MLS and your local classifieds are great ways to find a property. Chances are, you’ve landed many a great deal by paying close attention to these listings, and they’re an essential tool for every investor. However, there are other ways to find properties—ways that can get you an even better deal. If you want to get the highest possible return on investment, it’s in your best interest to scope out off-market properties.
What is an Off-Market Property?
An “off-market property” is often technically on the market. It can be a residential or a commercial property. Usually, it is being offered for sale, but it isn’t being actively marketed. It’s not posted on MLS for everyone to see, and there are no signs or flyers around town advertising the property. A real estate agent might be representing the seller and the property, but they aren’t actively searching for a buyer. Admittedly, “off-market” is a bit of a misnomer, but it’s a common term!
Why Would a Seller Keep Their Property Off-Market?
There are a couple of reasons for sellers keeping the sale of their property private. Maybe the seller is considering selling the property, but they aren’t in any hurry and they aren’t sure if they want to sell—they need a good opportunity or offer to seal the deal. Maybe the property is in pre-foreclosure and just hasn’t been advertised publicly yet. Perhaps it’s a hot property and the agent wants to save the buyer-agent commission, or maybe it’s for sale by owner and the owner doesn’t want to pay to put it on MLS. In any case, they’re usually not technically off the market—they just aren’t listed on MLS sites.
Are Off-Market Properties Really a Good Deal?
Off-market listings are not always good deals. Sometimes, they’re hot properties that aren’t listed on MLS just because there’s no need to do so. These properties will sell for a high price despite not being listed. Sometimes, wholesalers offer off-market properties. Since they’re working as middlemen, you’ll have to pay them—meaning that it might not end up being a great deal. However, there are still great off-market deals out there if you put in the time and effort to look for them!
How Can I Find Off-Market Real Estate Deals?
There are lots of ways to find off-market properties! Here are some of the most common techniques that investors use.
Network with Local Professionals
- Builders and Contractors—These guys often know about properties where the investor or owner lacked the money to finish the job. Maybe it’s a brand-new condo that isn’t quite finished yet, or maybe it’s a commercial building that was gutted for renovations and then the owner ran out of money or steam and wasn’t able to see the project to fruition. Establish relationships with as many local builders and contractors as possible, and let them know that you’re looking for this type of property. Next time they encounter something like this, they’ll think of you and hopefully give you a call.
- Estate Attorneys—Estate attorneys often know about properties that might be available in the near future. If you can find out about an estate before it’s even listed on MLS, you can jump on it before the competition gets word. Estates often have creditors that need to be paid quickly or they want to get the property off their books, so they’re motivated sellers and you can often get a good deal.
- Real Estate Agents—If you make friends with a local real estate agent, you can learn about pocket listings—properties that an agent is representing, but isn’t actively marketing— or properties that are soon to be listed.
Go Through Public Records
Examining public records can help you find foreclosure properties, short sale opportunities, and estate sales. It’s a good idea to stay up to date with public records at all times. That way, you can use a direct marketing approach or know when properties will soon be up for auction. If you stay on top of public records and find a property early on, it’ll give you valuable time to research and do the math before you make an offer or put in a bid.
Use Direct Marketing Tactics
There are lots of ways to do direct marketing. You can send out letters and postcards, advertise in local newspapers and magazines, distribute flyers and brochures, or put up signs around town. Direct marketing can be targeted at a specific seller (or potential seller), or it can be a general offer to all the homeowners in your area— “We Buy Homes for Cash!” Direct marketing allows you make offers to homeowners that just might convince them to sell to you, even if their property isn’t technically on the market!
Go to Auctions
Short sales, foreclosures, and bank-owned properties often go to auction, so if you’re looking for a distressed property, an auction is a good bet. Auction properties are considered off-market because they aren’t listed on MLS. There are lots of auction websites out there, and there’s always the traditional courthouse auction as well. This takes lots of research and fast action, but it can really pay off! Make sure to learn everything you can about the property prior to the auction date. That way, you can do the math, set a budget, and know when to stop bidding on a property. After all, you won’t get a good deal if you bid too high! When you get the hang of researching and bidding, you can really land some great properties with a high return on investment.
What’s Your Take on Off-Market Properties?
Have you ever purchased an off-market property? What are your tips and tricks for other investors as they seek out high-ROI real estate? Are there any other property-buying tips you’d like to hear from us in the future? Let us know in the comments below!