The Dangers of Buying Off-Market Properties - Buyers Beware

"Off-market" properties have become increasingly popular among property buyers, especially those attempting to seek the best deals or hoping to have a better chance of getting into a tight property market. If you're in the market and searching for exclusive opportunities, chances are you would have come across the term "off-market" properties. But are they truly the best option for buyers?

In the competitive real estate landscape, having the right support is crucial, particularly from top buyer agents in Melbourne (or any other regions) who specialize in securing off-market properties. These experts have insider knowledge and access to exclusive listings that are not publicly advertised. This gives buyers a significant advantage in finding hidden gems and securing properties before they hit the market.

However, the term "off-market" has been misused or abused by some sales agents and marketers, leading to confusion among buyers. While off-market properties can indeed offer great opportunities, not all properties labeled as "off-market" are worth pursuing.

To navigate this complex landscape and ensure you're making the best investment decisions, it's essential to know what you are buying and/or work with trusted buyer advocates who is genuinely on your side and have a proven track record of securing the best off-market deals. With their expertise and guidance, you can uncover hidden opportunities and secure your dream property without the stress and uncertainty of the open market.

What is an Off-Market Property?

In the strictest sense, an "Off-Market", is defined as one that is not being sold. The owners might not have made up their mind to sell or may not even have any intentions to sell. This definition has been extended in recent years to include those which are not being openly advertised for sale.

Genuine "off-market" properties can offer buyers a real buying advantage. But when buying properties in an off-market situation, buyers do need to be careful with the different types of "Off-market" properties they are being recommended.

This article will show you what these types of off market properties are, and why buyers need to be careful of such "off-market" properties, which are frequently promoted by the sales and marketing agents. We will also show you how to spot them and how to avoid them, and show you where you can find the various types of off-market properties, both real and fake ones.

But first, let us explain the different types of "Off-market" properties, which are the real ones, and which are the fake ones.

What are the different types of Off-Market Properties?

Generally speaking, at Concierge Buyers Advocates, our team of buyers advocates and buyers agents categorise the "off-market" properties into 3 main types. These are:

1. Type A - Properties which are not selling.

2. Type B - Properties which are sold willingly, and often, not advertised openly.

3. Type C - Properties which are selling, but not advertised openly.

Type A - The Off Market Properties Which the Owners have no-firm plans to Sell

Type A is the genuine off-market properties which the vendors are either not selling, or have no firm plans to sell. These are the properties which offer buyers the best buying opportunities. No one, or not many buyers, know they might be selling. You could walk pass one, and do not even know you can buy it. These are everywhere. But almost 99% of them are not for sale. And it is the agents job to persuade the owners to sell.

Type B - The Unwilling Off Market Properties

Some of the Type B "Off-market" properties are sold as the vendor does not want the publicity of a public listing. But most of these Type B "Off-market" properties are the ones which we would usually call Distressed properties. These are the properties which must be sold, due to the circumstances the owners and vendors are in, but are unwilling or unable to openly advertise them, for privacy, security, or any other reasons. These could be court orders, divorce properties, deceased estates, mortgagee-in-possession properties, etc. There is a genuine reason why they must sell, but they are not advertised openly in the usual public boards, due to one concern or the other.

Type C - The Fake Off Market Properties

Now, Type C, is the fake "Off-market" properties. These are the ones, which the owners, vendors or developers are actively selling, but had chosen not to advertise. The majority of these Type Cs are being sold through sales agents, property investment spruikers or "property investment strategists". And they are being actively used to trap unwary buyers, that they have "privileged access" to some rare and "profitable" properties.

When a real estate sales person approached you with an "off-market property" or when you approached sales agents asking for "off-market" properties, it would be one of these fake "off-market" properties, 99% of the time. Compared to Types A and B, the key difference here is, the owners have an intention to sell, and the sales agents would usually have some form of exclusive (or sometimes, open) agreement with the vendor and most of the times the vendors are not interested in selling them at market values.

Now, the Type C category can be further subdivided into 3 sub-categories:

1. the opportunistic "Off-markets" - vendors (and sales agents) motivated by opportunity. The opportunistic, greedy vendor or sales agents choosing to sell in the hidden market, away from public scrutiny. These are very often the vendors who think their properties are worth hundreds of thousands more than other properties in the area, and they do not want to invite their neighbours and public to scrutinise and talk about their expectations.

