Why Off-market Home Sales Helps Property Investors
The recent research finding that off-market home sales usually result in lower prices, as per PropTrack, a division of REA Group, has created a buzz in the real estate world. While this may appear to be a loss for the sellers, it opens up a treasure trove of opportunities for property investors. Here’s why.
1. Lower Acquisition Costs
Property investors are always on the lookout for lucrative deals, and off-market home sales provide exactly that. According to the recent study, homes sold that had been listed on REA’s website fetched an average of 4.3% more than those that were not. This can translate into savings of over $60,000 in markets like Sydney for investors purchasing off-market.
2. More Negotiation Power
With the property not publicly advertised, investors often find themselves in a stronger negotiating position. The absence of competing bids can provide investors with more time and flexibility to negotiate terms and conditions, leading to even better deals.
3. Exclusive Access to Opportunities
Off-market properties offer a certain exclusivity as they are not advertised to the general public. By building strong relationships with real estate agents or sellers, investors can gain access to these hidden opportunities before anyone else.
4. Potential for Value Addition
Since off-market properties often sell for lower prices, they offer the possibility of buying below market value. For investors looking to add value through renovations or development, this presents a unique opportunity to create substantial equity from the outset.
5. Market Insights and Strategy
Investing in off-market properties requires a keen understanding of the market, trends, and strong networking skills. Property investors can capitalize on these opportunities by being proactive and well-connected, using insights from experts like Ray White’s chief economist, Nerida Conisbee, to guide their strategy.
6. Adapting to Different Market Conditions
While PropTrack’s findings emphasize the price difference in regional markets, property investors can use this information strategically. In stronger markets, they may consider buying off-market, and during weaker market conditions, they can adapt their strategy accordingly.
7. Auctions vs. Private Treaty for Investors
The debate between purchasing a home through auction or private treaty is also worth considering for investors. Research shows that auctions may ramp up the price; hence investors may find more attractive deals through private treaties.
Time To Buy
The trend of off-market home sales resulting in lower prices may be a warning sign for sellers, but it is a golden opportunity for property investors. By leveraging lower acquisition costs, more negotiation power, exclusive access to properties, and the potential for value addition, investors can significantly enhance their portfolios. Strategic insight, adaptability, and a focus on off-market opportunities can lead to success in the ever-changing landscape of real estate investment.
