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Buying and selling off-market: What you need to know
With demand on the rise, buyers have been turning to pre-market opportunities to beat the competition, with a top agent revealing how both buyers and sellers can leverage the off-market space.
Pulse Property Agents' director, Ben Pike, has shared his top advice for sellers and buyers in the off-market space, as increasing competition has prompted many desperate property seekers to explore alternative options.
Pike’s comments followed last month’s data, which showed that more buyers have been choosing off-market properties, with annual sales activity increasing by nearly three per cent and stock levels decreasing by nearly 15 per cent over the same period.
He explained that sometimes “off-market” properties were also referred to as “pre-market” properties; however, there is a distinct difference between the two.
While off-market properties are intended to be sold entirely privately, pre-market properties are those that prospective buyers in an agency’s network are allowed to purchase before they are publicly listed for sale.
Pike said that an increase in demand has fueled interest in off-market and pre-market properties, with auctions nowadays seeing as many as ten serious buyers, whereas in the past, there were only two or so serious buyers.
“The pool of buyers that are qualified that have missed out is a lot greater – I just think that there's more qualified buyers, there's more demand, there's more urgency, and therefore the off-market deals come together a bit quicker,” he said.
Because of the increased competition, Pike said that off-market properties provided desperate buyers a chance to secure an ideal home, particularly if they previously missed out.
For example, he said duplexes often provided opportunities to buy homes they previously lost to other bidders, given their similarities to one another.
“We could use an example most recently where we had five people register, four bid, and it sold.”
“You've got the exact same property with a mirror image, all the people've done due diligence, know the area, know the price point, have this out. In that scenario, the underbidder has bought the one next door,” he said.
He noted that every time a property came up that was similar to one already sold, his team would contact all serious prospective buyers who had previously made an offer and show them the new property before it went to market.
“So we are handpicking the best buyers in the market that have made an offer in recent weeks at a similar price point for a similar style.”
“Typically, those buyers are a little bit more emotional, a little bit more aggressive, and don't want the home to go to market, so they're willing to pay a premium to stop that happening.”
Despite possibly having to pay more to prevent a property from reaching the market, Pike said that by purchasing early, buyers can avoid waiting weeks to find out if they’ve got the home.
According to Pike, the best way for buyers to find off-market properties is by informing agents of what they have been looking for during open inspections or auctions.
He also added that his agency preferred to maintain contact with buyers via email or phone to gain an understanding of the details behind their decision to purchase a property.
“What’s their timeframe, what have they bid on recently, what have they offered on recently, what their budget is.”
Pike also said that buyers can stay up to date online with which properties agents have recently sold.
“In most cases, where we can, [off-market properties] still go into REA and Domain once sold. So buyers are calling every single day who will go, ‘you just sold this property off market. If you get something similar, can you please let me know?'"
On the other hand, Pike noted that when considering whether to sell off-market, sellers should not assume that it is necessarily the simplest option just because it may allow for a quicker sale.
“I think you need to go into it understanding you're only selling it for the right price, the right terms, not just because it's easier and it's quicker, and you're not trying to save the marketing money.”
He said that to find an agent who may have the ideal network of interested buyers, sellers should find out what the agent is currently selling and what they have recently sold.
“They should jump on realestate.com, have a look at all the homes [the agents] currently have listed at a similar price point."
“Then go back and see all the homes they've sold in the last 30 days at a similar price point because that's who knows all your buyers.”
Once the seller has chosen an agent to work with, Pike said they should be aware that a legally binding agency agreement is still required, as it is a non-negotiable requirement.
Furthermore, if the agent is selling the property pre-market, as opposed to off-market, the seller should be aware that the agency will still prepare the property for eventual market listing if it does not sell.
“We would still be organising the marketing and the work in the background … buyers are very clear around the fact that when we show it to them, in most cases, it's when the photos are getting taken,” Pike said.
He said that properties were often shown to the buyer during the photo stage for two reasons, with the first being to create urgency so they understand that it will go to market within a couple of days.
“Two, if that buyer doesn't come to the right level or is not interested, we haven't slowed down the campaign, and we haven't lost time, so we do the work,” he concluded.
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