Step 5 - Property Sourcing and Selection
Generally speaking, there are two types of property deals:
On-market deals: these are deals which are listed publicly online for everyone to see, or in other words, these are the properties that are listed on realestate.com.au and domain.com.au
Off-market deals: these are deals that are not listed online and are only presented directly by the selling agent (or even the owner directly) to selected people with whom they have a relationship.
There is a rising trend in the property space where people think that just because a property is "off-market" they are getting a good deal or perhaps a better deal than they would if they had just purchased a property on-market.
This could not be further from the truth…
I would say the majority of properties presented as off-market opportunities are generally off-market for a reason. Meaning they often have something fundamentally wrong about them, that could be a structural issue, next to a train line, on a main road, unrealistic price expectations from the seller etc.
Think about it this way, if you are selling your house and you want to achieve the best price possible, wouldn't you want to advertise it online so that it gets the most amount of attention and create the most competition amongst buyers?
Additionally, with the influx of buyers agents in certain markets whilst you may think there is less competition on an off-market deal, sometimes there can be even more competition than on-markets deals if the agent has also sent the property to a bunch of buyer's agent who are willing to pay over market value just to get a deal over the line.
That it is not to say that there are no good off-market deals, I am just saying you need to not prioritize them or treat them differently as on-market deals in terms of your analysis of the property itself - good deals can come both on-market and off-market, so you should try source properties through both avenues.
Why would someone sell their property off-market?
With that being said, there are still very legitimate reasons why a seller would want to sell their property off-market as opposed to advertising it online. Some of these include:
Seller privacy: some people don't like the idea of having their home, especially a family home, posted online for everyone to see and have heaps of people walk through their home during open inspections.
Extenuating circumstances / personal reasons: in circumstances such as death, divorce, financial hardship etc. people often do not feel up to going through an entire marketing process for the sale of the property as it can be quite emotionally draining for some people.
Quick transactions: marketing campaigns generally take 3-4 weeks, some people prefer a quick sale whether that be for the reasons I stated above or just because they are too busy with life and don't want to have to deal with the sales / marketing process for that long.
Marketing costs: what some people don't know is that selling your property online can be quite expensive - it can costs thousands to post the advertisement online, stage the property, take photos etc. and some people would prefer to not spend that and just sell it off-market.
Whenever you have access to an off-market property, it is important to ask the selling agent why they are not going to market, because if it aligns with one of the above reasons then you may have a higher likelihood of getting a good deal in comparison to people that have to sell off-market because there is something fundamentally wrong with the home.
How do I get access to off-market properties?
We all know how to get on-market properties, you literally just browse realestate.com.au or domain.com.au, but how do you get access to off-market properties?
Do you need a buyer's agent? No, absolutely not - is that a legitimate option, yep for sure but it isn't 100% necessary.
All you need to do is develop and invest in your relationship with the sales agents in the area you are looking in. This basically just involves being a nice / genuine person to them, I know sales agents get a bad rep these days but they are humans also and they are not all bad I promise…
Have quick watch of this video from PK Gupta and then I will jump into some more detail.
Step 1: Identify the top 5 - 10 agents in the suburb you are looking in
You can do this by researching the relevant area on ratemyagent.com.au and also looking at those agents which are listing properties on realestate.com.au and domain.com.au. Generate a list of agents to contact from these results.
Quick tip: you will often see two agents on a listing online, you should contact the person who looks the most junior of the two as they are generally the one dealing with all the buyers.
Step 2: Try to give the agents a call to introduce yourself and what you are looking for
I know calling people seems scary for some people in my generation, but it is the best way to build a rapport with someone.
Some agents prefer calling and some much prefer emails, but I always try with a call first. If they don't answer, then you can jump to the email step below.
When you give them a call I like to say something along the lines of the following (after you have introduced yourself, asked them how they are going etc. etc. you know just be a normal and nice person guys…):
"I am pre-approved and actively looking for my next investment property in [insert] area and I can see that you sell a lot of great properties in this area."
"I am looking for a property which is: [insert requirements - i.e. free-standing, budget range, bed / bath requirements, land size requirements etc.] and was wondering if you had anything that fits this criteria (or even very similar)."
"I am keen to move quickly so it would be great if you could keep me in mind if anything pops up."
Now this is a phone call so you need to show your personality, I can't give you an exact script but the above are generally the things you want to cover.
Noting that if the agent asks you what your maximum pre-approval amount is do not tell them. In response, you can just say something along the lines of "I am comfortable with purchasing homes in my budget of [insert]" but please don't be rude about it…
You should also confirm at the end what their preferred method of communication is (i.e. call, text, email etc.).
Step 3: Send the agents an email either as a follow-up to the call you just had or instead of a call
Here is an example email that you can send to agents, feel free to adapt it as you see fit. The items in square brackets are for you to adjust to your personal circumstances.
If you have already spoken to the agent you should add something like "thanks for your time on the phone earlier" at the start of the email.
DRAFT EMAIL
Subject: Pre-approved buyer - Interested in Off-market / Pre-market opportunities
Hi [insert],
I am a pre-approved investor who is looking for an investment property and I am keen to buy in [insert suburb/s], and I wanted to see if you had anything pre-market / off-market that fits the following criteria:
[Free-standing house]
[Budget: 600k - 700k]
[Minimum 3 bed 1 bath]
[Above 500m2]
[Not on a main road or busy street]
If you have any properties that fit the above (or similar) please let me know. I am keen to move quickly and I'd love to get a deal done that works for everyone before it comes to market.
Feel free to give me a call or text if you prefer [insert number].
Kind regards,
[insert name]
Step 4: Follow-up with each agent weekly or fortnightly
After you have made initial contact with the agent, you should follow-up with them either weekly or fortnightly.
The best time to do this is a Monday / Tuesday morning. Don't follow-up with them more than once a week as you may start to get annoying and they might then just ignore you going forward.
Make your follow-up personable and not so direct / to the point.
Something along the lines of the following should work:
DRAFT EMAIL / TEXT / SCRIPT
"Hey [insert], hope you had a great weekend! Just wanted to check-in to see if you had any new pre-market / off-market opportunities as I am still looking and am keen on the area."
I would suggest giving them a call, but an email will suffice if you are too busy.
You can even add things such as "I saw you sold [insert recent sale by the agent] - looks like an great result, congrats." Just be a normal human and show actual interest.
Step 5: Make sure you respond to them if / when they send you something off market
Once you get an off-market deal, you should acknowledge receipt of it and say thanks.
If you aren't keen you should also let them know and thank them again for the opportunity then remind them you are still keen for future opportunities (you should give a reason or two for why you don't like it - be respectful though…).