As the US housing market stays hot, real estate investors need to get creative, which may include looking for off market properties and deals.
Table of Contents
- Definition of Off Market Property
- Pros and Cons of Buying an Off Market Property
- How to Find Off Market Properties
- Finding Off Market Properties with Mashvisor
In the real estate world, an off market property is a property not listed for sale. But depending on the context, it can actually have two separate meanings.
In this article, Mashvisor will bring the term “off market” closer to you. We’ll explain the definitions of the term “off market”, talk about the pros and cons of off market properties, and how to find off market properties in the US housing market.
Definition of Off Market Property
A house labeled “off market” on property-browsing websites means that the property is currently not for sale. But if you heard a realtor talking about finding off market properties for sale, it means that the properties are sold without being listed on the MLS database.
The Multiple Listing Service (MLS) databases don’t hold all houses that are for sale. According to the National Association of Realtors (NAR), about 11% of sellers find their property buyers without even listing the property. Such off market sales are usually the highest in the most competitive housing markets.
Related: How to Access MLS Listings Without an Agent—Investor’s Guide
Off market property sales happen more often than many property buyers realize. Off market houses are usually advertised privately to a group of potential buyers, or the seller negotiates with the buyer directly.
Why a Seller Might Decide Not to List Their Property
There are a few solid reasons why a real estate property seller might not list their home:
- Not available to show. Any MLS listing must be available to show, so if a seller isn’t available for showings, they might decide to take it off the market (temporarily).
- Seller’s market. When demand exceeds supply, or when there are many buyers but not enough inventory, it’s called a seller’s market. Since sellers are at an advantage, they have the luxury of holding onto their properties, waiting for the right offer to come their way. Some real estate markets are so hot that potential buyers and agents actively contact homeowners with offers for properties that aren’t even for sale.
- Pocket listing. A pocket listing is when the seller engages a realtor to market the property privately. In that case, realtors contact potential buyers directly to offer them the listing or they share it with a group of local area realtors.
- Coming soon. Whenever you see an investment property listed as coming soon on the MLS, it may mean that the seller is gauging buyer interest before listing the property.
- Foreclosure with tenants. A property in the early stages of foreclosure might not be listed for sale if there are tenants living in it. In cases like this, the seller doesn’t want to alert the tenants that the property is for sale.
Related: 7 Best Ways to Find Motivated Sellers
Pros and Cons of Buying an Off Market Property
People tend to believe that an off market property arrangement is always a win for the buyer because of reduced competition. But the truth is, this approach offers upsides and downsides for both buyers and sellers. Here, we’ll focus on the pros and cons of buying an off market property for buyers.
Pros of Buying an Off Market Property
- Discounts and unique deals. Getting a discount on a property deal is the most obvious benefit of purchasing a house off the market. Unless it’s a luxury pocket listing, sellers choose to list their properties off the market when they are not looking for top dollar. The price is not the seller’s primary concern, which is why the buyer can get it below the market price. Sellers might be trying to offload the house quietly or are concerned about their privacy.
- More inventory. By checking listed and off market houses, you will increase the number of homes that are available for purchase. If you are interested in buying a home in a hot housing market, there will be competition. When looking for off market properties, you increase the inventory in your search while excluding potential competitors.
- No rush. Off market property sellers are typically not in a rush to make a sale. As an investor, you can take your time to look at the house before you make an offer. There won’t be any other buyers that you have to beat by giving a higher offer.
- Less pressure. When you remove the time pressure, as you do in off market deals, the transactions are often smoother and more flexible. The seller won’t put many conditions on the sale when the competition for the house is lower, so buyers have the advantage. This is especially true for distressed properties, which buyers want to procure as part of their BRRRR strategy.
Cons of Buying an Off Market Property
- Difficult to determine the real market value. When a property is not listed on the MLS, you cannot easily compare price per square foot, comps, and other property aspects. You will need to conduct some real estate market analysis yourself.
- Not a great deal. It’s true that you can score a substantial discount with an off market property. However, if a house isn’t listed on MLS, it may be because it is not a good deal. Also, finding off market properties can take more time and require more work than looking to buy investment properties listed on the MLS.
- Higher fees. Off listing markets and pocket listing services may charge membership fees. Also, if you try to find off market real estate through direct marketing (by generating leads), your expenses will probably pile up.
- Taking longer to close. When the seller is not in a rush, it can benefit them. But if you want to hurry to close the deal as a buyer, it could be a disadvantage because the seller feels no pressure to move quickly with the closing.
Related: Real Estate Market Value vs Market Price—Learn the Difference
How to Find Off Market Properties
Off market real estate properties are highly sought after because they offer some great perks to investors. However, if you’re not a seasoned investor, you may be asking yourself how to find off market real estate. There are a few ways to identify such deals and, to ensure the best results, we recommend taking one strategy at a time.
1. Real Estate Agents
Real estate agents are a great source of off market homes, especially non-Realtors who aren’t bound by MLS Statement 8.0. But even Realtors have a short one-day window to sell a property before listing it on the MLS database.
