The Dangers of Buying Off-Market Properties. What Buyers Must Know Before They Buy in Melbourne

"Off-market" properties have become increasingly popular among property buyers, especially with those wanting 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? Or are they just sneaky marketing?

In the competitive and cut-throat real estate landscape, having the right support from experienced property advisors, such as independent buyers advocates is crucial. These property buying experts have insider knowledge and access to genuine exclusive off-market listings that are not publicly advertised. This gives buyers a significant advantage in finding hidden gems and securing properties before they hit the market.

In our decades of property buying advocacy experience, we've noticed some troubling facts about these "off-market" properties.

The term "off-market" has been misused or abused by sales agents and marketers, leading to confusion among property buyers. While genuine off-market properties can indeed offer great opportunities, not all properties labeled as "off-market" are worth pursuing. Most that you receive direct from sales agents and project marketers are just properties being sold unadvertised for a sinister reason.

To safely navigate this complex landscape and ensure you're making the best investment decisions, it is 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 real 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" property is a property that is not actively being advertised or sold to the general public.

In some cases, the owner may be considering selling but has not yet launched a campaign. In other cases, they may not have formally decided to sell at all. Over recent years, however, the term “off-market” has been misused and abused to describe almost any property that is not listed on the major property portals. That is where buyers need to be careful.

A genuine off-market opportunity can give buyers a real advantage. It usually mean less competition, a quieter negotiation, and the chance to secure a property before it reaches the open market. But not every so-called “off-market” property is truly off-market.

In today’s market, many properties promoted as “off-market” are simply pre-market listings, agent database listings, stale listings, or developer properties being dressed up as exclusive opportunities. Some are useful. Some are average. And most are marketing fluff in a nice suit.

This article explains the different types of off-market properties, which ones are genuine, which ones are questionable, and why buyers need to be cautious when sales agents and marketing agents start waving the “off-market” flag.

We will also show you how to identify real off-market opportunities, how to avoid the fake ones, and where buyers can actually find these properties. Both the good, the bad, and the heavily polished overpriced properties.

But first, let’s break down the different types of “off-market” properties and separate the real off-market from the fakes.

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 type of off-market properties are everywhere. But almost 99% of them are not for sale. And it is the agents' job to persuade the owners to sell. The genuine off-market properties are usually the most rewarding to buy, and takes the longest time to buy.

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 many 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 agent approached you with an "off-market property" or when the public 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.

Why aren't all For Sale Properties Advertised?

Now, let's take a deeper look at the Type Cs. We further categorise the Type C off-market properties into 3 sub-categories:

1. the opportunistic "Off-markets" - vendors (and sales agents) motivated by opportunity. The opportunistic, greedy vendor and/or sales agents choosing to sell in the hidden market, away from public scrutiny. These are very often the unrealistic 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 scrutinising and talking 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, vendors are asking too much for what the proeprties are worth. Agents would usually suggest that these properties be taken off-market, usually after their exclusive sales agreement has lapsed, so the 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 form 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. It will be a very expensive advertisement campaign if the agents were to advertise 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 good 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 Off-Market are the ones Buyers Must be Wary Of

Throughout the years, we've noticed a few common themes with these Type C fake "off-market" properties. And one characteristics 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 are 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 Frustrated Buyers Buy?

In the world of real estate, sales agents and marketers possess a keen ability to gauge a buyer's 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 tired buyers with promises of minimal competition and exceptional value. However, behind the facade lies the strategy to exploit the naiveness 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, these are often the type of "off-market" being released to the unsuspecting and inexperienced buyers, when they asked for "off-market" properties.

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

Eventually, one would have noticed these Type-C "off-market" properties are often severely overpriced properties. And there is a reason for this. In addition to allowing them to promote these properties as "Off-market" properties, the sales agents achieve 3 things:

1. They Avoid Public Scrutiny.

   When a property is openly advertised, the market can judge it. Buyers can compare it against recent sales, competing listings, suburb medians, etc. Because these are usually very overpriced, people notice and will question it.

   But when the property is quietly circulated as an “off-market opportunity”, it avoids that same level of public scrutiny. There is no public listing sitting online for weeks. There are fewer awkward questions about why the vendor’s expectations are miles ahead of the market.

   In other words, the “off-market” label is often used to make an overpriced property feel exclusive, when in reality it is just an expensive, overpriced property. They avoid questions on why these properties are so much more expensive than others in the market.

2. They Protect the agency's reputation.

   Overpriced properties are difficult to sell. They often sit on the market for a long time, attract limited serious interest, and eventually need a price reduction. In some cases, they are withdrawn from the market altogether. That is not a great look for the selling agency.

   By keeping these properties off the major public real estate portals, agents can avoid the public embarrassment of a property sitting online for months, failing to sell, or eventually selling well below the advertised price.

   It allows the agency to maintain the appearance of strong results and responsible pricing, while still testing inflated vendor expectations behind the scenes.

   Put simply, if the price is too ambitious, it is much easier to hide the evidence when the property was never publicly listed in the first place.

3. They use Buyers to Test the Market.

   Some “off-market” campaigns are not really designed to sell the property immediately. They are used to test buyer appetite. The vendor may not be fully committed. The price may not be realistic. The agent or vendor may simply be gathering feedback and offers to work out whether the market will support the vendor’s expectations.

   This is where buyers need to be especially careful. An unsuspecting buyer may think they are being given a private opportunity, when in reality they are being used as a pricing experiment.

   If offers are received, the vendor may use those offers as a benchmark before launching a proper public campaign later.

   We have often seen properties promoted quietly as “off-market”, only for buyers to later be told the property is “no longer available”, and reappear online weeks later as a public listing.

   Sometimes, it is even listed by a completely different agent. That tells you everything. This “off-market” approach was not always a genuine selling opportunity. It was market testing dressed up as exclusivity.

   
   

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.

Good properties are seldom sold off market. It limits their sales potential.

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 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.

90% of off market properties are either fake or overpriced.

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.

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