Off Market Properties |
The Financial Times reported:
“A sharp rise in the proportion of so-called “off-market” sales has been registered by estate agent Hamptons International, which found they accounted for 25 per cent of £1m-plus sales in London so far this year”.
Unveiling the Truth: Off-Market Properties – Debunking Misconceptions and Revealing the Hidden Market
As with most press reports there are various inaccuracies/omissions. Firstly, 25% is nothing new. Both Knight Frank & Savills have openly admitted over several years that they have sold 25% of properties over £2m before they have reached the open market.
And the number of off-market properties increases with the value of the property (I will show you the process we use to source the best homes and investments for our members later in this article). The number of properties sold over £10m off market is probably closer to 50%.
Indeed, a couple of years ago, one estate agency in central London claimed that 70% of their properties were off-market. However, I expect that this was a bit of an exaggeration in order to tempt buyers to contact them.
And then there are specific situations where certain types of properties are predominantly sold off-market. For example, the majority of houses on communal gardens in Notting Hill right now are being sold without ever appearing on the websites.
Unlocking the Power of Off-Market Properties: Why Relying on Property Websites Is a Costly Mistake
Hopefully, this highlights a point that I make repeatedly because so few buyers believe it. Namely, that relying on property websites/portals is a huge mistake:
Firstly, you will miss out on all the off-market properties the agents have. So, not only will you be missing out on a significant percentage of the properties, but also consider how many of these do you think are the best properties.
Secondly – and this surprises a lot of buyers – sellers negotiate in lots of different ways. In some instances, they will put high valuations on their property but will not reduce the asking prices on the websites even though they would accept significant discounts.
I won’t go into the reasons for this as that is a whole topic for another day. However, if you are not speaking to the agents on a regular basis you will also be unaware of who would accept a low offer, so you will miss out on opportunities that may seem way over your budget.
Thirdly, there are the sellers who after a month or two realise that their property is overpriced and will reduce their asking price. However, if you wait for this to be changed on the websites then what advantage does that give you over every buyer who is relying on the websites too?
Gaining the Upper Hand: The Untapped Potential of Off-Market Properties
Of course, the agents will often know a week or two in advance that sellers will reduce their asking prices. Would it be unhelpful to know this before the price is changed on the property portals, so that you are ahead of other buyers in the market and can effectively negotiate in a vacuum?
There is simply no substitute for talking to all the agents in your target areas. If you are relying on the websites, you are basically joining a virtual queue. By the way, email is fine as a follow up to a call but if you are just sending emails rather than speaking to the agents regularly then you won’t stand out as much. If you call, then you will and be the first person the agent contacts when a really good opportunity arises.
Of course, one concern you might have about an off-market property is that the seller may want a massive premium. This is often the case. But there are also many occasions when the seller would rather an off-market sale for privacy or security reasons rather than achieving the highest price.
For example,
I once inspected an apartment in Belgravia which could be acquired for £12m. It wasn’t on the market because the artwork in the apartment was probably worth about four times as much. Understandably, the owner didn’t want this advertised on the internet and was also very selective about who could view the property.
I know I keep hammering this point about calling the estate agents, but I do so because we speak to a staggering number of buyers who think that registering with seven or eight agents will suffice while keeping an eye on the websites.
However, there are over 100 estate agencies just in Kensington & Chelsea, for example. How do you expect to buy a “best in breed” property if you are limiting yourself to only seeing 50% of the market? But this is what almost every buyer does (and 50% is probably overestimating the percentage of the properties that are available) which is why they buy poor or average properties and overpay.
This happens on a weekly basis. The estate agents actually laugh about it while I stare in amazement at how they managed to persuade a buyer to pay such high prices – remember the estate agent is paid by the seller and is legally obliged to achieve the highest price possible. Their job is not to help you find your ideal home or investment, however friendly they may seem.
There are other techniques I use to source off-market properties for my clients. You won’t be able to replicate my network of contacts built up over the last 20+ years, but you can use some of the strategies and tactics.
Contact: Mercury Homesearch
These are revealed in my book, The Insider’s Guide To Acquiring Luxury Property in London. If you would like to request a free copy, simply click here, call 02034578855 (+442034578855 from outside the UK) or email dee@mercuryhomesearch.com.
