Off-market deals: How agents turn emotion into competitive offers

Pike’s comments come after last month’s data showed more buyers choosing off-market properties, with annual sales activity increasing by nearly three per cent and stock levels decreasing by nearly 15 per cent over the same period.

He explained that sometimes “off-market” properties were also referred to as “pre-market” properties; however, there is a distinct difference between the two.

While off-market properties are intended to be sold completely privately, pre-market properties are those that prospective buyers in an agency’s network are allowed to purchase before they are publicly listed for sale.

He said the only reason his agency would not intend to put a property on the market at all was if it received a particularly good offer.

“Not often do we sign something up with the sole intent to sell off-market. We're normally getting it ready in the background, and sometimes that's painting or flooring or staging, whatever it might be,” he said.

“In the meantime, once we've got the contracting agency, the whole team – 41 plus agents – are reaching out to every buyer that's made an offer at that price point and trying to get 'em through at the photo shoot,” he said.

Pike said that a potential benefit of selling off-market, or pre-market, was that it can sometimes allow agents to achieve better prices if desperate buyers in their network have previously missed out on a similar house.

He added that buyers who have become emotionally invested in a home and missed out at auction are often more competitive and may pay a premium for a similar property to prevent it from reaching the market.

Pike said duplexes often provided opportunities to sell pre-market given the homes’ similarities to one another, allowing buyers another chance to buy if they missed out the first time.

“We could use an example most recently where we had five people register, four bid, and it sold.”

“You've got the exact same property with a mirror image, all the people've done due diligence, know the area, know the price point, have this out. In that scenario, the underbidder has bought the one next door,” he said.

He said that every time a property came up that was similar to one already sold, his team would contact all serious prospective buyers who had previously made an offer and show them the new property before it went to market.

“So we are handpicking the best buyers in the market that have made an offer in recent weeks at a similar price point for a similar style,” he said.

“Typically, those buyers are a little bit more emotional, a little bit more aggressive, and don't want the home to go to market, so they're willing to pay a premium to stop that happening.

He also said that if buyers waited until the property went to market, it could be at least four weeks before they knew if they were getting it or not, whereas the process is drastically sped up by buying pre-market.

According to Pike, the best way for agents to build a network of interested buyers for off-market properties is by servicing every buyer they meet at open inspections or auctions.

He said that keeping in touch with buyers via email or phone to get an understanding of the details behind their decision to purchase a property was beneficial when selling homes pre-market.

“What’s their timeframe, what have they bid on recently, what have they offered on recently, what their budget is,” he said.

Pike said that if agents have a good Customer Relationship Management (CRM) and are organised with the information they have, they will be able to tailor the right buyer to the right property.

As another way to spark buyer interest, Pike said his agency will often inform its database of top clients when it sells homes off-market.

“In most cases, where we can, [properties] still go into REA and Domain once sold. So buyers are calling every single day that will go, ‘you just sold this property off market. If you get something similar, can you please let me know?’"

By keeping their clients informed about similar homes that meet their criteria, agents can also establish a reputation in the off-market sector.

“You start to get inbound traffic because they understand that you are selling in that price range and that style of home. So you become almost an expert in that space,” Pike said.

Ultimately, Pike stressed that increasing competition in the market among qualified buyers was prompting many desperate property seekers to turn to the off-market space for options.

“For the last two years, every sale had one, maybe two good buyers on each property, but at the moment at auctions, you've got as many as eight, nine, and 10 registered.”

“So the pool of buyers that are qualified that have missed out is a lot greater – I just think that there's more qualified buyers, there's more demand, there's more urgency, and therefore the off-market deals come together a bit quicker,” he concluded.

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