One of the best ways to invest in property is to buy for a low price – also known as Below Market Value (BMV) – and then rent or “flip” for a profit. A great way to achieve this is via an off market property purchase.
In this article, expert auctioneer Property Solvers explore this niche area within the property investment world.
We discuss why people choose to sell in this way, whether it’s really a good buying strategy, the potential pitfalls and how to find off market properties for yourself.
What Are Off Market Properties?
Off market properties are those that are not sold on the traditional open market. There are no estate agents involved and sellers usually handle most aspects of the transaction themselves.
Often, these properties are not publicly advertised on portals like Rightmove, Zoopla, On the Market or other go-to places for homebuyers.
In order to locate off market property, the buyer therefore needs to know where to look.
Why Do People Sell Properties Off Market?
A seller may have a number of motives for choosing the off-market approach…
To Sell Faster
Other sellers may go off market because they want a quick house sale – particularly if they are willing to accept a lower price.
Prefer a Private Sale
There are property owners who might prefer to sell off market so that they can keep things discreet.
Some people worry that displaying images and floorplans creates easier access for burglars. It’s also fairly common for homeowners to not want neighbours knowing of their plans to sell (say they are divorcing, selling an inherited property, trying to stop repossession or going through other personal issues).
Other times, it may be that the seller would rather prevent third parties from collecting data relating to their property and finances.
Distrust of Estate Agents
Previous negative experiences with estate agents can be a compelling reason for people to explore selling their homes off market.
With the buyer and seller dealing with each other directly, many of the stresses that come with an open market sale are also bypassed.
To Avoid Estate Agent Fees
Typical property sales include charges for admin, marketing, listing on online portals and many other tasks undertaken by estate agents. Depending on the size and location, this can reach into the £1,000s.
By contrast, it’s possible to do much of it for free via an off market sale.
To Gauge the Market
An owner may choose to begin their sale off market in order to “test the waters” and gauge interest.
Depending on the results, they may opt to continue in this vein or to engage the service of an estate agent further down the line.
To Have More Control
Without the involvement of a middleman or intermediary, sellers know exactly where things are at and can make choices on what they feel is best. As long as solicitors are involved, risks can be kept to a minimum.
Related to the above, some property owners decide to keep their sale private to reduce the hassle of an open market sale. For many, the option is more attractive than having to host multiple viewings and keep in constant contact with agents.
Due to Property Market Changes
During housing market downturns, more sellers tend to explore the off market approach due to the difficulty of selling through conventional channels.
Why Seek Out Off Market Properties?
There are many reasons why you might want to start looking for off market properties.
Often, off market sales provide opportunities for buyers to great properties without having to compete with other house hunters.
If you find a home for sale that is not officially listed, you might be the first to express interest. What’s more, the seller may well want to get the transaction over and done fast!
This may well make the buying process much quicker than it would be via an estate agent. You are more likely to achieve a lower price as a result. This is because there will be no “bidding wars” with other buyers to push your offer up.
Ultimately, presenting yourself as a serious buyer (preferably with cash) is likely to put you in a stronger position.
Why Might it be a Bad Idea to Buy Property Off Market?
Buying an off market property can end up being more expensive than buyers first expect, as they could find problems with the home that require urgent attention.
After all, some sellers decide to go off market because their property isn’t exactly in prime condition. Other issues include noisy neighbours, problem tenants, pollution, undesirable developments / infrastructure happening nearby.
It may be about to be repossessed – and its owner might not have been able to keep up with its maintenance. In other scenarios, the sellers may be concerned that property agents would not be able to sell it effectively due to its poor state of repair or if there are mortgageability issues.
Pulling the wool over a buyer’s eyes is often easier when there is no agent overseeing the property sale and undertaking thorough checks.
For this reason, it’s usually a good idea for buyers to approach any potential off market home purchase with a degree of caution.
How to Find Off Market Properties
Below we highlight some of the common strategies to gain access to off market properties.
Investors who specialise in buying off market property sometimes engage the services of a “property sourcer”. These are specialists who are instructed to contact their clients when they find viable and genuinely off market homes.
They’re different from estate agents in that they find properties privately. Indeed, be weary of property sourcers that simply market properties that are already on the market (and take a fee). You can simply check the main portals such as Rightmove and Zoopla or Google the property address.
On this note, we would encourage you to complete our property investors / auction buyers profile form. Our team will forward any suitable opportunities that fit within your criteria.
Direct to Vendor (D2V) Property Marketing
It’s also possible to advertise your services as a private investor and encourage sellers to come directly to you.With many sellers unaware that the world of off-market properties actually exists, this is a great way to build a local reputation as a serious homebuyer.
With the added incentive of no estate agency or legal fees, sellers benefit from saving what can often be thousands of pounds.
