Are you finding that more people are vying for fewer ideal rental properties? This can be frustrating when you’re looking for a good investment. The best deals are often snatched up by the time you hear about them, or get more expensive as multiple buyers compete for a purchase.
If you’re struggling to find a property that meets your investment requirements, looking for off-market properties might be a way to expand your options. But what exactly are off-market properties and how do you find them if they aren’t included in the regular listings?
Read on to learn more about the world of off-market properties and how to find the best off-market property investment opportunities.
Table Of Contents: Off-Market Properties
Discover exclusive opportunities in real estate with off-market properties. Navigate our comprehensive guide below to uncover insights, benefits, and strategies for success.
- What Are Off-Market Properties?
- How To Find Off-Market Properties
- Negotiating The Sale
- FAQs – Finding Off-Market Properties
- Find Your Next Property Investment
The majority of people, when they have real estate to sell, will list their property with the Multiple Listing Service, or MLS. This service goes to real estate agents and feeds most of the property listings that you find online. Sellers do this to ensure the maximum number of people can find their property.
A property is considered off-market when it is not added to the MLS. As a result, many fewer people will know about it. This is attractive to buyers. As an investor, you have access to off-market properties, you can start negotiating before the seller is bombarded by other buyers. Less competition also means that you might get a better deal.
But, why wouldn’t a seller want to list their property on the MLS? There are a number of reasons. First among them is privacy. There may be certain people they don’t want to know about the potential sale. This can apply in the case of the owner of an apartment complex who doesn’t want to spook tenants with the information that they are considering selling. Others simply might not want to broadcast that they’ll be changing their address.
Another reason is that, when you are selling a property, you can waste a lot of time with people who are curious but have no intention of buying. When your property is off-market, you are likely to have contact only with buyers who are qualified to make a purchase.
So, if off-market properties aren’t listed in the normal places, how can you find them? Below are eight of the most effective strategies for tracking down off-market property investment opportunities.
While off-market properties aren’t listed on the MLS, local real estate agents are likely to know about potential opportunities. Investors who work with properties regularly, such as buying fixer-uppers and flipping them, often talk to real estate agents when they have a property that is almost ready to sell. They know the agent will have a list of qualified buyers interested in properties in the area so are likely to be able to make a quick sale.
Sellers who value their privacy might also give their property to a specific real estate agent as a pocket listing. This is a listing they have the exclusive right to sell, and which, again, they will divulge only to their qualified buyers.
Building up the right relationship with real estate professionals in the know can take time. They won’t want to share their off-market properties with you unless they know you’re a qualified buyer. They won’t want to link you up with one of their important clients just for the deal to fall through.
Show them your property profile, explain what you are interested in and your budget, and build trust. Before you know it, they will be calling you when they have an interesting off-market property on their hands, rather than the other way around.
This may seem a bit morbid, but contacting local probate agents is an effective way to find off-market properties. When a homeowner passes away, it is often the case that their next of kin will sell the property, but there are things that must happen before they can list it for sale. Details of the will, if applicable, and any disputes between beneficiaries must be resolved, plus discretion is required to not upset grieving family members.
Probate agents will know when a property will be available but is not yet ready for listing. If you build a good relationship with a local probate agent, they can alert you when a property that meets your requirements is likely to become available. They can also suggest that contact to the family at the right time.
While it might seem mercenary to swoop down on houses through probate, done the right way it can actually help grieving families who don’t want to go through the process of listing a home and dealing with multiple buyers. But it’s important to be patient and sensitive when dealing with off-market homes via probate agents.
Contractors are another group of professionals who are likely to know when a property will soon be ready to hit the market. They may be working to fix up a property for sale. If you work with contractors on your own properties, you can also ask them to let you know when they see or hear about properties becoming available so you can contact the seller.
A potential seller fixing up a property might also ask their contractor if they know any likely buyers, since they will also know that their contractor is connected in the industry.
