, sellers are taking advantage of the opportunity to test the market and maintain their privacy while listing their property. This gives buyers a unique opportunity to do the same in terms of searching for properties.
If you’re interested in learning more, and in securing funding for your next listing venture, contact us to get started.