2. the ex-listings - these are properties which were previously listed, but unsold due to an unsuccessful sales campaign, usually due to "unrealistic vendor expectations". Aka, vendora are asking too much for what they are worth. Agents would usually suggest that these properties be taken off-market, usually after their exclusive sales agreement has lapsed, so agents can protect their performance reputations and also giving themselves the exclusive opportunity to privately market them as "off-market" properties.

3. the developer stocks - these are the bulk of fake off-market properties. And unfortunately, these make up the majority the so-called off-market properties being sold by sales agents, real estate marketers and new buyers agents. The developers have hundreds and sometimes, thousands of such new properties, and they must sell. Advertising them on the public boards isn't practical, as there are too many combinations, which means it will be a very expensive advertisement campaign for each and every one of them.

The Dangers of "Off-market" Properties

Types A and B are the legitimate, real "off-market" properties. They aren't available openly for legitimate reasons, and if buyers have access to them, they might be able to pick up some good or unique deals. As with any purchases, always do your due diligence. Not what the sales agent tells you.

The Type Cs are the ones to be wary of.

Throughout the years, we've noticed a few common themes with these Type C fake "off-market" properties. And one of that is that the vendors and sellers are not interested in selling them at market prices. In most cases, the sellers are asking for a significant premium above market prices.

And these are unfortunately, the types of "off-market" properties being recommended by the sales and marketing people, the property investment "strategists" and new buyers agents to unwary buyers. The agents do not have to hunt for them, they are being distributed freely by property developers and vendors, for these agents to sell on their behalf. They are also almost always offered by the sellers or developers with huge commissions for every property they sell. Someone is paying for the commissions. Guess who?

These type C fake "off-market" properties are usually either overpriced or the types of properties which are oversupplied in the market. There are just too many of these products being built. Buyers are very unlikely to enjoy any growth, and we are never proud to buy one of these for our clients.

What do Desperate and Frustrated Buyers Buy?

In the world of real estate, sales agents and marketers possess a keen ability to gauge a buyer's level of experience and emotional state. They prey on the vulnerability of inexperienced and desperate buyers, recognizing them as easy targets for peddling what we call Type-C "fake" off-market properties.

These properties, masquerading as exclusive deals or "off-market" properties, are often marketed as easy-to-buy opportunities, enticing weary buyers with promises of minimal competition and exceptional value. However, behind the facade lies the strategy to exploit the naivety of desperate and rookie buyers, luring them with false claims of exclusivity and unparalleled opportunities.

Trapped in their desperation, buyers eagerly fall for the agent's pitch, believing these properties to be the elusive gems they've been searching for. Unfortunately, they are unaware of the deception at play and the true nature of these Type-C fake "off-market" properties.

Driven by the desire to avoid competition, many buyers exclusively seek out off-market properties, assuming they are gaining an advantage in the market. Little do they know, they are merely falling into the trap set by sales agents, who eagerly present them with Type-C properties instead of genuine off-market opportunities.

It's imperative for buyers to exercise caution and discernment when navigating the real estate market, especially when it comes to off-market properties. By understanding the tactics employed by unscrupulous agents and marketers, buyers can protect themselves from falling victim to the allure of Type-C fake "off-market" properties.

Stay vigilant and informed, and remember, not all off-market properties are created equal.

How do Type C Fake Off Market Properties come about?

The sales and marketing people are not to be underestimated. Most are smart and very opportunistic. Don't get me wrong. They work hard for the money. Just don't question their ethics.

When approached by a seller who holds unrealistic price expectations for their properties, sales agents would often suggest marketing these properties as "off-market" properties. Although they are labeled as "off-market", it is important to note that these are not the genuine "off-market" properties in the true sense of the term. Owners have every intention to sell. It is on the market to sell, but they are asking for very unrealistic prices. These are the "fake" off-market properties.

Unfortunately, it is these misleading properties that sales agents often present to unsuspecting and less experienced buyers who inquire about "off-market" opportunities.

Why are Properties sold as "Off Market" Properties often Overpriced?

One would have noticed the overpriced properties are often marketed as "off-market". And this is marketed this way because, in addition to allowing them to promote these properties as "Off-market" properties, the sales agents achieve 3 things:

1. They avoid public scrutiny of these overpriced listings. They avoid questions on why these properties are so much more expensive than others in the market.

