Off-market real estate properties can be the perfect opportunity for commercial real estate investors on the lookout for great deals.

Many investors are surprised to learn that a good number of properties change hands every month without ever being listed for sale to the general public. In this article, we’ll explain why off-market real estate can be a good deal for both sellers and buyers and the best strategies you can begin using today to find off-market property for sale

What Does Off Market Mean in Real Estate?

Also known as “pocket listings,” an off-market property is one that currently isn’t listed for sale – at least as far as the general public is concerned. At first glance, it might seem strange that a seller would want to keep the fact that a property is for sale a secret. But savvy sellers and buyers know that sometimes the best real estate deals to be made are the ones that can’t be found on the internet. That’s because off-market investment opportunities are marketed by word-of-mouth to a network of qualified investors, similar to the way that venture capital investing works.

What Are the Advantages for Sellers?

There are several good reasons why a seller would want to sell their property off the market:

• Off-market properties have a certain allure and can imply that the property isn’t available to just anyone.

• Test the waters before marketing to the general public to get feedback on property appearance, pricing, and anticipate objections.

• Keep tenants unaware that the property is for sale because a renter may try to use a property being sold as leverage to renegotiate better lease terms with the current owner.

• Negotiating with a targeted pool of qualified buyers who have a history of performing can lead to a smoother real estate transaction with a high likelihood of closing on time.

How Can Buyers Win With Off Market Strategies?

Buyers may find that an off-market listing offers a winning opportunity as well:

• Sellers of off-market listings in cities, where demand for is strong, may not be in a hurry to sell, which gives a buyer time to conduct thorough due diligence before making an offer on the property.

• Less competition from other investors means the seller has more time to focus on a memorandum of agreement from a qualified purchaser and work with the prospective buyer to put together a win-win deal at a good price.

• Off-market listings can also be ideal for high-profile buyers wishing to keep the purchase and transaction terms confidential and away from the public eye.

• Off-market deals sometimes occur without the help of a broker, saving on fees.

What Are 5 Off Market Real Estate Strategies to Try?

1. Direct Mail Marketing

Direct mail may be considered an “old school” form of marketing, but it is still one that works extremely well. Tips for buyers using direct mail to find off-market listings include:

• Identify the asset type, like Class A office buildings in the Central Business District or individual properties in a suburban office park.

• Research the characteristics of the target owner, such as in-state versus out-of-state owners or institutional versus private investors.

• Select specific submarket to direct mail to, using key criteria such as job and population increase, rent growth and occupancy rates, and tenant mix and nearby amenities.

• Direct mail letters and postcards have a longer “shelf life” than emails or telephone calls, with property owners holding on to well-designed marketing pieces until the time is right to sell.

2. Real Estate Agents

Leasing agents and commercial real estate brokers are another good option for finding off-market properties for sale. After you’ve selected a submarket to target, give the real estate agent a phone call and ask if they or anyone they know has any pocket listings for sale. Framing the question this way lets the agent know you’re open to having them represent you as a buyer and encourages the agent to contact other commercial real estate brokerages on your behalf. Keep in mind that brokers in the hottest markets may get dozens of calls like this each week, so it’s important to present yourself as a serious investor who is ready, willing, and able to perform when the right opportunity comes along.

3. Networking

Commercial real estate is a people business, and finding the best off-market deals is as much about what you know as who you know. In addition to commercial brokers, people to reach out to and stay in touch with for future off-market opportunities include:

• Office building and multi-family developers are a good source for spec and build-to-suit properties, while local property management companies have the inside track on how buildings are performing and which owners are thinking of selling.

• Real estate attorneys and financial planners may have clients who need to rebalance portfolios or generate additional capital from co-investors.

• Local investment groups.

4. Wholesalers

Real estate wholesalers are professionals who scour the market looking for motivated sellers with distressed properties at a below-market price so that you don’t have to. Once the wholesaler has identified a good deal, they’ll tie the property up using a purchase agreement with a long close period. Then they’ll go looking for an investor just like you to assign the contract to in exchange for a small wholesale assignment fee. Granted, you’ll pay a little bit more for the property when the wholesaler’s fee is factored in. But a good real estate wholesaler can be worth their weight in gold, especially for remote commercial real estate investors.

5. Public Record

Short sale and pre-foreclosure properties often appear on the public records of local and state government websites prior to the property being foreclosed on. Oftentimes distressed properties like these are not listed for sale, especially if the current owner has already given up. While situations like these are bad for a seller, they can offer unique and potentially lucrative opportunities for investing in commercial real estate. Some commercial real estate listing websites offer the option for searching for pre-foreclosure properties, while local real estate attorneys and property managers may work with motivated clients who might jump at the opportunity to sell their property to another investor rather than suffering the embarrassment of foreclosure.

Final Thoughts on Off-Market Real Estate Strategies

Investing in off-market deals can offer numerous advantages that may not be found when buying commercial real estate listed for sale to the general public. Competition from other investors is less intense even in the best markets, and buyers and sellers have more time to spend putting together a deal that is a win-win for both sides. Real estate transactions are also more confidential than public listings, making off-market opportunities ideal for the high-profile investor who prefers discretion and anonymity when investing.

Are you interested in investing in off-market real estate? Get in touch with Appelman Properties’