Buying a property before it goes to market, known in the industry as a silent sale, is a great way to maximise your opportunities, and should be a part of any property-buying strategy.
For first homebuyers and investors looking to purchase property at the lower to middle end of the market, bidding on properties before they go to market makes sense. This is a good way to beat the strong competition that these properties tend to attract.
Median-priced properties close to CBDs, transport and leisure facilities will nearly always sell and rent well. Consequently, these types of properties are subject to strong competition once they are listed, and often sell at auction for 5 – 10 per cent higher than their true market value. So if your goal is to buy at or below market value, you need to look at properties before they are listed.
Placing a property on the market brings with it marketing and advertising fees as well as a reasonable time frame, so a number of vendors ask agents to show the property to their database before they embark on a formal sales campaign. Other sellers find auctions risky and are nervous about whether buyers will attend or bid and may take a guaranteed offer beforehand rather than running the risk of an unfavourable sale at auction.
Often, professional investors and buyers agents handpick these listing before they go to market and the public gets what’s left. If you want to get ahead of the competition you need to become savvy and learn the techniques of industry professionals.
At times, Empire snaps up to 80-90 per cent of its properties for clients before they are marketed or within the first couple of days of a campaign. Clients of mine have come to rely on our ability to purchase such properties on their behalf. For example, we bought a whole block of seven units over a nine-month period off different owners. Only two were advertised to the public, the other five were silent sales direct to us. Not only can vendors save $5,000-$10,000 on marketing and auction fees, they often get a sale within 24-48 hours, instead of 4-6 weeks.
Quite often during down times or where there’s a lack of confidence in the property market, the amount of silent sales increases as vendors go for a guaranteed result rather than spinning a wheel of chance.
To maximise your opportunities in the market, here are my top five tips for purchasing a silent sale property.
CHRIS’S TOP 5 TIPS FOR SNAPPING UP UNLISTED PROPERTIES
- Become better friends with your local real estate agent. The key contact between sellers and buyers, agents are the first to be aware of properties for sale. Make sure they know you are pre-approved for finance, are serious about buying and can make a quick decision followed by a signed, unconditional contract.
- Letterbox drops. Do what the agents do and letterbox drop in the areas you want to buy. Say that you are a serious buyer for the right property and the vendor can save time and money by going direct to you.
- Get organised. Make sure you are ready when the right deal comes along. Get pre-approved for finance and have your valuer, building inspector and strata inspector all ready so they can check you are buying the right property at the right price.
- Tell your friends, family and colleagues you are looking to buy. Often those close to you will know of someone else looking to sell, so spread the word.
- Use a buyers’ agent. If you’re short of time and don’t have the contacts, consider hiring a professional. Buyers’ agents, such as Empire, have good relationships with real estate agents, who prefer to deal with them, as they make quicker buying decisions. Whilst you do pay a fee to a buyers agent, they will often get you a better property for a better price which will more than compensate the cost.