Find deals with the lowest competition and highest profit through precision targeting.
As the housing market is changing in cities across the U.S., investors must get creative to stay on top of the latest deals. For most buyers, this means looking for off-market real estate deals.
WHAT ARE OFF-MARKET PROPERTIES?
In real estate, an off-market property refers to a home in which the owners are not actively looking to sell. An off-market listing, on the other hand, refers to a property an owner is actively trying to sell but is not listed on the multiple listing services (MLS).
The MLS is not an exhaustive list of every property for sale. As many as 11% of sellers find buyers without the need to list their property. There are several reasons why a seller may not list a property.
Poor Property Condition
If the property is in too poor condition for the buyer to receive a typical loan, the seller may list it as an off-market property.
A seller’s market is when there are more buyers than properties available. If a seller’s market occurs, the seller may hold onto their property until they receive the right offer. Some seller’s markets become so intense that agents and potential buyers will actively contact homeowners with offers, even when their homes are not currently for sale.
An agent may not list a home in the early stages of foreclosure if the seller does not want to alert their tenants that the house is for sale.
In some cases, the seller may enlist the help of a real estate agent to list their home privately, also known as a pocket listing. In the event of a pocket listing, the agent will contact potential buyers directly or might only share the listing with a few agents in the area.
Not Available to Show
For an agent to list a home on the MLS, the seller must be available to show their house. If the seller is unavailable for showings, they may take their home entirely off the market. If this occurs, the listing agent will change the status of the house to “temporarily off the market.”
You may see a property with a “coming soon” listing on the MLS. This label means the seller wants to gauge buyer interest before placing their house on the market.
WHY WOULD SOMEONE NOT LOOKING TO SELL BE WILLING TO SELL?
A property may also be considered off-market if the owner hasn’t thought about selling their home. There are several reasons why an owner not looking to sell might sell their home:
- The owner lives in a different state from their property and no longer wishes to manage both properties.
- The property has a lien on it that the owner is struggling to resolve.
- The property was left in an inheritance and the children or inheritors want to sell it quickly and split the profits.
- The owner is undergoing a foreclosure.
- The owner is moving into a nursing home.
- The property has been vacant for some time and it’s too expensive or labor-intensive to continue owning.
- The property is very run down and the owner doesn’t want to fix it.
While not everyone will want to sell in these situations, some property owners will.
WHY DO INVESTORS LOOK FOR OFF-MARKET PROPERTIES?
Buying an off-market property offers many advantages for investors. In addition to unique real estate opportunities and smoother transitions, buying property off-market provides the following benefits.
Most buyers fail to consider off-market properties, which means fewer people trying to buy the same property. Since the competition is lower, the seller doesn’t have to put as many conditions on the sale, creating more advantages for the buyers.
Unless a seller uses an agent to market their home, they likely don’t want to experience a bidding war. Most off-market sellers wish to privately or quietly sell their home, which means you may get a better deal.
Less of a Rush
The off-market buying process tends to offer greater flexibility because there are no time constraints. Owners of off-market homes are less rushed to sell their homes, allowing investors to look at the property and consider their options before making an offer. Buying an off-market property also means you won’t be trying to outbid other buyers.
The off-market buying process tends to offer greater discounts on properties because of the general situation the owners are in and that fewer people are trying to purchase the property. These discounted properties allow you as the investor to make more money when fix and flipping.
HOW TO FIND OFF-MARKET PROPERTIES
While you can contact your local real estate agent to find an off-market property, one of the easiest ways to find and buy off-market properties is with DoHardMoney’s Find Fund Flip System. This all-in-one resource makes it easy to find off-market properties and access tools, trainings and more for greater investing success.
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