Agents and professional investors can find off-market properties using various proven strategies. You can use these data-driven strategies to discover off-market investment properties for real estate. Off-market properties can help you avoid wasting money, effort, and time pursuing bad deals.
That said, not every off-market property is a good buy, which is why it is important to find off-market properties that make the most financial sense.
Keep reading if you are motivated and curious about off-market properties and how you can transform them into deals.
This guide will give you actionable tips on discovering off-market real estate properties. What you’ll find here are time-tested strategies used by seasoned professionals.
What Exactly are Off-Market Real Estate Properties?
Before we get into how you can locate off-market properties, you must first understand what an off-market real estate property is. It is also important to note how it differs from traditional real estate listings.
In simple terms, an off-market property is any property not currently listed for sale. You won’t find these unlisted properties on real estate listing platforms such as the MLS.
These properties are also not listed in alternate platforms such as Zillow, Facebook, Craigslist, magazines, and newspapers. In fact, those selling off-market properties are typically willing to sell their property only if the right deal comes along.
They differ from traditional real estate sellers because they are not actively searching for qualified buyers for their properties.
Why Do Off-Market Properties Exist?
According to statistics, about 4% of sellers in 2020 don’t list their properties on the MLS. While it is easy to discount this number as insignificant, it does make you wonder why a property seller would want to have their property listed off-market.
Typically, when a property owner privately lists their property to a sizable percentage of prospects, there are several variables they may have considered. Here are a couple of reasons why sellers list their properties off-market:
A property might have some legal or title issues
Real estate investors understand that some homeowners or owners of commercial real estate have problems selling their properties due to pending legal actions or a clouded title. This type of scenario is a win-win as it enables the property owner to cash out on their property, while investors use their knowledge and resources to resolve the issues resulting in significant returns.
The property is FSBO (or for sale by the owner)
Properties in this category are generally sold by their owners without the assistance of a real estate broker or a listing agent.
From when they think about selling to when the deal is closed, they never have to list their property on an MLS. Instead, they use third-party sites or social media.
Owners sometimes get unsolicited offers
Sometimes, off-market opportunities result from unsolicited offers or even purchase inquiries on property not actively listed on the market. It could be a real estate investor or professional inquiring. Typically, unsolicited offers come in the form of phone calls, postcards, or letters from an individual offering to purchase the property.
Disrepairs and hoarder homes can be tough to sell
It can be difficult to sell place-hoarder homes as every party involved understands that they require a significant amount of labor, time, and money. This is why homeowners of properties in disrepair could choose to sell their properties to avoid repairing the home.
Off-market properties can be sold with more privacy
Typically, off-market properties have a more discreet and private transaction process, resulting in extremely private individuals choosing this method as it enables them to sell their property to a select group outside of the public eye.
How to Find Off-Market Properties
When it comes to finding off-market properties to buy, there are various ways you can do this. And while a few of these methods are a lot better than others, it is still important to know all the options available.
Some of these options are free but can take some time. On the other hand, a few others can cost a bit of money, but they save you plenty of time and may even be cheaper in the long run.
Searching Public Records
Public records can be a great way to discover the owners of off-market properties. They are also a great way to find foreclosed and other distressed properties. In any case, the information you get from public records can help you directly identify the seller.
Keep in mind that while this method is free, searching for off-market real estate through the public record can become quite messy. In most cases, there is a ton of data to sort through, which can be very time-consuming as well as challenging.
The reason for this is not too difficult to figure out. Most public records were created before computers ever existed, meaning that something as small as a typo could result in a lot of wasted time and effort.
Go Driving for Dollars
This method is another excellent way to find off-market properties, and it is just as it sounds. It involves driving around neighborhoods and searching for houses or properties that match your preference, allowing you to discover homes in disrepair, boarded-up homes, and others that can be of value.
Once you find a property you like, you can try to find the owner by visiting the local assessor’s office to get the owner’s mailing address and name. You can also switch to skip trace to get their email and phone number.
This provides you with comprehensive information, such as the mortgage status of the property, the owner, and their situation. Armed with this information, you can make a better sales pitch that matches the owner’s current situation.
Talking to Inspectors, Contractors, or Builders
Builders, inspectors, and contractors tend to run into building projects that might be a little difficult for owners to sell. In many cases, it could be due to a lack of funds to pay for the necessary improvements and work.
You can find off-market properties by letting this group of people know that you are on the lookout and are willing to pay them for a great lead. This gives them the incentive to let you know about any matching property they come across. Obviously, for this method to be effective, you need to first network with builders, inspectors, or contractors.
Connecting with Off-Market Wholesalers
Wholesalers in real estate are contracted with interested sellers to purchase properties. After a wholesaler locates a potential buyer (usually a cash buyer), they sell the property to them at a slightly higher price and keep the difference.
In most cases, the properties purchased by wholesalers are off-market real estate deals resulting from persistence. Some of the methods used by off-market wholesalers are cold calling, door knocking, driving for dollars, and direct mail marketing.
In this situation, the investor is the home buyer, meaning you are likely to pay a bit more for the property than the wholesaler did, possibly above market value, depending on the market. There are also scenarios in which you can only buy the property after the wholesaler purchased it. In other cases, you are contracted by the wholesaler while they are still in the process of buying the property.
Keep in mind that this type of deal usually comes with an assignment fee or finder’s fee, which is either a hefty sum or a small percentage of the contract, depending on the negotiated deal. To avoid this, you can use public records to locate off-market properties, allowing you to keep the spread.
Hiring an Off-Market Property Agent
While real estate agents tend to use their local MLS to find properties, most agents tend to have industry connections as well as insider knowledge about certain properties that are not on the market yet. Agents might also have insights on properties that can’t be listed on the market due to issues with the property or owners themselves.
A highly motivated real estate agent might be willing to reach out to owners of off-market properties on your behalf. It can be a great opportunity for them even if you choose not to move forward with the deal. That’s because they can take that listing and sell it to someone else.
If you opt for this method, it is important to keep in mind that you will have to compensate the real estate agent for their time and effort.
As you can see, there are many ways to find off-market properties. The most important thing to remember is that all these methods will take a bit of time and effort. You simply need to choose the one that best suits your preferences and needs.
The most time-consuming method is searching through the public record, and the most effective can be networking with inspectors, contractors, and builders.