What Does Off Market Mean in Real Estate?
Off market real estate is a term used to describe properties that are for sale or have already been sold without any advertising on the MLS or public knowledge. Off market properties for sale are usually made known through word of mouth, through a broker, the network of a broker, or through more exclusive real estate listing sites.
In the past, off market deals were typically preserved for ultra-high-end properties. Currently, they have spread to include a wide range of price points. This is because more sellers and buyers are recognizing the benefits of off market real estate deals.
However, some people are still confused about whether to look for off market deals or not. While, every real estate investment strategy has its own advantages and disadvantages, off market deals have a number of merits that make them very attractive to investors. Here are 6 reasons why you should look for off market real estate deals:
1. Off Market Real Estate Deals Can Be Kept Out of the Spotlight
One of the pros of off market real estate is that it is not publicized. In other words, the property never hits the open market for everyone to see. This means that the purchase can be kept out of the spotlight. Therefore, you can control the transaction and keep it private if you want to. High-profile people usually prefer off market deals so as to keep the media away from their purchases. This also ensures that they don’t reveal their financial situation to the public since nobody knows how much they are paying.
A real estate investor can also buy an occupied rental property without prematurely upsetting the current tenants. Some tenants may choose to vacate upon learning that the investment property is being sold. However, with off market real estate deals, it is easier to maintain such tenants.
2. Buyers Have a Competitive Edge
When buying properties that are publicly listed on the MLS, you will be competing with many potential buyers. However, when buying off market property, you will be competing with only a few other people, if any. Since off market real estate deals have less competition, it is unlikely for bidding wars to occur. Therefore, it will be easier for investors using this strategy to purchase properties at a good price. This is the main reason why off market properties make for good real estate deals.
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3. You Have More Time to Do Due Diligence on Properties
Sellers who have listed their properties on the MLS are usually expecting a quick sale. One drawback of this is that time is never on your side since many buyers will rush to make offers on the property before it gets sold. In such a scenario, it’s difficult to thoroughly look over the properties before making an offer.
In non-MLS deals, however, property sellers are usually not in a rush to sell. Moreover, since only a few buyers know about the property, competition is driven down and the property could take longer to sell. This allows potential property buyers to take their time and do their due diligence before making an offer on the property.
Related: The Ultimate Property Inspection Checklist for Real Estate Investors
However, it is important to note that not all off market real estate deals take longer to close. This advantage may not apply when you buy from a distressed seller. Deals like short sales and pre-foreclosures may need a quicker closing process. However, this is usually made up for with a discounted buying price.
4. Negotiations Are More Flexible
Since off market real estate deals have no time pressures, both the seller and the buyer are far more relaxed at the negotiating table. These conditions encourage reasonable and more flexible negotiations. This can lead to contracts that would be impossible in an open market. Therefore, it is easier to have a win-win situation for both parties. If you are looking for an off market property for sale, ensure you understand the terms you want and have your contingencies ready beforehand. This will enable you to negotiate better.
Related: Top Negotiation Tips When Buying an Investment Property
5. The Real Estate Transaction Is Typically Smoother
In off market real estate deals, the property sellers are often dealing with one or a few buyers. This makes it possible for the sellers to dedicate more of their time to the prospective buyers. The sellers often deal with the buyers directly. As a property buyer, you won’t be worried about property sellers hosting open houses or dealing with third parties. The transaction can be handled smoothly through closing.
6. Off Market Properties Provide Unique Opportunities
Off market listings may be a result of unfortunate circumstances faced by the seller. The homeowner may be in financial distress or looking to make a quiet and quick exit from the property. Moreover, some off market deals are handled by people with little experience in home selling. Thus, they may not know how to fetch the best price for the property. All these situations offer unique investment opportunities that are typically not on the MLS. It is possible to find a hidden gem unknown to most other buyers at a cheap price. These properties can offer high-profit margins for investors.
The Bottom Line
Off market real estate deals come with a number of benefits that aren’t available when buying on the open market. For those who know how to find them, they can offer endless investment opportunities. Therefore, if you are looking to add some new off market investment properties to your portfolio, it is important that you learn how to find off market real estate deals. You can find off market properties for sale in the Mashvisor Property Marketplace.