Now in the digital age, finding a home is just one click away. You go online, search the web, and pick one that suits your budget, style, and preferences. But what if you browse virtually everything and you still cannot choose one that you really like? That is where off-market homes come in.
Defining off-market homes
Off-market homes, literally, are residential properties that are not listed in the market and are not publicly advertised. Some sellers prefer not to list their homes mostly to test the waters, save on commission fees, or create a sense of exclusivity which could mean a higher selling price. For buyers, on the other hand, off-market listings provide access to additional inventory, discounts, and the opportunity to avoid competition for property in a highly desirable area. Gaining access to these listings is usually through word-of-mouth, and transactions are direct to brokers or homeowners.
Ways to find off-market homes
Paul Esajian from FortuneBuilders lists 10 ways to find off-market homes for sale:
• Direct Mail Marketing
"One of the most efficient ways to find off-market real estate deals is through direct mail marketing. Define your target home seller and send out postcards or other ads that express your interest in purchasing their home. Sometimes, homeowners don’t even know they are ready to sell unless presented with an attractive offer."
• Online Resources
"Keep in mind that while identifying properties online is cost-efficient, you may have better luck with more proactive lead generation strategies. Due to the popularity of the internet, even off-market listings featured online may be highly competitive. That being said, do not completely rule out this strategy—you never know what you might find."
• Networking
"Networking is arguably the best lead generation strategy in the real estate world, which holds true with off-market properties. You may find that networking becomes easier with time and practice, so don’t be afraid to put yourself out there."
• Real Estate Agents
"For investors interested in pursuing this strategy, I recommend curating a list of the top agents in the market area you wish to buy in. You can reach out by phone or email and ask for any off-market listings they may be aware of. Although, before reaching out to an agent, be sure to check their website; oftentimes, their pocket listings will be cataloged online. Additionally, keep in mind that even if a particular real estate agent cannot offer help with your current search, that doesn’t mean they won’t be able to in the future. Leave your contact information with anyone you speak to so they know how to reach you if need be."
• Builders & Contractors
"In addition to real estate agents, builders and contractors are good friends to have if you’re an investor looking to find hot, off-market deals. Local builders are usually “in the know” about properties where the homeowner or investor abandoned the job mid-project because he or she didn’t have the financing to finish the construction. While this situation is unfortunate for the seller, it can be quite fortuitous for the investor ready to swoop in, finish the job, and turn a profit at closing."
• Wholesalers
"Wholesalers are great friends to have if you’re an investor looking for off market properties. Why? Because wholesalers specialize in just that: real estate wholesaling. At its core, wholesaling consists of finding a discounted property, putting it under contract, assigning the contract to a potential buyer, and charging that new buyer a fee. Often, those discounted properties wholesalers find are off market properties."
• Public Record
"It is a great idea to keep up to date on public records, which will often feature pre-foreclosures or short sale properties, both of which can offer lucrative investment opportunities. I recommend surveying newspapers and state and local government websites to do so. Occasionally, these sources will also mention real estate properties that are soon to be listed, offering yet another opportunity for savvy investors."
• Word Of Mouth
"No matter how you look at it, real estate investing is a people business. Anyone you encounter—from your family to your friends—should know who you are, what you do, and how to contact you. The more you employ word-of-mouth marketing, the more people will think of you when they see an off-market property. This is similar to building a network. However, do not shy away from a potential connection simply because they are not directly involved in real estate. You never know who will lead you to your next investment deal."
• Real Estate Auctions
There are two main types of auction properties to look out for:
Foreclosures: "Foreclosures are handled differently depending on the county, but generally follow the same process. These properties are often sold “as is” for below-market value prices. When looking for foreclosures, gather as much information as possible about the property before deciding to invest. While they can be excellent opportunities, in some cases, a foreclosure may have liens or other drawbacks that undermine the overall deal potential. Luckily, all of these issues can be discovered with a little research before the auction."
REOs: "Real estate owned (REO) properties are houses owned by lenders, typically as a result of an unsuccessful foreclosure auction. These off-market properties can be yet another way to score real estate deals. However, investors should still make sure to get these properties inspected. While lenders are unlikely to make changes or repairs in the way a traditional seller might, it is important to have the entire picture before bidding on the property. If you are careful to mind due diligence, REOs can be a great off-market opportunity."
• Driving For Dollars
"Driving around neighborhoods can be an interesting yet effective way to find off-market properties. As the name suggests, investors actually drive in search of potential deals. The most common type of deals you will come across are either vacant or distressed properties, as these will be the easiest off-market homes to spot. To find vacant or distressed homes, keep an eye out for overgrown yards, scattered items in the yard, or boarded-up windows. As you find potential leads, jot down the addresses for later."
Final say on off-market homes
Off-market homes offer a great deal if you know where to find them. Discounts and less competition for property are the main advantages of off-market listings which could give you the home you have been dreaming of in a desirable place at a desirable price.
Sources:
Esajian, P. (2021, April 30). How To Find Off-Market Properties For Sale. FortuneBuilders. https://www.fortunebuilders.com/off-market-real-estate/
Fuscaldo, D. (2021, February 27). How To Find and Buy Off-Market Homes. Investopedia. https://www.investopedia.com/articles/personal-finance/121415/how-find-and-buy-offmarket-homes.asp