Off-market Overpriced Properties

This particular off-market property caught our attention after the selling agent suggested we take a look. And to be fair, it presented very well.

The home felt well maintained, nicely upgraded and clearly had plenty going for it. In the right location, it could easily have been a $2+ million property.

But it wasn’t in the right location.

It was in a pocket of South-East Melbourne where the surrounding sales simply did not support the vendor’s expectations.

The sellers were looking for more than $1.5 million. But our assessment said $1.3 million.

We knew the selling agent well, and they knew us well enough that there wasn’t much point dancing around the issue. After inspecting the property, we told them plainly that we could not justify anything much above $1.3 million.

They maintained that the vendors wanted more than $1.5 million.

Their words said one thing. Their body language said something rather different.

Our impression was that the property was effectively being tested off-market at an ambitious price, before being exposed to the scrutiny of the broader market.

There is nothing inherently wrong with selling off-market. Genuine off-market opportunities can be excellent.

But buyers need to understand that “off-market” does not automatically mean “good value”, “exclusive opportunity” or “below market”.

Sometimes it simply means:

“Let’s see if someone will pay our price before we put it on the open market.”

We declined to pursue it.

Around three weeks later, the property was officially listed for auction with an advertised range of approximately $1.0 million–$1.1 million.

Auction day arrived.

The bidding reached approximately $1.35 million.

The property passed in.

So despite bidding already sitting well above the advertised range, the property was still unsold.

That result told us quite a lot.

Our original appraisal of around $1.3 million had been much closer to where the market saw the property than the vendor’s initial $1.5 million-plus expectations.

This is why we never become overly excited simply because someone tells us a property is “off-market”.

The important question isn't:

“Can we get access before everyone else?”

It is:

“What is this property actually worth?”

Sometimes an off-market opportunity really is an opportunity.

And sometimes it is simply a very opportunistic and optimistic vendor looking for an optimistic buyer.

We chose not to be that buyer.

We walked away and watched the show.

The property was delisted after 2 months. Unsold.

Rejected Due to: OVERPRICED