2. They maintain the agency's reputation. Without openly advertising these overvalued properties, they are maintaining their agency's reputation as a responsible agency. They are also avoiding the embarrassing situation where a listed property is sold for way less than a published list price, if the buyer can successfully negotiate it.

3. Offers from genuine buyers will be used as benchmark. If they do receive an offer, offers from these unsuspecting buyers can be (and are often) used by the vendor to set the benchmark for a proper campaign. The vendors are often using the "off-market" campaign as guinea pigs and using any offers received as reference for a proper campaign later. We often hear agents saying these fake "off-market" properties are no longer for sale, only to see them being listed in the public listing boards. And very often the listing agent is different from the agent who had earlier been marketing them as "off-market" properties.

Where can you find the genuine "off-market" properties?

So where can you find the real deal "off-market" properties? Well, that depends on which types of "off-market" properties you are looking for.

In general, here are where you can find them:

Type A - Genuine "off-market" properties

Bulk of these properties are actually not available for sale. However, buyers advocates with the right skill-sets would be able to find them, and negotiate a purchase outcome. Our Platinum buying plan focuses on helping buyers find and buy the real off-market properties. This premium service may take a few months to a couple of years to find and negotiate an outcome. In one instance, we spent almost 2 years acquiring one such property in Glen Waverley.

Type B - Unwilling "Off-Market" properties

Buyers Advocates would be able to access them. Most of the times, there could be some legal or court orders on these properties. In blue chip areas, agents would typical list these properties for auction or sell by "set date". It is believed that selling them opening is the right way to extract market value for these properties.

However, in locations with poor demand, these would usually be sold unadvertised through buyers agents or buyers advocates, as this is usually the most efficient way of selling. They do not pay any selling and advertisements costs, and because our buyers are all qualified and ready to buy the right property, it usually means it is a definite sale if we've a suitable buyer.

Our buyers advocates are often approached by vendors and / or their legal representatives for buyers for these properties. Although we understand the buyers unfortunate predicament, we believed in running a ethical business, and doing the right thing morally. We would not undervalue such properties. We would never take advantage of someone's unfortunate circumstances. We would kindly ask a buyer to look elsewhere if they insist on taking advantage of any unfortunate circumstances. No apologies here.

Type C - Fake "Off-market" properties

These are the easiest to find. The "off-market" market is flooded with these fake off-market properties. These fake off-market properties make up over 90% of the "off-market" properties. Ask any sales agent, and they would have lists of catalogs for you. They are also available through the so-called "property investment strategists", who are no more than real estate marketers. They sell you a get-rich investment dream, but it could easily be 5 to 10 years before you realise you had bought a nightmare. Many buyers ended up losing hundreds of thousands, as the combination of high rental management fees, high body corporate fees, and negative growth turned these properties into major money pits. Remember, over 99% of these are priced well above market value.

As with any properties, buyers should always do your due diligence. This is especially true with these Type C fake "off-market" properties, to avoid being taken for a ride. If you want an independent assessment of the property you are being sold, talk to one of our independent buyers advocates. We can help provide you with an independent, unbiased assessment of the property you are interested in.

Do Concierge Buyers Advocates have Off Market Properties?

Yes, we do.

We were often approached by agents and marketers offering these "off-market" properties as well, but we would always vet and qualify these properties, before making any recommendations. We assess the property, appraise the property and if the price is within expectations, we grade and classify these properties. 99% of these properties are rejected as they were either oversupplied, irrelevant, or too expensive for what they are, to be honest, which prompted us to write this article.

We will only match the property to buyers if they are relevant and suitable for them. We would not want to waste the buyer's time. We do occasionally come across a few good ones though, so, if you are keen, do get in touch.

Type B genuine off-market properties are the ones we tend to receive from real estate agents, the vendor's solicitors, or court orders. Real estate sales agents know, as industry experts, our experienced buyers advocates can tell a genuine off-market from the fake ones, and they would not want to damage their professional reputation by sending us fake off-market properties. They are, thus, usually on-point with their recommendations.

Type A Off-market properties are available through our Platinum Buying Plan, where our emphasis is on exclusivity. We have to custom search using a expert techniques, to find and access them. Our buyers are usually the only one or one of the privileged few who has access to them.

If you are in the market to buy your property and interested to know if any Off Market properties is suitable for you, or just want to have a chat about this article, do feel free to get in touch.

More home and investment property buying news and tips here.