CoreVest Finance recently attended the IMN Single Family Rental “SFR” conference in Scottsdale, Arizona. A…
by Kevin Sherouse, Relationship Manager
In today’s competitive real estate market, finding a good deal on a property can be challenging. With multiple buyers bidding on listed homes, sale prices are often driven higher beyond asking, making off market properties an attractive option for buyers looking for a deal. In the world of real estate, off-market properties are like hidden gems waiting to be discovered by savvy investors and homebuyers. Thesy rarely appear on the multiple listing services (MLS) or in the public eye, making them a secret trove of opportunities for those in the know.
Whether you’re a first-time homebuyer looking for a unique residence or an investor seeking that competitive edge, understanding how to uncover off-market properties can be a game-changer. In this blog, we’ll guide you through 10 strategies for discovering these exclusive real estate opportunities, helping you expand your deal flow and gain a competitive advantage in finding the best off-market properties.
Understanding Off-Market Properties
An off-market property refers to a real estate asset that is not publicly listed on multiple listing services (MLS) or widely advertised through traditional marketing channels. These properties are not readily visible to the public, and their availability is often restricted to a select group of individuals, such as a real estate agent’s network, private listings, or word-of-mouth referrals. The concept of off-market properties offers a unique advantage in the real estate market and comes with its own set of pros and cons.
On the positive side, off-market properties tend to have less competition, increasing the chances of securing a property without bidding wars. Since these properties are not listed on the MLS, sellers can avoid paying commissions to listing agents, potentially leading to more competitive pricing. This benefit extends to buyers who may also negotiate lower agent commissions, ultimately reducing transaction costs. Off-market deals also provide greater flexibility in contract negotiations, as parties can discuss terms without the pressure of competing offers, leading to more favorable arrangements.
However, the downsides include the challenge of finding these hidden opportunities due to fierce competition among buyers and agents, which can inflate property prices. Additionally, limited public information can make it difficult to assess a property’s true value and associated risks, posing a potential drawback.
Here are 10 Strategies to Find Off Market Properties
Real Estate Professional Relationships
Real estate professionals play a crucial role in finding off-market properties by leveraging their expertise and extensive networks. Their knowledge of the local market and industry connections, including other agents, property owners, and investors, often give them access to exclusive off-market listings. Real estate professionals also have access to professional associations, industry events, and industry-specific databases and tools that help connect them to potential sellers that may prefer a discreet sale.
Additionally, their negotiation skills can be instrumental in securing off-market deals, as they can bridge the gap between buyers and sellers who may have varying interests and expectations. These professionals can also provide valuable insights and guidance to buyers, helping them navigate the complexities and risks associated with off-market transactions. Overall, real estate professionals are invaluable in the quest for finding off-market properties.
Using MLS for Off-Market Properties
While the Multiple Listing Service (MLS) is primarily used to find properties that are on the market, it can also be used to help find off-market properties. Although the MLS doesn’t directly list off-market properties, it does provide a database of listed properties and the ability to identify patterns and trends in the market. By analyzing data on expired or withdrawn listings, you may be able to find properties that are now potentially available off-market.
Using MLS for Off-Market Properties
Networking and Word of Mouth
As a real estate professional, having a strong industry network often leads to obtaining insider information and exclusive listings, making networking a priority to uncover hidden opportunities. This includes attending industry events, joining local real estate associations, and connecting with other investors online. Additionally, word of mouth referrals from satisfied clients and colleagues can lead to opportunities that align with a buyer’s or investor’s criteria, providing a significant competitive advantage in securing a potential off-market deal.
Direct Mail Marketing
Direct mail marketing can be a strategic and effective approach by sending targeted mailers to specific neighborhoods or property owners to find potential sellers. With the use of targeted mailing lists, this allows real estate professionals to tap into a hidden market who may have not considered listing their properties, and allows for a personalized and discreet outreach, highlighting the benefits of selling off-market. Additionally, this can also generate leads and initiate conversations with potential and motivated sellers.
