4 Ways to Find and Buy Off-Market Houses
In a competitive real estate market, trying to find and close a good deal on an investment property can be nearly impossible. If you’re looking for a way to obtain properties without competing with dozens of other people, you might need to think outside the box.
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4 Ways to Buy an Off-Market Property
It's a great time to be a seller. If you're selling a house in today's market, you're likely benefitting from significant price appreciation, high levels of demand, and a sense of enormous leverage. But on the flip side, it's difficult to be a buyer. Inventory is scarce in many markets, and prices seem a bit inflated.
But do you know what’s even more difficult? Being an investor on the lookout for smart investments. You make your money when you buy, which means overpaying in a seller-friendly market will doom an investment from the start.
If you're looking to invest in property in today's market, you can't afford to be browsing listings on Zillow—or even listings that just hit the MLS. You need to find potential deals that haven't even hit the market.
For those who have never looked into this option, the notion of buying an off-marketing property seems foreign. But it’s not as impossible as it seems. Here are some strategies and techniques you can use.
1. Mass Mailings
You don’t know until you ask. This is the unofficial mantra of many investors who pursue off-market properties.
While it’s not free—it’ll cost you both time and money—sending out mass mailings to homeowners is one method of finding and qualifying leads. You simply find a neighborhood or area of town that you’re interested in and mail letters/flyers to the homeowners to let them know that you’re interested in possibly purchasing their home. Less than 5 percent of homeowners will respond (and only a fraction of these will actually be interested in what you have to say), but it can occasionally produce a good opportunity.
The key is to work with the right printing partner to make the material costs as cheap as possible. You’ll also need to design and write your letters well. You want to grab the homeowner’s attention without coming across as desperate or gimmicky. Professionalism is key.
2. Inside Information From Real Estate Agent
It's tempting to invest in real estate without the help of a real estate agent. After all, a 3 percent commission could cost you tens of thousands of dollars over the years. But when it comes to buying off-market properties, an agent is worth her weight in gold.
Real estate agents have their fingers on the pulse of the local market. They have connections that allow them to know when listings will reach market (before it’s actually public knowledge). This can give you a significant leg up.
3. Telltale Signs of Neglect
One popular strategy among real estate investors is to drive around and physically look for houses that show signs of neglect or disrepair. In many cases, the homeowner is overwhelmed and would be happy to sell the property before it becomes even more of a burden. While you’ll have to practice some discipline in how you approach these individuals, driving for dollars can produce great results.
4. Seek Out Receptive Sellers
Condition of the property isn’t the only telltale factor. You can also look at ownership details and past listing activity to find owners who are more likely to consider an offer.
“Offering to buy a house that sold in the last couple of years likely isn’t going to get much interest from an owner who’s enjoying the space,” realtor Devon Thorsby writes. “You are most likely to receive interest from homeowners who previously listed their home with an agent but took it off market before it sold.”
Little details like these are what you need to seek out. Think like a homeowner and consider any factors that may indicate a willingness to sell. You’ll need as much leverage as possible.
Think Outside the Box
These aren’t the only methods for purchasing an off-market property as an investment, but these are the preferred strategies that savvy investors use to find good deals in seller-friendly markets. Give them some thought and consider implementing some of the principles discussed in this article.
What are some methods that have worked for you?
Weigh in with a comment!