Some agents are ready to cold call property owners in areas where properties are highly sought after and ask if they’re interested in selling. However, to have success with a real estate agent, you need to establish yourself as a serious buyer and have a good relationship with the agent.
Besides them improving and building homes, contractors are also great sources of information. They are in direct contact with property owners who often talk about their intentions with the property. So, contractors are those who know whether a house will be for sale long before it gets listed. Many homeowners even directly ask their contractors if they know any trusted buyers who would be interested in off market houses.
Real estate auctions are places where properties get sold because they got repossessed or the owner fell behind on taxes. Such houses can be bought cheap, sometimes for the amount of back taxes owed. On the other hand, such properties often require lots of work.
4. Networking With Other Investors
Talking to other investors is an excellent way to find off market properties because they may be buying what you’re selling and vice versa, or they may know someone selling what you need. Ultimately, building relationships and closing successful deals with investors in your network will solidify your good reputation, and investors will more likely want to collaborate in the future.
5. Direct Marketing
When you find a property you would like to buy, you can rely on direct mail marketing. This involves sending mail directly to the homeowner in hopes of convincing them to sell the property to you.
6. Public or County Records
Public or county records can reveal who owns the property you’re interested in. Sifting through these records is a useful way to track homeowners and send them direct mail or “drive for dollars.”
7. The Driving for Dollars Technique
Driving for Dollars is a tactic that basically involves driving around neighborhoods in which you want to purchase a property, looking for the most appealing houses. Then, simply get in touch with the homeowner to start the conversation and make an offer. Also, you can look for distressed properties, which may indicate that owners no longer live there or cannot afford to maintain them. Owners of such properties are typically more open to selling their homes because it can help them financially.
8. Online Resources
There are many online resources for finding properties that are not listed on the MLS. For example, Mashvisor offers a vast supply of off market properties, including tenant-occupied rentals, foreclosures, and many more. It also features a range of useful filters you can use to narrow your search down to listings that match your criteria.
Finding Off Market Properties With Mashvisor
Mashvisor’s Property Marketplace tool is another excellent way of sourcing for off market homes. As an advanced AI-based real estate investment platform, it helps locate and analyze both Airbnb and traditional property anywhere in the US.
Our platform relies on predictive analytics and vast amounts of property data that help investors make smarter investment decisions. Besides Property Marketplace, you get access to other tools like Mashboard, Investment Calculator, and Real Estate Heatmap when you sign up.
However, the Property Marketplace is a tool designed to help you find off market deals. Let’s examine the process more closely.
To learn more about how we will help you make faster and smarter real estate investment decisions, click here.
Find Off Market Properties
Once you sign up with Mashvisor, you gain access to a huge database of MLS and non-MLS houses, including bank-owned homes, short sales, auctioned homes, foreclosed homes, etc. You won’t have problems finding the best place to invest in real estate and the right property thanks to Mashvisor’s filtering options. Are you looking for a two-bedroom beach house in Florida to rent on Airbnb? Or are you interested in off market multifamily properties for sale in Denver? The filters you can use include:
- Listing type (tenant-occupied, needs repairs, foreclosure, non-MLS, etc.)
- Property type
- Rental strategy
- Number of bedrooms/bathrooms
- Cap rate
- Cash on cash return
Analyze ROI Potential
If you’re looking for an off market property to bring you profits along the way, you can use Mashvisor to conduct a detailed real estate investment analysis. The platform provides property data that are necessary for deciding on the best investment opportunity. Our Real Estate Investment Property Calculator, which is found in every listing page, will show you:
- Listing price
- One-time startup costs and recurring monthly expenses
- Rental income (traditional and Airbnb)
- Occupancy rate (traditional and Airbnb)
- Cash on cash return (traditional and Airbnb)
- Cap rate (traditional and Airbnb)
- Cash flow (traditional and Airbnb)
Access Property Owner Information
When you find your ideal off market property, you can access property owner information, which you can use in your marketing efforts or in reaching out directly and making them an offer. This is probably the best way to close an off market property deal while avoiding competition. Mashvisor provides information such as contact data, address, city, state, zip code, property type, year built, and sale date.
Also, if you’re looking to sell property off the market, you can do it right here on Mashvisor.
Contact an Agent
Besides offering the chance of locating the most profitable housing markets to invest in, Mashvisor also has an up-to-date directory of real estate agents. As an investor, you can use it to find and contact reliable and experienced local real estate agents to help you spot the best off market property deals.
In real estate, finding great off market properties means striking deals on properties without having to compete with other investors (like you do with listed properties). The transitions are quieter, fasters, and also more profitable for those who know where to look.
Since buying a property is a major decision, you need to do your due diligence and conduct a thorough real estate analysis before investing. With Mashvisor, the entire process of finding a house and calculating its profit potential is made easy, while your chances of making better profits increase.
Sign up for a 7-day free trial of Mashvisor today, followed by 15% off for life.