The first question you might ask is why would anyone want to sell their property “off-market” when it seems more likely that one could achieve a higher price by placing the property on the open market and creating a bidding war. Now in certain markets this is certainly true. However, the Prime London market is very different. There are a number of reasons why a seller may want the market sold discreetly:
There are some truly stunning residences in London. However, what is contained in them can be an even greater revelation – collections of fine wines, guns, antiques, and jewellery. Art collections that would and have graced national museums. I remember looking at an apartment worth c. £20m in Belgravia, where the value of the apartment was dwarfed by the value of the impressionist art inside. Understandably owners of such collections will not want these publicised in details on the Internet or pictures in magazines. Therefore potential buyers are carefully screened and even if the agent tells you about the property you may not be granted a viewing.
The owner may be a wealthy family who guard his or her privacy, a high profile businessperson, or a celebrity. The last thing they want is for journalists to discover that they are selling. Indeed some people do not want their neighbours to know that they are selling or for what price.
There are certain residences that can only be afforded by a very small list of potential buyers – for example, the houses in Kensington Palace Gardens, the smallest of which would sell for £90m in poor condition. There is little point in marketing these openly as both parties involved in the transaction would undoubtedly wish for discretion.
It allows the owner of the property to test the market and potentially achieve a higher price due to the perceived cachet for some buyers of acquiring off market properties. (Psychologically they have bought something that no-one else could have.) This may be combined with the fact that they can say that they are not really sellers, but would consider an offer at a premium price.
Indeed we have had clients request that we only acquire an off-market property for them. However, I advise them that this is a mistake and I would actively dissuade you from just wanting to buy off-market properties. The reason is that quite often off-market properties can be over priced by sellers, as I mentioned above. The other problem is that you’re immediately limiting your chances of acquiring the best home available. So, we always advise clients to consider the properties we source on the open market as well as off-market properties. Remember the vast majority of buyers do not see every property that is openly available – there are no statistics for this but I would be surprised if even five percent were aware of every available property. So many properties on the open market can be opportunities. Remember you only need to find that one ideal property, so you must carry out your due diligence and leave no stone unturned.
So how can you source off market properties that even the agents are not aware of? Obviously we have an advantage because we’ve been doing this for eleven years and we have a huge network of off-market contacts, but there are five strategies that we employ that you can too.
- The simplest, although probably also the most expensive of these, is to place adverts in suitable publications. For example we do this in the Financial Times and occasionally the Sunday Times. There are also local magazines in Kensington and Belgravia where one can also advertise. As with any advertising you need to attract the reader’s attention, so you have to make sure the headline stands out and it’s important that you position yourself as a strong buyer. We take out quarter-column adverts. You can take out whatever size you wish.
A problem with this approach is that it’s rather haphazard and it can quickly become very expensive as you may have to place numerous advertisements and you will not be guaranteed success. However, it’s certainly worth trying.
You should also read the property sections of the main newspapers, particularly the Financial Times or the FT at the Weekend, which has a property supplement. There’s also the Sunday Times, and the Telegraph on Friday and Sunday has property sections where people will sometimes advertise to sell their properties privately.
- A more targeted and therefore more cost effective way to source off market properties is to identify potential properties that you like and write letters to the owners. Now, again, this works when you have a very good idea of the specific type of property and specific areas that you like. So, for example, if you particularly like Chester Square in Belgravia it’s very easy to work out which are the larger houses in the square and then write letters to the owners.
In many cases you can find out their names and write to them directly. If you’re particularly inclined you can try knocking on the door, although this is a slightly invasive approach, so write letters. Don’t send just one; follow it up, because sometimes staff can clear away the letters or they can just simply be put into the junk mail if they’re not addressed properly.
If you just address the letter to ‘The Homeowner’ it probably won’t be opened so it’s better to have a name, but a letter is better than no letter at all. The contents of the letter should highlight the fact that you’re a serious buyer, so mention the firm of solicitors who will represent you and the fact that you’re in a position to move swiftly.
Also make sure that there is more than one way to contact you – some people refuse to use email so it’s best to give a telephone number as well. The issue here again is that you may get a response from people saying we’ll sell but only at an inflated price. You’ll be receiving a number of CDs on negotiation that will help you with this issue.
- If you’re looking for a property that has a concierge or porter it’s certainly prudent to speak to the porters within buildings. They are great source of information because they know absolutely everything that is going on in the buildings.
They’ll see which agents are coming in to value properties so they’ll know if somebody is thinking about selling, and, quite frankly, you can incentivise them to ensure you hear about upcoming sales. By that I’m not saying give them money up front, but motivate them by saying “If you introduce us to a property that we buy we will reward you in x, y, or z way.” I would say that there is nothing illegal or underhand about doing this, you’re merely paying for information from a very good source.
- In a similar vein you can contact developers directly. If you see large developments you can just simply Google the address of the development and you’ll be able to find out who the developers are. If you’re looking to buy a house and you see a lot of building work going on outside it’s worth speaking to the builders to see whether it’s just an owner renovating the property or whether it’s a developer doing up the property. If it’s the latter simply ask for their number and make contact.
Now you may think, why would a developer want to sell to you rather than bringing it on the open market? There are number of reasons for this. For example, they can save on estate agents and other marketing costs – the agents charge 1.5% to 2.5%, which is a reasonable margin for the developers to save. Also, if they sell before the works are completed, that helps with their cash flow, and they may have another project they like the look of but aren’t able to finance at that particular stage.
So there are all sorts of reasons why a developer may want to sell to you before they finish the development, and again you can negotiate whether they continue the work or you may want to take over the work and decorate in your own style. That is something for negotiations, which is a different topic.
- In this digital age one thing not to forget, depending on how private you are and how confidential you want your acquisition to be, is to inform friends and family that you’re looking for a property. If you require complete discretion then this approach will not be suitable for you. However, if it’s not an issue you’d be surprised how often a friend or a friend of a friend or even a business acquaintance will know someone who is considering selling a property.
In all these instances, more often than not, the off-market property may fit your criteria loosely but may not actually be the right property for you. It’s still very important to leave no stone unturned in your search for your ideal home, and those are five simple ways for you to source off-market properties in addition to using agents.
One final note: there are websites that specialise in off-market properties. These tend to be lower value properties and properties that are really not of a particularly good quality. So, these five suggestions I’ve given you remain the best ways we’ve found of finding and acquiring off-market properties.
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Of course, such an in-depth guide to acquiring a central London property is not for everyone. These strategies are applicable only for those dedicated to acquiring the most prestigious homes on excellent terms.
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Yours for a successful home acquisition,