Though this is not the first time we talk about off market properties (and it definitely won’t be the last, either!), today we’re going to take a moment and try to answer everything you ever wondered about that term. In this week’s glossary, find out what off market properties are, how to access them, and why they’re the most valuable information in the market to run a highly competitive business!
Let’s start at the beginning: what are off market properties? Also known as quiet or pocket listings, off market properties consist of homes that may be for sale but aren’t listed on the MLS (or multiple listing services). Despite this practice being out of the ordinary in the past, it has gained popularity with homeowners in recent years, making these listings a secondary market.
This is excellent news for real estate investors, especially in hot or low inventory markets, since they will have an alternative source of properties to invest in areas where homes are scarce. But this is not the only advantage off market properties have. Keep reading to find out more!
Pros and cons of working with off market properties
We’ve just mentioned the most obvious advantage of working with off market properties. The U.S. currently has a shortage of homes, and in the fastest markets, they are sold within the first month of published in the MLS. So, the competition is really intense, and prices are higher than the market value – just to put an example, in Florida, properties are overpriced by more than 20%.
Therefore, having a secondary source of properties that haven’t hit the market yet becomes an asset for real estate investors. This way, they will be in a privileged position compared to other investors – because they can access information that remains out of the public eye for the moment being – and they also will potentially land much more profitable deals.
Working with off market properties means dealing with people motivated to sell, mainly because they are in a challenging situation and can’t pay their mortgage or because they inherited a house from a relative – more on the types of leads you can work with here. These are distressed people who need to solve a problem urgently, which means that you (as an investor) will most certainly be talking to them directly (and not through an agent). It also means that they might be willing to accept a lower cash offer, leaving you with a bigger profit.
To sum up, these are the advantages of working with off market properties:
- Lower competition – not every agent, realtor, and investor have access to off market listings.
- Deeper discounts – you can buy off market properties with considerable discounts and make your investments even more profitable.
- Motivated sellers – though they haven’t decided to sell their house, they’re in the middle of a tricky situation that needs to be solved.
- Lack of agents – because homeowners might not have decided to sell yet, they probably haven’t contacted a real estate agent either. So, you’ll deal with them directly.
Nonetheless, working with off market properties also has its downside. To start with, talking to owners can be stressful. You’ll need to be empathetic in order to convince them to sell. You also need to have a bit more knowledge of the market to assess properties correctly and explain the selling process to homeowners. And lastly, you might need to put a bit more effort into finding off market properties and being patient because it might take a while to close a deal.
How to find off market properties
As we mentioned before, off market properties aren’t published in the MLS (yet). So, you might have a hard time locating them. They’re often the product of preforeclosures, evictions, divorces, heirship, and liens. If you don’t have a buck to spend, there are a few free options to implement, such as driving for dollars (and keeping an eye open for garage sales, code violations, or burned houses), estate or sheriff sales, or expired listings on the MLS.
However, these alternatives won’t give you regularity. If you want to be a real estate investor and really make money by flipping houses, wholesaling, or renting, you need to ensure yourself a pipeline of leads coming to you periodically. As Martin Chera said here: “No deal is going to knock on your door and say, ‘Hey, buy me; you’re going to make 100 grand.’ You need a pipeline of deals coming to you, and you have to stick to a plan.”
For that reason, the best thing you can do if you want to work with off market properties is to invest a few dollars and subscribe to a listing. Yes, off market listings exist, and at Real Estate IQ, we have the best ones in the market!
Our Off Market Leads will provide you with daily lists (from Monday to Friday) of distressed sellers in Texas, Florida, Georgia, and Utah. In other words, you’ll receive an updated list of up to 10 different types of leads (subject to market availability) every day in your inbox. All you have to do is pour a cup of coffee and have breakfast in front of your computer, browsing among the information delivered to you.
We’re so confident about having the best coverage and first-hand information (cleaned, organized, and analyzed by our research team) that we can guarantee you will find a deal within 90 days! And the best part is that the estimated period may go way down if you get our Premium Off Market Leads because it comes with the skip tracing information (phone numbers and email addresses) already included!
Key takeaways
Working with off market properties allows you to stay ahead of your competition. It provides you with homes that are not yet for sale and homeowners in distress who need to solve a financial situation. Thus, it’s the place to find properties with deeper discounts to invest in, especially in hot markets.
Yes, it will make your work a bit harder, but there are ways for you to focus on closing a deal instead of looking for opportunities. Subscribing to off market listings is actually an investment because it will save you hours of driving around looking for properties. With products like Real Estate IQ’s Off Market Leads, you no longer have to worry about having a deal flow. That’s our job – and we know how to do it!
Disclaimer: The blog articles are intended for educational and informational purposes only. Nothing in the content is designed to be legal or financial advice.
Sources:
- https://community.realestateiq.co/everything-you-need-to-know-to-find-the-best-off-market-properties/
- https://www.thebalance.com/how-to-find-and-buy-off-market-listings-5194687
- https://www.investopedia.com/articles/personal-finance/121415/how-find-and-buy-offmarket-homes.asp