There are many people who work with property for a profit, and wholesalers are just one more example. They will find properties that they can get a contract on relatively cheaply and then flip the right to purchase that house to another buyer for a finder’s fee.
They use various strategies to find these properties, including many of those listed here. But wholesalers will do this almost full time, which means they are likely to find some pretty good deals. They can even put listed properties under contract, but they become off-list due to the contract.
You definitely need to be savvy when working with wholesalers, since they are trying to maximize their profits. They might downplay the work needed to get a house up to snuff, to push the price up. But it can be worth it, especially if you’re struggling to find a property in a specific area.
Read our guide to wholesale real estate and how it works.
Most real estate auctions, both in person and online, sell properties that have been seized due to back taxes owed. The houses are then sold at auction for a fraction of their value since the auction house is mainly trying to cover the delinquent taxes rather than maximize their profits.
These kinds of auction properties are not listed on MLS but have often been abandoned for a period so may need a lot of work. Personal property is often abandoned in auction properties and it is incredible what you can encounter. But be careful: The personal property left in the home is not necessarily legally yours.
Read our guide to how to buy a house at auction.
Just because off-market properties aren’t listed on the MLS doesn’t mean they aren’t in any online databases. There are plenty of online databases with exclusive listings that do not make it onto MLS. Bear in mind, you usually need to pay for a subscription to these sites. This again helps sellers weed out buyers who aren’t serious.
Have you ever received a letter in the post asking if you’re interested in selling your property and wondered, why does this person think I’m interested in selling? They don’t, but they are interested in buying!
This is called direct mail marketing. An investor will drop letters or postcards in the mailboxes of properties they are interested in buying. They will usually target a specific area and a specific type of property.
While the vast majority of people will throw that communication in the trash without another thought, there are some who might be considering selling and will get in touch. This is highly beneficial for the buyer as they probably don’t have any competition because no one else knows the owner is interested in selling.
These days, this approach can also be taken online with digital ads targeted at residents of certain neighborhoods, perhaps combined with information such as individuals looking for a new job or searching for properties. (Yes, it is scary what digital marketers know about you.)
The last strategy on our list is called driving for dollars, and it combines a lot of other strategies we’ve mentioned, but it starts by driving through the neighborhoods you’re interested in.
You can drop direct marketing letters off at properties that interest you, and you can identify homes that need a lot of investment or that look abandoned. You can then use public records to try and track down the owner of the property to see if it is available for sale, and to get in touch and make an offer.
Once you find an off-market property that is available and meets your needs, you’ll need to negotiate with the seller. This often involves convincing them that they are better off selling to you than listing on MLS, even if they might be able to get a better price if they communicate with more potential buyers.
If you aren’t experienced, it can be a good idea to work with a real estate agent that you trust in these negotiations. They will know what matters to sellers and how to talk to them.
Another important factor is to have your financing lined up before you start negotiating. One of the most important things to off-market sellers is closing the deal and getting their money as quickly as possible. Being able to promise that will help you in your negotiations.
Below are answers to some of the most frequently asked questions about how to find off-market property investment opportunities.
Off-market properties are properties that are not listed with the MLS and therefore not filtered down to real estate agencies and online listings.
On-market properties are listed on the MLS. On-market properties have greater competition.
Properties are usually kept off-market when the seller does not want to make their intentions public, or when they are still at the early stages of preparing their property for sale and therefore have not yet listed it.
Expired listings are properties that were listed for sale but the listing expired without the property being sold. It may be that the sale was just not registered or that the seller decided not to sell, perhaps because they couldn’t get the price they wanted. It is possible to track down expired listings and make an offer to the seller.
In a competitive real estate market, being able to find off-market property can be an important flex for an investor. You can see properties and start negotiating with sellers before the general market, which means you are less likely to miss out on an opportunity. You can also get great deals as there is less competition and sellers are often interested in a quick sale.
Finding good real estate investments is challenging but not impossible if you follow our guide to finding off-market properties to buy.