Real estate investment is about finding the best possible price on a property. It is easier to reach a return if the property is held for long-term income and easier to get the most significant return if you are engaged in reselling. So what’s the problem with hunting down deals? The market is flooded with buyers, and inventory has been at all-time low levels in recent years.
The key to finding great deals before a feeding frenzy is knowing how to look outside the traditional marketplace. Publicly marketed properties are not the only ones for sale; they are just the only ones marketed to the public.
Off-Market Property Listing
There are various ways to locate off-market properties, and each depends on the type of lead you are working with. The term means that a property is sold outside the regular listing mechanisms that alert brokers and realtors to its availability. Sometimes that is because the property is not up for sale yet, and the owner needs to be persuaded; other times, it just means the owner is seeking a private sale through a variety of channels.
How Do You Locate Off-Market Property Listings?
If a property is up for sale, but the sale is simply private, there are a few ways to learn about it. All of them require some groundwork to be laid out first, so make sure your professional network is solid and lively.
- Inquire about private sales and off-market listings with brokers
- Check out property auctions
- Talk to other investors about their properties
- Tap into the resources of property wholesalers in your area
Not every off-market sale is from a private listing. Sometimes, you can find a potential seller and talk them into selling you the property. Understanding how to find off-market properties like that can put you in touch with the deals that allow you to become a wholesaler. It can also give you the best price on your stock when you want to acquire long-term income properties and homes to flip.
- Pre-foreclosure lists
- Tax lien lists
- Property search software like BatchLeads
By reaching out to owners and closing deals one on one, you can give them the price they need while avoiding the hassle that comes with competition on your heels.
Why Sellers List Off-Market Homes
Off-market sales tend to depend on the kind of seller you work with. Homeowners typically sell to unburden themselves or to upgrade houses. Motivated sellers tend to either have mortgage and tax problems or inherited properties. Often when the owner has recently died, the heirs need to sell to divide the proceeds.
When you work with wholesalers or other investors, the motivations tend to be more about that individual’s professional focus. Investors who sell commercial properties tend to do so because they need to let go of properties that they cannot focus on to make the most of an opportunity that requires their full attention. Letting it go or using a wholesaler to find a buyer is often a way of breaking even on speculations and freeing up capital.
Benefits of Purchasing Off-Market Homes
There are many benefits to seeking off-market properties for sale when hunting for commercial properties in an area. The lower cost of cutting out middle dealers and avoiding bidding wars is a noticeable gain because it makes hitting your goals for returns much easier, but there are more reasons to do it.
Investors who buy off-market have more options for dealing with properties once they acquire them because that lower price point makes it easy to resell to another investor if they wish. If you plan on acquiring several properties in an area and then focusing on the most promising, this is a crucial tactic because it can help you ensure that every resale brings at least marginal returns.
If you are looking into an off-market property acquisition for the first time, keep three key points in mind.
- Invest in tools that allow you to build your leads so you can find the best deals
- Work your professional network
- Understand your options when you acquire a property and set a backup strategy in case you need to sell it early
If you can do these things, you will be in a great position to work with other investors who also sell property off-market. That, in turn, will help your efforts when you are buying and selling because you will be on their contact lists while you work your original leads. The key to closing deals is working at volume, and no one does that in a vacuum. It takes a multi-pronged approach and great professional connections.