The best deals aren't published. As any smart investor knows, you have to go below the surface to find off-market opportunities that make it possible to close without competition. What is an off-market listing? Off-market real estate refers to any property that is being sold outside of the conventional "listing" process. The listing broker or agent doesn't submit the property to be featured in MLS listings. For investors, the only way to gain access to these properties is by being "in the loop." In addition to identifying homes that are for sale privately, savvy investors can also use strategies for identifying homes that could be for sale with the right conversation. Let's talk about how to get there using seven tips for identifying off-market investment opportunities.
1. Form Strong Relationships With Realtors and Brokers to Gain Access to Pocket Listings
Nurture relationships with a select handful of real estate agents and brokers in the market(s) you're targeting. While agents and brokers make their bones selling through public MLS listings, they also have insider knowledge about private, off-market properties that aren't listed. They generally reserve knowledge about these listings for inner-circle contacts they trust with word-of-mouth information. Why would real estate agents hold certain listings close to the vest instead of advertising them loudly?
Known as pocket listings in the real estate world, off-market properties are ones that sellers want to keep private for any number of reasons. The reason behind the secrecy might be because the seller is a high-profile person, the sale is being triggered by a divorce, debt is forcing a person to sell, a home is being sold because of a tragic death, or some other "sensitive" scenario. Agents trusted with pocket listings are given exclusive rights to showcase a property using discreet, under-the-radar methods. You'll only hear about these properties if an agent or broker places you in the inner circle. However, you can rest assured that the seller is just as motivated to sell the property as someone who is using a traditional MLS listing. The desire for a quick, quiet sale can actually work in your favor as an investor.
2. Use a Zillow Hack
Yes, Zillow is crowded with traditional MLS listings. However, some smart navigation can reveal a hidden world of off-market properties. There are two ways to find off-market properties on Zillow. The first is to check out Zillow's "coming soon" listings. Zillow allows agents to post properties up to 30 days in advance of a listing being published as a way to build anticipation. Making an offer before the listing goes live could put you in a position to grab a property before it technically hits the market. Sellers seeking to get ahead of tumbling prices may happily accept an offer before they get put in a position to publicly decrease the price if the property doesn't sell. Next, Zillow features for-sale-by-owner (FSBO) listings that are technically off-market properties. Focusing on FSBO properties allows you to make offers directly to owners without the politics of going through an agent.
3. Use Public Records to Contact Owners Directly
What if a property is so "off-market" that the owner isn't even aware that they want to sell it yet? You may have identified a few properties in your geographical sphere that you believe would make good investments. The problem is that none of them have "for sale" signs out front. Using public records, you can track down the names of the property owners. Some quick Internet sleuthing can tell you age, occupation, original purchase price, and other details that can help you to craft an offer that speaks the language of the occupant. For instance, a retired occupant of a home may already be considering a move. An unsolicited offer that takes them by surprise may be the push they need to start making plans.
4. Browse Rental Listings
Rental listings are valuable for would-be investors because they let you know for certain which homes are already investment properties instead of primary residences. This isn't necessarily something you can know by simply driving around town. The truth about landlords is that a good number of them will actually be contemplating getting out of the "rental gig" at any point because they are frustrated by tenants, burdened by the need to keep up with maintenance, or simply hoping to reinvest in another property. This is why investors often have good luck when swooping in from nowhere to make an offer for a property.
5. Contact the Local Assessor's Office
Few people realize just how much information about properties is actually public record. Your local public records may offer clues about which homeowners are on the brink. When homeowners fail to stay current with mortgage payments, a notice of default is filed publicly with a local court as part of the pre-foreclosure process. Additionally, property tax delinquencies are also considered public information. Both of these signs of distress create opportunities for investors to reach out to make offers on off-market properties that allow distressed homeowners to walk away from their homes before facing serious legal consequences. As an investor, you are likely to be the only person approaching these homeowners with "a way out" because few people will put in the work to identify pre-foreclosure properties.
6. Build Relationships With Local Contractors and Builders
While agents and brokers often know about properties that are about to hit the market, contractors and builders know about properties that haven't even been built yet. Yes, contractors and builders are helpful because they are the ones building properties that haven't hit the market yet. However, there's another benefit to being "in the know" with this group. In many cases, contractors and builders know about properties that were started without ever being finished. This puts you in the position to make low offers on abandoned projects that allow you to hire your own contractor to finish up. Many savvy investors build incentive-based relationships with local contractors based on the agreement that they will hire the contractor who gives them the tip to complete unfinished work if they end up closing on a property.
7. Attend Real Estate Auctions
If you're ready to dive in at full speed, a live real estate auction can expose you to properties that aren't published in traditional channels. Live property auctions sell homes at post-probate, and post-repossession stages. It's common to get a good deal on a home at a live auction. However, some states are better for live auctions than others due to the fact that some states have laws dictating just how far below appraised value a home can go for at auction. Be prepared to make an all-cash offer when buying from an auction. You'll also need to accept a property "as is" without time for conducting a thorough inspection. While live auctions certainly come with their risks and drawbacks, some dedicated investors swear by them for getting unbelievable deals that simply aren't achievable through mainstream channels.
It's Time to Build Your Strategy
Successfully landing off-market deals often require a mix of solo sleuth work and relentless networking. There's simply some information you can only get from having important connections in the worlds of home sales and construction. However, there's nothing quite like putting in the grunt work to research properties in order to target homeowners who need little more than a nudge to make a deal. Putting several strategies in play creates constant movement for investors willing to put in the work.