On Market vs. Off Market Listings: What’s The Difference

First time buyers, Home buying & selling
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For generations, the accepted approach to finding a home or investment was to trawl through one of the popular listing websites or the weekend paper. You’d make a shortlist, attend inspections, narrow down your choices, and make an offer or bid at an auction. If successful, you do your paperwork, labour your way through the conditional and non-conditional periods and then, if all the stars aligned, take possession of your chosen property come settlement day.

There’s nothing intrinsically wrong with this system, but it can be challenging depending on the market. Take right now, where demand is high, and your typical open-for-inspection can draw dozens of people. Likewise, in a down market, there might not be much to choose from as would-be vendors sit on their hands, leaving you with crumbs.

It wasn’t until relatively recently that the average Australian came to learn the term ‘off-market’. Many liked the sound of it and now it’s a phrase used in marketing and as a savvy sales technique – even if the homes being flogged don’t technically fit the bill.

So, what is ‘off market’?

In the traditional sense, an off-market property is one that’s bought or sold without being presented to the wider market through an open, wide-reaching campaign. It’s sold “out of sight”. You won’t find it online or in the paper and there won’t be a glossy sign board out front.

The nature of these discrete details is that there’s often much less competition and often a great deal to be made. Without the frenzy of an open home or a crowded auction setting, there’s less chance of people throwing more money down than they would if it was quiet. 

There are good reasons for vendors to sell off market too. It could be that they’re a celebrity, business identity or simply someone who values their privacy and doesn’t want high-resolution images of their home splashed anywhere and everywhere. They might loathe the idea of hordes of strangers, as well as tyre-kicking neighbours, traipsing through their castle.

It could be that someone is going through a divorce or there’s been a death and the need for a sensitive and lowkey is paramount.

So, they engage an agent to help them quietly find a buyer. That agent might tap into their existing networks, speak with colleagues and peers about who they have among their networks, or bring in a buyers’ agent.

In some cases, someone might be considering selling up but doesn’t want to fully commit, so they’ll have an agent reach out to potentially interested parties and see if they get any nibbles on the line.

And sometimes, it’s purchaser led. A buyer in search of a particular type of home, a spot in a desirable neighbourhood, or a potential development site, will literally walk the streets and knock on doors or leave notes in mailboxes offering to buy a property. 

Whatever the type, the vendor gets a quick and painless sale, and the buyer gets the opportunity to act without the pressure of competing bidders. It can be a real win-win for most parties.

No wonder more and more would-be buyers are eager to see if they can sniff out an off-market deal.

And that’s where things get tricky

Do a Google search for off market properties and you’ll be bombarded with results from a whole range of players keen to capitalise on the growing popularity of the idea.

You’ll find those who offer exclusive or VIP access to a secret list of high-quality and incredibly priced properties that no-one else can get to. In many cases, those operators are essentially project marketers who take new or off-the-plan stock and dress it up as something else. And you can be sure they get a nice commission for connecting you to the ‘off market’ deal.

There are those who offer education courses on how to find an off-market opportunity or dedicated one-on-one mentoring from an expert. Again, you’ll probably pay a pretty penny for the privilege of someone explaining to you what I’ve just written above.

And you’ll see a whole bunch of real estate agencies promoting their off-market deal. If that seems to be a bit counterintuitive, for an agent to condone essentially cutting themselves out of the equation, then you’re onto something.

The way agents see ‘off market’ is probably more akin to ‘pre-market’, where they’re testing the waters with a property before going out with a broader campaign. Remember, many of those sellers who value the point of selling off market wouldn’t want their homes promoted in glorious detail online. But it’s a tool an agent and vendor can use to drum up some early interest and, if they get enough of it and secure a buyer, save on marketing and auction fees.

Is off better than on?

If you can sniff out an off-market opportunity and it suits your needs and wants, then it probably makes sense to push ahead… and you may find yourself very pleased with the results.

But it’s a time-consuming process that involves a lot of research and a lot of networking, so it isn’t right for some people. Think about your time. What’s all that effort worth to you and will you make it back by potentially saving some money on the purchase price?

Engaging a qualified, experienced and independent buyers’ agent to help you find an off-market deal is a worthy idea. A good one will have been in the game for a long time and know a lot of people, so there’s a chance they can help you score something others don’t get a chance to nab.

Conversely, the benefit of buying a home that’s on the market is that it’s the market that determines the value – not a vendor and their representative. If a home is overpriced, it needs to meet buyers where they’re at otherwise it might not sell at all. The process quickly helps sort out sellers who are overpricing their property.

Real estate agents also must comply with a whole stack of rules and regulations, so there are safeguards in place for buyers who are dealing with them in an on-market scenario. You can also move at your own pace with campaigns that typically run for weeks.

Of course, when it comes to real estate it’s always crucial to take your own personal circumstances into account. Don’t be sold on the idea of an ‘off market’ for the sake of it. If it won’t meet your needs, no matter how enticing off market sounds, then this isn’t the property for you.

The takeaway is this – off-market properties can be golden for some buyers, but they’re not all bargains. Thorough due diligence and research is key to spotting the deals that warrant pursuing. If you do find one that’s worth the effort, you’ll probably have to move fast to lock it away before others get word. That means being fully prepared as a buyer, particularly in relation to your finance. Pre-approval is essential for ensuring your property needs meet your buying budget.

This is where an experienced mortgage broker is invaluable. We can work through the scenarios, so you are in the best possible position to take advantage of any quiet deals that come your way.

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Andrew Mirams