Related: How to Find Off Market Properties in 2020
A Brief Overview of Off Market Real Estate Deals
As the name suggests, off market real estate deals are transactions that occur outside of the public market. In fact, the seller does not advertise the sale on the MLS and entirely relies on word of mouth and private networks. Sellers usually resort to this option when they want to offload their property in a discrete manner or if they deem the real estate market to be too saturated. As for real estate investors, here are some of the benefits of off market real estate:
- Negotiating an off market deal is generally easier since there is no time pressure on either party.
- They offer you the best chance of landing below market value investment properties.
- You won’t have to deal with stiff competition from other potential buyers.
- Off market deals offer you ample time to conduct thorough real estate due diligence and investment property analysis.
Let’s now take a look at some of the top real estate tips for buyers who are planning on finding off market real estate deals.
1- Work with a real estate agent
The simplest way to ensure the smoothness of any real estate deal is to simply work with a real estate agent. In fact, the role of the agent is even more important when buying off market real estate. The extensive networks of these professionals will allow you to reach the ideal property seller in a matter of days. Furthermore, the agent can handle the entire buying process for you, from making an offer to finalizing the deal.
2- Use specialized real estate websites
Online platforms that are specifically designed to accommodate real estate investors are your best bet when looking for off market properties. The right real estate website will streamline the off market real estate search and help you perform analysis without any hiccups.
Mashvisor, in particular, has everything you need to get started. You can access hundreds of off market properties in any real estate market (including off market multifamily for sale) thanks to the Mashvisor Property Marketplace. Furthermore, the Airbnb calculator can help you carry out in-depth real estate investment analysis with the click of a button. Click here to learn more about the wide range of tools that Mashvisor puts at your disposal.
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3- Hire a professional appraiser
Since off market real estate deals take place outside of the MLS, doing a comparative market analysis between multiple listings is not easily doable. Of course, if you do opt to use the Mashvisor Property Marketplace to find off market properties, each listing will come with real estate comps. If not, however, getting a professional appraisal is one of the first things that you should consider when finding off market properties. As a matter of fact, this is the only way to ensure that you are not overpaying for an investment property. A professional appraisal will give you an accurate estimate of the property’s value so that you know how much to offer and can even point you towards any necessary work that needs to be done.
Related: A Guide to the Cost Approach to Real Estate Valuation
4- Get your investment property financing lined up
A key part of securing a smooth off market real estate deal is having your financing lined up the moment you reach an agreement with a seller. While financing these deals differs from traditional investment loans, most brokers are willing to finance off market purchases. In most cases, the mortgage provider will require an additional appraisal as well as a copy of the purchase and sale agreement in order to assess the risk of the deal.
5- Buy title insurance
Getting title insurance when buying an off market property protects you from potential liens in the future. This is especially the case when dealing with investment properties that have not been occupied for a long time. Examples of liens on a property include judicial, tax, and mechanics’ liens.
6- Conduct an inspection of the premises
Before closing an off market real estate deal, you need to conduct a thorough inspection to ensure that everything is in order. Such an inspection might reveal severe structural issues that could potentially compromise the investment property. Consequently, an inspection can be grounds for negotiating a lower price with the seller.
Related: The Ultimate Property Inspection Checklist for Real Estate Investors
7- Hire an attorney to handle the closing
Unless you are an experienced real estate investor, handling closing paperwork is better left to an attorney. The paperwork typically consists of around 100 pages of documents that should be carefully examined and signed. At this point, your mortgage provider will also request to examine the documents. Once the lender approves, the deal between the two parties can be finalized.
Other Best Practices to Keep in Mind When Looking for Off Market Homes for Sale
Applying the tips that we outlined above should be enough to secure a good off market real estate deal. However, you can still take some extra steps to increase your chances of closing the perfect deal. Here is a couple of them:
- Write a compelling letter to the seller: Writing a good Letter of Offer to potential sellers is an effective way to establish a good rapport with them. This will help create a relaxed atmosphere during negotiations and might sway them towards your terms.
- Don’t limit your network to real estate agents: Real estate agents are not the only market actors who can provide you with valuable information concerning off market real estate transactions. In fact, builders and contractors are just as well positioned to identify these sales.
As long as you abide by the guidelines of this article, landing profitable off market real estate investments is easily achievable.