Buying property off-market has grown in popularity in recent times thanks to the unusual circumstances we’ve found ourselves in over the past 12 months.
However, it’s important to understand that if you are looking to buy a property off-market, that doesn’t necessarily mean you’re going to be able to pay whatever you want for it. It also doesn’t mean you won’t face any competition. These are some of the major misconceptions that buyers face and it can often cause them to miss out on a great property.
Property buyers oftentimes have a set figure in their mind that they are willing to pay for a property. In reality, that might be based on their own budget or their own perception of how much a property is worth. Unfortunately, the market and the vendor might well have other ideas irrespective of whether it is being sold on or off-market.
An off-market transaction will often come about because a buyer has approached a vendor or agent directly, or because an agent has contacted one or more interested buyers.
As a buyer, it is important to understand that all vendors have their price. Their price is a point at which they will not cross. Just because you have a different idea about what that price might be doesn’t mean an unmotivated vendor will agree with you. Similarly, just because a vendor is choosing to sell a property without officially listing it, doesn’t mean they will take a lower value than what they believe it’s worth.
There is also the possibility that there will be multiple interested parties even if the property is not listed. This often occurs when an agent contacts their active buyers directly with a pre-listing.
If you’re a buyer, whether it’s off-market or even at auction, it is your responsibility to know what a property is worth.
We already know that the price guide given by agents is rarely all that useful in determining what a property will actually sell for. The best way to gauge a property’s worth is by comparing it to recent sales in the same area.
That way, you are building a realistic expectation of price based on hard evidence which is far better than your own opinion.
The second part is to work with the sales agent and try to determine what the vendor might be willing to accept for a property. Try to determine why the vendor is selling the property and also why they (or the agent) are choosing to sell it off-market. Buying a property off-market does allow you to build a relationship with the agent and that can be used to your advantage.
When you’re able to work out why the vendor is selling, what their expectations might be and how much similar properties are selling for, then you can get a clear idea of how much you can pay.
Also, take into consideration how much interest there has been from buyers for the same types of properties in that area. A vendor will likely know, just how well properties have been selling in their area.
If you have a good idea of how much it is worth, you will also be able to negotiate and even come in early with an offer to try and beat out any competition.
Again, just because a property is selling off-market, doesn’t mean a vendor will give it away, so don’t fall into that trap. Do your research and know a property’s real value even if the property is being sold off-market.