An off-market real estate deal involves a property or portfolio that is not listed for sale or advertised.
Off-market deals are akin to rare treasures because they afford many advantages to investors and broker professionals who find them.
The greatest advantage to finding an off-market deal, particularly when the real estate market is hot, is limited competition.
If fewer people know an asset is up for sale, the pool of interested buyers is much smaller than it would be for one listed as on the market.
That means fewer entities to bid up the price, more time for due diligence, and a greater likelihood that the seller will entertain your offer.
The question is: How do investors find off-market deals?
Here are three methods of finding off-market opportunities that your competition doesn’t know about:
- Cultivate and nurture your connections to property owners and brokers. Since you can’t rely on listing services or online marketplaces to inform you about off-market opportunities, relationships are especially important. You are more likely to hear about an asset on the sale block first if you already keep in touch with potential sellers. And if you learn about it first, you have more time to prepare for the deal.
- Get on buyers’ lists. Through the above-mentioned relationships, you can get yourself placed on buyers’ lists that keep you informed about properties that are quietly up for sale. You’re more likely to discover “pocket listings,” deals that brokers know about but sellers don’t want to list for fear of alarming tenants or management.
- Become hyper observant. Find off-market deals by discovering them before the seller commits to selling. A property with deferred maintenance or poor Yelp reviews could be ripe for new ownership and management, and a seller looking for a way out will welcome a pro-active lead. The same might be true if an owner has held the property for many years and has been toying with the idea of listing it. Without the rush from competitive buyers, that seller may warm up to an interested investor.
Once you find an off-market deal, be sure to run it by a trusted real estate professional before making an offer.
As in any transaction, these assets require proper due diligence to determine if they’re as wise an investment as they may seem on the surface.