What’s the Deal with Off-Market Deals?

You’ve heard the term many times but may be unsure exactly what’s involved with off-market property investing. But….how does one find these deals?

FINDING DEALS OFF MARKET

Where do you look? It could be a friend or family wanting to get rid of a property…a who you know scenario or on social media, a neighbor, or a network connection to a property manager, or Realtor or someone in the real estate biz as a vendor, etc.

The biggest advantage for buyers is that you face less competition for deals. Also, you may be able to negotiate directly with the Seller, and maybe even get seller financing. Sometimes it involves a wholesaler – the middle person, they will make some money on “finding” the deal.

The biggest advantage for sellers is the privacy of being Off Market. If the property goes on the MLS, there would be a multitude of showings. Many times, that isn’t what the seller wants. It provides more confidentiality for someone attempting to unload an apartment building without unnerving the tenants. OR the property may be a clutter house or need repairs that the seller doesn’t have the funds to handle. Also it could be a life situation – divorce, death or illness. These are just some of the reasons people prefer a quiet sale. In many instances they can just walk away with their personal belonging and leave anything they don’t want...years of stuff.

Sellers also have an easy option of a CASH OFFER. That means you can get a super quick sale and be done. You may not even have to clean out the house, AS IS – WHERE IS. (If you want a cash offer, let me know at [email protected], and I’ll get you one quick.)

The disadvantage for sellers is fundamental knowledge of the market. Without help from someone in the real estate industry – a Realtor or an appraiser – it may be tough to dial in on the true market value of a property. The seller could be leaving money on the table.

The bottom line is the motivation of the seller and how to meet their needs. How fast do they want to get rid of the property? Do they need the money now or would a payment plan work – seller financing.

How do you find off-market properties?

Each off-market investor has his/her own method of gaining off-market leads. A few approaches to consider:

Network with other investors, especially wholesalers who may be willing to share leads

Identify a specific geographic and demographic market, then purchase a qualified mail list and send direct mail piece(s) with a simple clear message and response mechanism

Drive neighborhoods to identify properties—especially those showing signs of maintenance neglect, then make notes, determine who the owners are and contact them

Search tax records for non-owner-occupied homes; some worn out landlords will be interested in selling

Check out for-sale-by-owner properties, then research and contact owners

Use social media to reach out and find sellers of distressed or unwanted properties

Connect and collaborate with real estate professionals who may know of such properties

How to finance off-market deals

It’s great if you are ready with cash to purchase off-market gems. Most investors will attempt to negotiate seller-financing and contribute little or no funding. Seller-financing can be quicker and cheaper than conventional financing but runs for a shorter period than a typical mortgage. Both buyer and seller should hire professionals for guidance, completion and closing of accurate seller-financing paperwork.