As Perth’s property market remains highly competitive and buyers continue to miss out on properties, one of the most common questions that our buyer’s agents are getting asked is, ‘can you help me find an off-market property?’
For property buyers who are struggling to secure a property, no matter whether they are an investor or an owner, off-market property deals can present an avenue to secure an asset without the trials and competition of the broader market.
While off-market transactions are worth exploring as an option for securing property in a hot market, there are risks involved and buyers should do their research before taking the plunge. Here are our top tips and advice if you’re considering an off-market purchase.
The benefits of buying off-market
Before discussing the benefits of an off-market purchase, it is important to understand what an off-market deal actually is. A true off-market deal is when only one buyer is aware of the potential sale and there is no competition from other parties. In reality, this is a very rare occurrence and what many buyers consider to be an off-market property has actually been advertised to a pool of potential buyers.
Despite not always offering the exclusivity that buyers may think they’re getting, off-market deals can still provide lucrative buying opportunities.
The first benefit – and probably the biggest – is the potential for buyers to secure a property at a favourable price. Without the competition from other buyers that exists on the open market, it is possible to find a better deal than what is available amongst advertised properties.
For buyers who may find the property acquisition process a little stressful, off-market deals can also remove some of the pressures of the traditional buying process. With more time to consider a property and less external competition, buyers can make measured and informed decisions that will, hopefully, lead to a better acquisition.
Be wary of hidden issues and don’t chase shadows
While there can be strong upsides to buying off-market properties, there are also pitfalls that buyers need to be wary of.
One of the main considerations for buyers is to understand the motive of the seller. If they are simply trying to save themselves the hassle of bringing a property to market, maybe because it is a deceased estate sale, then these properties can present strong buying opportunities.
However, some property owners may try to sell a property off-market as they are aware that there are issues with it that may negatively influence buyer perception and they don’t want to outwardly advertise these.
Proposed new infrastructure nearby or structural issues with the property are two common reasons that sellers may look to an off-market sale in order to avoid publicly advertising the flaws of a property.
If you’re considering an off-market purchase, then there are a number of questions that you need to research before taking the plunge.
- Is the vendor actually motivated to sell or are they just testing the market?
- How realistic is the price they are wanting?
- Are there any hidden issues with the property? And if so, is there still a cost benefit to the purchase?
Strong networks can be fundamental to off-market deals
Buying a property off-market is rarely a straightforward process – it usually requires a lot of research and networking in order to uncover properties that are yet to hit the market. Not only is this a time-consuming process, but it also requires contacts and networks that regular buyers simply don’t have.
Many buyers will choose to use a buyer’s agent to help them with the process. As experienced property professionals, buyer’s agents have both the knowledge and contacts needed to help source off-market deals for buyers.
As well as better access to these deals, they can also quickly assess the critical factors of a property and determine whether it is a sound purchase or not.
Although a buyer’s agent does have a stronger network of industry contacts and is well-placed to source off-market deals, it is important to note that a buyer’s acquisition strategy should extend beyond solely chasing off-market properties as these won’t always present the most compelling acquisitions.
We’ve included two example case studies below of recent off-market opportunities that our team have sourced, and why they did or didn’t proceed with the purchase.
Example One: 4-bedroom, 2-bathroom established house in Heathridge, WA
This well-presented house sat on a 700sqm block, giving it strong future development potential. However, it was located directly adjacent to Marmion Avenue (a major arterial road) making it less desirable to tenants and to future buyers’ post-development.
Because of the location of the property, our buyer’s agent decided against making an offer on this house, despite the opportunity to secure it off-market.
Example Two: 3-bedroom, 1-bathroom established house in Forrestfield, WA
A Forrestfield selling agent reached out to one of our buyer’s agents looking for expressions of interest on this established house in Forrestfield. Set on a 1,012sqm block, the property held strong development potential but the house itself was in quite poor condition. In particular, the internal floors were damaged, and the current owner couldn’t fix these issues before selling.
Because the selling agent was concerned that the perceived cost of repairing the floors would discount the price of the property too much if it was advertised on the open market, they instead decided to sell it off-market. Our client had the cash reserves to fix the flooring and undertake minor improvements, making the off-market purchase a sound investment. The property will be leased in the short-term, with the plan to develop in the future.
Looking for professional help in sourcing your next property investment? Organise an obligation-free consultation with one of our property specialists, or visit our buyer’s agency page to learn more about our services.