Did you know that the U.S. housing market reached a value of $36 trillion in 2021? With numbers like that, it's easy to see why so many see this sector as a source of investment opportunities.
Many people look for properties listed in traditional real estate markets, but what about off market properties? There are advantages to going this route but you should know some common mistakes that are made. Read on to learn more.
What Are Off Market Properties?
An off market property is a property that is for sale but not listed on the Multiple Listing Service (MLS) or similar database. Besides being a well-known source for properties, services like the MLS also allow brokers to communicate with one another or locate buying and selling agents.
The downside to these services is that because they are so popular, multiple offers can come in on a property and cause the price to increase. If you are a potential buyer, this isn't good.
What Are Common Mistakes Made with Off Market Properties?
While off market sales may pose more of a risk to sellers, you should know the disadvantages of buying off market properties. Some of the major ones include:
Connections Are Needed
Since these properties aren't listed on a major database of residential listings, you must have insider knowledge about one that is up for sale. This could include a real estate broker with an off market property or knowing about properties in bankruptcy. These need to be people you trust or you can get led astray.
Higher Initial Offer
While you won't be bidding against other potential buyers, the seller of an off market property may have a firm price in mind. You may have to consider the price on a take-it or leave-it basis.
Short Sale or Foreclosure Issues
There's a chance an off market property could be a short sale or foreclosure, which could mean working with a bank. This can make the buying process much longer.
How Do You Find Off Market Properties?
Even without services like the MLS, there are ways of finding off market properties. Traditional real estate agents may have properties that have yet to be listed, so you could start there. You should also consider talking to other professionals centered around the real estate industry, such as contractors and wholesalers.
While it might sound unusual, you could try using direct mail marketing to target homeowners with a property that interests you. There's always a chance that a homeowner presented with an attractive offer would sell.
Do Your Due Diligence
No matter who you work with on an off market property, it's your responsibility to do a proper background check. Buying the property should be contingent on it passing a home inspection. You should also obtain the records of the work that has been done on it.
Taking a Chance on Off-Market Properties
Now that you know the risk associated with off market properties, are still interested in making an investment? If you know what to avoid, you may reap the benefits of off market properties. There are multiple ways to look for properties and you should always do a complete background check.
If you're ready to start the next real estate adventure, contact us for all your needs.