How To Know If An Off-Market Is Good
In This Week’s How's The Market | Edition 66
How To Know If An Off-Market Is Good
11 Weeks To Christmas & November Looks Busy
RBA Leaves Interest Rates On Hold Despite A Rise In Inflation
How To Know If An Off-Market Is Good
As a buyer's agent, I get access to and review many off-market properties.
And if you’ve ever heard me talking about off-markets in the past, you’ll know that not all off-markets are created equal and that some are simply rubbish properties disguised by agents as a secret and exclusive opportunity.
However, they’re also not all bad. We purchase approximately 50% off the properties we buy for clients off-market and know that there are hidden gems out there that can make for incredible buying opportunities.
Though buying properties off-market isn’t for everyone and it does come with its own challenges, so in this article I’d like to describe what some of the challenges are for those willing to seek them out, as well as how to overcome them.
1. Off-Markets Often Have No Photos Or Floor Plans
One of the incentives for a vendor to sell off-market is that they do not need to pay for marketing costs.
This can save them thousands of dollars which may help knock the price down in your favour, however, it can sometimes be more challenging analysing and reviewing a property without being able to see it through photos online. Sometimes you will be able to find photos online from previous campaigns, though not always.
Having no floor plan is also equally challenging. Not knowing the room sizes and flow of the property or sitemap can be frustrating, especially if you are planning on renovating the home in any way.
My suggestion here is firstly, to view the property in person and take a long and detailed video of the entire home looking in every cupboard. Trust me you will watch this video back multiple times and constantly learn new information you weren’t able to take in on your first inspection.
Secondly, I’ve purchased a cheap laser tape measure from Bunnings that I keep with me when inspecting homes to check floor plan measurements. When you don’t have a floor plan, you can create a very basic one on a piece of paper and include the measurements that will help give you a much better understanding of how you could use the home and live in it.
2. Off-Markets May Also Be In A Slightly Worse Condition The Properties Online
This is something that we have experienced with our last couple of off-market purchases which may initially seem like a disadvantage, though in our opinion, is actually a brilliant opportunity.
Have you ever walked through an open home and noticed that smell of fresh paint and new carpet that has clearly gone in and been done in the days or weeks prior?
It’s very common for real estate agents to suggest to vendors to complete minor cosmetic repairs and renovations like new carpet, paint, blinds and light fittings to get the property ready for sale.
Due to our relationships with agents, we are often able to look through the properties prior to any of these renovations being completed.
This makes the purchase slightly more challenging as you also need to factor in renovation costs, however, we see it as a huge advantage for two reasons:
If the vendor were to spend $20k touching up a property, it may increase the final sale price by $40k - $60k or more depending on the market. We would much rather our client gets this equity uplift.
If the vendor along with the assistance of the agent completes the renovation, they will likely opt for a very safe style which may not be what our clients even like. Think white everything and the most common grey carpet in the bedrooms you’ve ever seen.
My suggestion would be to insist on seeing the property prior to renovations and framing the negotiation around how much time, stress and money you will save the vendor by giving them the option to sell the property as is.
3. Off-Market Properties Have No Social Proof
When you inspect a standard online property on a Saturday at its first open for inspection, you can get a good feel for how popular the property is.
Is there a line of people around the corner?
Are there people asking for the contracts?
Are people asking about making offers and if the vendor will accept offers prior to auction?
Or, are you the only person there?
If you’re inspecting a true off-market property, you will likely be the only person there. There will be very little transparency around other people who may or may not have inspected the home and you will likely be negotiating directly against the agent and vendor rather than against another purchaser.
This can make the experience feel more daunting for a first-home buyer or someone who hasn’t purchased real estate recently.
In this case, you need to make sure you really do your due diligence and find recent comparable sales so you know the value of the property and can be confident when making an offer.
What The Agents Are Saying
11 weeks left until Christmas!!
Different price points are moving at rapidly different speeds at the moment.
Agents have been stating that they are seeing the sub $800k markets in the suburbs with good quality homes increasing in momentum and demand.
The sub $500k market is very short on stock at the moment. An agent who usually sells many 2 bed, 1 bath units under $500k has said the stock has literally dried up with no new listings hitting the market in the last 3 months.
The top end of the market has started to slow down in the inner city too. Some auctions I’ve gone to that passed in 3 - 4 weeks ago over $4m are still on the market and not selling, even though there was interest there throughout the campaigns.
The overall sentiment from agents this week has been that more listings are coming with November looking to be the biggest month of the year for auctions.
The Wow Factor!
25 Linlithgow Road, Toorak, Vic 3142
Grand period charm meets modern open-plan living and natural light.
I’m a huge fan of the old English architecture with large rooms and dark tones.
Price guide: $15,695,000
In The Media
The RBA has left interest rates on hold again on Tuesday, even though annual inflation did increase last month due to rising fuel, housing and insurance prices.
Economists have stated that they predicted the spike in inflation and have said the overall trend for inflation is to still head downwards this year.
Final Thoughts
Off-markets can be a great opportunity to get a better deal on a better property, though they come with their drawbacks.
I hope this helps you when going through off-markets.
Thanks for reading this far!
We value feedback and if you have any suggestions on what you would like covered in the future please email me at tristan@tomii.com.au
Happy Buying!
Note: This is general advice and does not take into consideration your objectives, situations or needs. Please consider if this advice is suitable for you and your circumstances and speak to a professional before making any financial decisions.