Some methods include:
- Leaflets and postcards
- External display advertising / billboards
- Local newspaper / magazine advertising
- Digital and social media advertising (such as Google and/or Facebook Ads)
- Supermarket / local community notice boards
- Adverts in shop windows
- Add a picture and some info. on your Facebook, Twitter, Instagram, LinkedIn and other social media profiles you may have;
- Inform local WhatsApp groups you may be part of;
- Let people at your local pubs, coffee shops, schools, churches, communities centres etc. know you’re an active property buyer;
- With the group manager’s permission, add the details on your neighbourhood Facebook page (if one exists)
Much to the dismay of estate agents, many off market property buyers / sourcers also approach sellers directly by door knocking where they see boards and/or tracing details via the Rightmove and Zoopla listings.Note that direct to vendor is a costly approach. This strategy may not work as well if you want to buy an off market property to simply serve as your long term home.
Direct Mail Marketing
Related to the above, some investors send targeted letters to homeowners in search of off market opportunities.How broad you want to take the targeting is up to you, but many have success in searching for properties on Google Maps, Street View and by simply walking around the neighbourhood.
For example, if you come across empty or abandoned properties it’s worth downloading the Title Register from HM Land Registry. Assuming it’s been updated with the owner’s contact details, you can send a letter explaining how you’re a local property buyer and interested in discussing a sale.
Try and also chat with neighbours who may be able to shed some light on the whereabouts of the owner (or may even be able to put you in touch).
Remember that follow ups are often just as important as the initial letter as it’s common for such communication to get lost (or forgotten about).
It’s worth building relationships with estate agents who can sometimes refer clients in search of a quick, private sale. Other times, you may be able to negotiate a better price on a property that has been lingering on the market for a while.Remember to show proof of funds (preferably cash) to show that you are serious.
Be sure that the estate agent is taking a fee from the seller only. Taking a buyer’s fee (or “backhander”) is an unquestionable breach of legislation and regulations set by bodies such as the National Association of Estate Agents (NAEA). The punishment for such actions is severe.
There are times when developers and housebuilders have surplus stock to dispose of and are willing to strike a deal with an investor.Some developers might be willing to come to an agreement on a house before they begin to promote it on public markets. With such high pressure on margins, they may be open to an offer if you can complete the sale quickly,
Remember that new build properties often come with a “premium” and it’s therefore important to make sure the transaction stacks up financially – especially for buy to let purposes.
Word of Mouth
It’s worth talking to friends and family members who are local to your chosen investment area.Word of mouth remains a great way to learn about available properties without using an estate agent.
You could also try contacting property professionals directly to learn of possible opportunities.
Networking and Property Investor Forums
There are plenty of local networking events well worth attending.Remember to also check out some of the well known (and unbias) property investor forums and Facebook groups. You may sometimes find private property sellers and sourcers you can speak to.
Indeed – with all the punitive changes that have hit the private rented sector in recent years (including pending minimum EPC requirements, Section 24 of the Finance Act 2015, rent caps, eviction controls) – more landlords are looking to sell up than ever before.
Builders, Tradespeople and Contractors
It’s worth letting people you know in the building and refurbishment trade that you’re an active buyer.With ever-rising costs, it’s common to hear of property owners and developers being unable to finish projects. To avert financial difficulty, some are willing to sell or perhaps joint venture with off-market investors.
Off Market Properties for Sale
Although they are “on market” per se, you can often find properties on a number of independent portals to which sellers upload their properties (and estate agents rarely upload their stock to). These include:
- Gumtree’s property pages
- eBay’s property pages
- Mumsnet’s Local Pages
- The House Shop
- Residential People
- Net House Prices
- Property Heads
- Property Mutual
- House Ladder
- Homes 24 (regional property pages)
- Property Pidgeon
- Renovate Me
- Property Renovate (London Only)
- Trovit Renovations
- Wreck of the Week
Off Market Properties London
Finding off market houses in Greater London is challenging given the high demand for property – not to mention the seemingly endless number of estate agents and brokers competing against each other.
Yet at the same time, with estate agency fees reaching as high as 3%, there are many sellers across the capital that could be open to such a proposition.
As London property buyers and auctioneers ourselves, here are some approaches we’ve deployed in the past:
- There are some London auction houses that do offer properties off the market, particularly where vendors wish to keep the sale private
- Similarly, there are property buying companies that have stock that does not fit within their business / growth strategy
- Despite the expense, advertising in the property pages of free London newspapers like the Metro and Evening Standard can be worthwhile – particularly given the high readership numbers these publications have
- Seek out London buying agents who sometimes know of active sellers in search of a fast sale
- The Empty Homes Agency campaigns for more properties to be brought into use for the benefit of those in housing need. It may be worth contacting this charity to see if they know of any housing stock that fits within your acquisition plans
- Although most London local authorities would dispose of their properties through auction or private treaty, they do sometimes sell to professional landlords with proven track records
- Nimbus, Propalt and Land Insight are three paid property and land finding tools worth checking out
- Stay on the look out for permitted development (PD) and commercial to residential conversion opportunities. With the benefit of lower competition, provided you know what you’re doing, there’s often opportunity to add value to the property and gain greater returns in a variety of ways.
Off market properties are often a great way to invest in property.
However, there are still benefits to using agents and other real estate specialists. It is particularly worth remembering that these professionals offer a level of expertise that their clients may not be able to match on their own.