Driving for Dollars
“Driving for dollars” is a real estate investment strategy focused on finding discounted properties before they hit the market. The concept involves driving through target neighborhoods and looking for signs of neglected or distressed properties, including signs of vacancy, overgrown lawns, peeling paint, or broken windows, in hopes of finding properties to purchase below market value.
Once a list of properties is compiled, research of ownership details and follow up can help gauge the interest of the seller. Many motivated sellers will consider reasonable offers to avoid foreclosure or get rid of burdensome properties.
Foreclosure and Pre-Foreclosure Listings
Foreclosure and pre-foreclosure listings can provide substantial discounts for real estate investors and buyers. When a homeowner falls behind on their mortgage payments, their property may enter the pre-foreclosure stage, a critical time when they might be willing to sell quickly and at a substantial discount to avoid foreclosure.
Foreclosure listings, on the other hand, are properties that have completed the foreclosure process and are typically auctioned or sold by banks or financial institutions. Both provide an opportunity to acquire properties at prices below market value, however, it’s essential to navigate this process with care, as many are sold “as-is,” requiring repairs or renovation, and can be legally complex. To find foreclosure and pre-foreclosure properties, homebuyers can search public records or use online databases that specialize in these types of properties.
Online Resources and Websites
The internet has revolutionized the property search process, offering a multitude of online resources for finding off-market properties. These platforms include classified advertisements websites like Craigslist, which is particularly useful for owner-listed properties, and real estate websites that provide comprehensive databases for property listings. Some of these websites offer features like “Make Me Move” or “Private Listing Network” that enable homeowners and agents to share off-market listings, making it easier to find hidden opportunities.
In addition, real estate data analytics companies provide investors with information on off-market properties, allowing them to identify properties not listed on the traditional MLS. These online tools have significantly streamlined the process of discovering off-market properties.
Government and Public Records
Public records can include a variety of documents, such as property tax records, deeds, and mortgage documents used to uncover potential off-market opportunities. These documents can provide information about the ownership history of a property, current market value, and any liens or encumbrances, making it possible to identify distressed or underutilized properties that could be a suitable investment.
In addition, local zoning and planning departments can provide information about properties that are in the process of being rezoned or developed, which may indicate that they may soon be available for sale.
Working with Wholesalers
Real estate wholesalers are individuals or companies that purchase properties at a discounted price and then sell them to investors at a profit. Wholesalers typically have a network of sellers and buyers and can provide investors with access to off-market properties that may not be available through other channels.
When working with wholesalers, it is important for investors to conduct due diligence on the properties they are interested in purchasing, including reviewing the property’s title and conducting a thorough inspection to identify any potential issues. Investors should also be aware that wholesalers may charge a fee for their services, which can impact the overall profitability of the investment.
For Sale by Owner (FSBO)
FSBO properties are homes or properties that are being sold by the owner without the assistance of a real estate agent. This means that the seller is responsible for all aspects of the sale, including marketing, negotiating, and closing the deal. One of the biggest advantages of buying an FSBO property is that there are no real estate agent commissions involved. To find FSBO properties, buyers can search online real estate platforms, such as Zillow or Craigslist, or drive around neighborhoods looking for “For Sale by Owner” signs.
When considering an FSBO property, it’s important for buyers to do their due diligence and thoroughly research the property and seller. This includes obtaining a home inspection, reviewing the property’s title history, and verifying that the seller has the legal right to sell the property.
Finding off-market real estate deals takes effort and persistence, but it can be a great way to uncover hidden gems. Each approach carries its own set of advantages and challenges, making it essential to conduct thorough research and exercise caution during the search for off-market real estate deals, but by utilizing these strategies, buyers and investors can expand their horizons and gain a competitive edge in finding off-market properties at a good value.
So be proactive, get creative, and don’t get discouraged. With the right approach, anyone can become skilled at discovering these under-the-radar deals.
CoreVest is a market leader in rental loans, also known as DSCR loans, and has helped thousands of investors finance their properties and improve their holdings. For more information about how CoreVest can help you maximize the value of your rental or investment portfolios, please call Kevin Sherouse at 949.275.3759 or email at [email protected].