Finding Off-Market Properties
- Adam Garrett
- Jun 2, 2023
- 1 min read
Updated: Jan 8, 2024
Above: Property I sold that had a "We Buy Houses" offer prior to listing where I netted the seller more by selling on the open market.
In this article, I wanted to go into how buyers can locate off-market properties.
#1 Source of Heavily Discounted Properties for Buyers, But Consider Ethics
Off Market properties are the source of the heaviest discounted homes generally available that are visible prior to contract ratification. The lower the price you can get for it, the higher your profit margins will be. Some people have an ethical problem with this concept. While I can represent a buyer doing it, I personally would have a hard time taking advantage of ignorance if I was the buyer myself unless it was their absolute last resort (which it very rarely is). I've seen a disabled person get taken advantage of this way where I knew the disabled person and the buyer either didn't know or didn't care about how bad of a situation they put the seller in by the purchase.
Avoid Misleading Language Common to "We Buy Houses" Offers
I often see language that is clearly misleading in "we buy houses" style ads that dupe sellers by language like an offer for a "full price" or "fair" offer. If you go the off market route, be sure to never mislead the seller and know that I will avoid that. I don't believe in karma, but I would have a hard time going to sleep at night if I made a living profiting off others' loss by misleading them. It's unethical. Also, it could come back to haunt you if you defraud someone with misleading statements and then they sue you. Some statements common to off market property purchases, if intentionally misleading, are ones I would not be willing to convey. Blockbusting (stating that another race are ruining a neighborhood) or stating that the market is about to crash are examples that I would not be willing to take part of or convey to a seller.
Properties Where Seller Has an Agent
If you found out that the seller has representation from a real estate agent, the chances of a heavy discount on a home are reduced drastically. A represented seller is much less likely to get duped into selling a home at a heavy discount. There are some agents who would like a ready buyer at a low price without having to do as much paperwork, but I feel that they’d be failing in their fiduciary duty to take care of their clients best interest at all times in the vast majority of cases, getting a smaller commission, & potentially would get a bad review if the seller discovered their mistake.
Deadlines on Offers
Off-market offers are best with deadlines. I don't have an ethical problem taking part in certain pressure sales tactics, such as a deadline on an offer, and sometimes encourage that in offers with buyers. More time means more people can look at it.
Wholesaling
One of the ways to make money off these is wholesaling, which is possible without any contractor experience. With wholesaling, you make an offer contingent on the home being sold to someone else through assigning it. You skip out on closing and the costs you would lose for it. You can still list a property on the open market this way with the seller that doesn't want to pay agency commissions directly paying for them indirectly and paying for the extra profits that you make off their foolish decision not to sell a home on the open market. Keep in mind that some contracts explicitly prohibit assignment unless you strike a provision.
Pre-Foreclosures
Pre-foreclosures are where a home is about to get foreclosed on if nothing is done about it. When appearing as "pre-foreclosure" on Zillow, it has typically not been listed yet. Most will not want to check the boxes for "Foreclosed or "Pre-Foreclosures" due to cost benefit analysis, but that's for you to decide.
For more details on pre-foreclosures, go to my article on the subject, including the following topics:
What Happens Next on Zillow? Foreclosed Status
Pros
Cons
Should You Consider Them?
Finding Them
Making Contact with the Seller
The Best Pre-Foreclosures to Look for
How You can Find the Owner Name & Mailing Address from Tax Records
You can often find the owner name and their mailing address by looking at the tax records for a property.
Tax records search (i.e. after seeing an old seemingly abandoned property) below (Newport News example):
https://maps.nnva.gov/viewer/?find=313000520
View by map Link:
Search an address or a nearby address and then by the map
Click on a parcel
See the name, mailing address
If you'd like, you can send sellers direct mail. I get these all the time from we buy houses style investors about my own property.
Use 3rd Party Websites to Find Phone Numbers & Email Addresses
Making contact with the seller:
Keep in mind that contacting people by tax records can be quite a hassle to deal with as is the case with pre-foreclosures, with the owner's contact information seldom readily available besides their address, but if you are willing to go through the hassle of trying to find them online through sites like Been Verified (the easiest way to do it as a buyer that I am aware of, but it is a paid service) or sending them mail &/or knocking on their door, sometimes you can get some bargains. In some cases their contact info (email, phone, etc.) will freely be listed here as well as tenants:
https://thatsthem.com/reverse-address-lookup
If you have the name from the tax records search, and there are more than just a few residents run a search (i.e. ctrl+F on a PC) on the that's them page once the results are present so that you don't have to manually go through them all.
Google if necessary and the owner is not showing up and you really want to know about a specific property.
Where to Find Off-Market Properties
Pay Someone Else to Find them For You
Many successful off-market big-time purchasers do extensive advertising and hire others to do the finding of homes for them. I frequently get calls and mailers from those seeking to buy my home and homes from my family even though I'm an agent. The discount possible in the home justifies the spending on others, even if you hire multiple people for full-time jobs where all they do is make calls to sellers.
Some Buyers Reach Out to Listing Agents Looking for Off Market Deals, but Adam Won't be a Good Source of These Out of Policy
I am not going to be a good direct source of off-market properties for buyers looking to purchase off-market. Part of the reason is that I don't do dual agency, where 1 agent represents both buyer and seller. Dual agency is so fraught with issues that it's prohibited at Garrett Realty Partners & illegal in some states, though legal in VA. I believe that I would typically be doing a disservice to sellers to encourage them to go with an off-market buyer. Conversely, if I have a buyer client I represent, and I don't represent the seller, I want the buyer to get the best deal that they can. When sellers are looking to list a property with me, on the other hand, I'm not going to try to steer them toward something that would hurt them.
Pre-Foreclosures
For pre-foreclosures, there are not good options on MLS. On the other hand, Zillow has some great options for pre-foreclosures. Go to Zillow.com, then click "Listing type" then select pre-foreclosures.
Websites that I don’t recommend include: https://www.foreclosurelistings.com/ since they charge a monthly fee in order to see the numbers to the address. For more details on Pre-Foreclosures, see my article on the subject.
Special Programs & Otherwise that Won't Hit MLS
In some cases, properties won't be listed on the open market, but will be marketed in some capacity. Many properties that are auctioned off, for instance, never hit MLS and are cash only.
Hampton off Market Properties limited by owner occupant 80% or below area median income (direct numbers on website are 2007 numbers in 2020, so go to https://www.huduser.gov/portal/datasets/il.html & click on the link for 2020 “Access Individual Income Limits Areas”. Sometimes similar programs are available in other cities.
Consider For Sale By Owner properties, but generally speaking, the more poorly marketed, the better the deal possible. For instance, if the property is "For Sale by Owner" but all they have up is a sign in their yard, or they're just on some obscure website that gets very little traffic, you'll have better chances than if a FSBO is getting good exposure and has plenty of good pictures etc.
Additional methods:
https://learn.roofstock.com/blog/off-market-properties
https://www.fortunebuilders.com/off-market-real-estate/
https://www.biggerpockets.com/hubs/finding-deals/off-market-deals
Related:
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