The real estate market is ever changing in the United States, but the buying and selling of residential property is a constant. There are typically two kinds of residential properties in real estate, those that are listed and those that are not. Surprisingly, both kinds of properties can result in a sale that benefits the buyer and seller. While the unlisted properties, often referred to as off market houses, may be harder to find, by partnering with a realtor, the benefits can far outweigh the leg work.
What are off market houses?
Off market houses are exactly as the name indicates, houses that are not on the market. They are not publicly listed with the local real estate service. Yet, off market housing is increasingly becoming a big business.
At first glance, the process can seem to be a bit of a paradox. Off market housing typically pertains to residential properties that are not currently listed on the market. These properties are also generally tied to a unique circumstance such as vacancy, foreclosure, or a similar state of physical or financial distress.
So, if these houses are not on the market, how do they sell?
Off market houses are typically bought by a highly motivated investor, whether an individual or a company. In most cases, these homes appear on a potential investor’s radar in one of three ways. Often, word of a property’s physical or financial challenges will reach the ears of an eager investor simply by word of mouth. In other cases, a potential investor may come across the property in their day to day routine and can witness a house’s physical distress first-hand. Efficient investors often enlist the help of a realtor who may have the inside track on off market houses.
Once a potential buyer has closely reviewed the property they may choose to approach the seller with an offer. Since the house is not publicly listed with local real estate services, it is highly possible that there would be no other offer on the property. In this case, the offer is often eagerly accepted by the seller. The entire transaction from the offer on the property to changing ownership can happen on a relatively fast timeline.
How Houses Sell Off Market
Much of the time, houses are sold off market because of extenuating circumstances such as foreclosure or vacancy. In some cases, these residential properties were previously on the market, but were then taken off due to a change in circumstances.
Because the owners of some of these properties can be in dire straits if facing a foreclosure, an offer from an investor can be quite attractive. Sellers generally also appreciate the fact that in an off market sale they are not accountable for some of the responsibilities of sellers that have homes publicly listed, such as open houses or showings. To further sweeten the deal, off market purchasers are often willing to move quickly and pay the new seller in full via a fast payment method, such as cash.
The sale then frees the previous owner from annoying and expensive house repairs and usually gives them enough short term cash to put towards relocating and making a new start. The investor is then free to make repairs and update the home to eventually sell or rent for a substantial profit.
Advantages of Buying Off Market Houses
A house listed on multiple listing services (MLS) is usually priced too high for investors to buy and then turn a profit. An MLS listed property is also commonly swamped with offers, so for an investor to be competitive in their own offer, it would have to be even higher. Because of these reasons and more, off market houses are becoming more attractive to potential investors, and the advantages of buying off market are almost all unique to this particular type of sale.
A house that is not physically listed on the market is off most buyers’ radar. With no listing, no pictures of the property, no estimates on square footage and more, there tends to be a much smaller group of investors clamoring for any one listing at a time.
With fewer buyers competing for the sale, there is usually no bidding war for the property. This allows investors to name their price with a great deal of confidence that the seller will indeed accept it. If the investor is able to negotiate a low selling price, they can then put otherwise available funds toward updating and renovating the house before selling or renting it for profit.
How a Realtor Can Help with Off Market Sales and Purchases
Realtors know houses and the real estate market better than most. While much of their work tends to be with MLS listed properties, they are free to venture outside of those parameters and work on other opportunities, such as off market listings.
There are several ways realtors can play a role in off market listings. Some realtors may already have the property under an agreement or are working with a potential buyer or investor. Other realtors actively seek out off market houses so they can help connect those owners with the right investors.
When it comes to utilizing a realtor to help with selling an off market property, they can be quite an asset. Sellers should be honest with the realtor about their current situation in terms of if they are willing to make any repairs to the house or if they are simply ready to sell and get out fast. A realtor can then be instrumental in connecting the right investors with the seller to create a win-win situation for both.
When enlisting the help of a realtor for buying an off market property, their wisdom of the real estate industry can undoubtedly be an asset. Many agents may already have some properties under an agreement that would appeal to a motivated investor. This helps facilitate the process for an investor who would otherwise be forced to rely on word of mouth or approach the sellers of potential off market houses directly.
