How To Find Off Market Properties
Savvy investors look for properties with the highest potential return on investment (ROI). Off-market properties are one of the best ways to get a high ROI. Off-market properties are homes that are not listed with a real estate agent and not on any listing services such as the multiple listing service or listing sites like Zillow or Trulia. In recent years, off-market properties have become an additional real estate market and a very lucrative area for real estate investors.
Read on for tips to finding off-market properties and start investing in real estate today.
What Is Your Initial Investing Strategy?
Before scouting and making contact with sellers, you need to have a plan. An initial investing strategy will help you to focus on achieving the greatest returns. This is especially true of off-market properties where you will be searching for very different types of properties depending on your investment strategy.
When you have your investment strategy in perspective, you can focus your attention on the type of properties you want to pursue.
The most common real estate investing strategies are:
- Wholesaling
- House Flipping
- Buying Rental Property
- Buying Turnkey
It’s usually a good idea to focus on only one or two of these areas initially until you have built confidence and expertise.
Each of these areas presents substantial ROI potential. Purchasing properties off-market can help secure a lower price, increasing your returns.
Create a Script
Once you have your focus, it’s time to come up with a script that can be used for cold and warm opportunities. Cold opportunities are with contacts who you don’t already know. Warm contacts are motivated sellers you already have a relationship with.
TIP: Be prepared and have clear talking points prepared for any seller.
The initial goal is to get an appointment to see the property. Your script should be centered around making this appointment. Try to make the script both professional and personal so homeowners will want to meet you.
Practicing Your Script
Practice your script until it flows naturally. You can practice in front of the mirror, with your kids, or with friends. Once you are comfortable with the script, you are ready to start contacting owners of off-market properties.
Where to Look for Properties
For Sale By Owner (FSBO)
One of the most common types of off-market properties are properties that are “for sale by owner” (FSBO). You can find FSBO properties by driving around a target neighborhood, in local newspapers, and by searching online.
Here are our tips for finding FSBO properties:
- Local newspapers are still one of the best ways to find off-market properties. Sellers post their property for sale by owner. Prospective buyers and investors can then contact the seller.
- Zillow allows sellers to post to their site and list their home directly. The Zillow database will allow you to search throughout the US FSBO properties. Prospective buyers and investors can then call or contact the seller via email.
- Craigslist is an online database that has many off-market properties. Sellers list their property for sale by owner. Prospective buyers and investors can call or contact the seller via email. Check out our complete guide to learn how to use Craigslist to locate properties.
- For sale by owner websites also provide listings. While Zillow and Craigslist are the largest, there are increasingly more FSBO websites where owners list their off-market properties with their contact information.
All of these options are free ways to find off-market properties that are for sale by owner that offer direct lines of communication with the owner.
Expired Listing
Expired listings are property listings that were in the MLS but expired without a sale. These listings are a great opportunity for investors because the seller is increasingly eager to make the sale, and the listing agent would also like to recoup their time spent on the listing.
An investor-friendly real estate agent who lost a listing will be happy to work with you to recoup his time, resources, and energy. You can also work with an investor-friendly real estate agent to pull the expired listings from the local MLS.
The agent will have the seller’s contact information or has resources to find homeowners’ information quickly.
Investing in off-market properties through expired listings has advantages for both the real estate agent and the seller.
Advantages for the agent and seller include:
- Recoup Lost Resources: The agent is able to recoup resources spent on the listing.
- Lower Commission: You and the seller will pay one commission on the transaction, not two commissions.
- Hassle-Free: For both the agent and the seller, there is no additional marketing, MLS listing, open houses, showings, etc.
- Fast Close: In many cases, as an investor paying in cash, you will be able to provide a faster close.
Bird Dogs
If you are intimidated to start the search for off-market properties directly, you can hire a bird dog. Bird dogs scout out properties for investors for a set fee or a percentage of the profit.
The advantage of using bird dogs is that they are generally familiar with a wide range of neighborhoods and keep a close eye on the property market. Bird dogs will save you time by locating properties that meet your criteria and also scouting other properties with investment potential to prepare you before you make contact with the seller.
Visit our guide to working with bird dogs for more information.
Wholesalers
You can also work with wholesalers to locate off-market properties. A wholesaler will find properties under market value and enter a purchase and sale agreement with the owner. You can then trade places with the wholesaler and purchase the property at the agreed price. In wholesaling, you’ll pay a set fee to the wholesaler for this service.
Whether you choose to use wholesalers to find off-market properties or want to start wholesaling yourself, check out our guide on buying wholesale real estate to learn the best insider tips.
Direct or Online Marketing
You can also generate leads for off-market properties through direct or online marketing. This includes newspaper ads, car wraps, signs or billboards, direct mailing campaigns, and online listing services like Craigslist.
When you create direct and online marketing campaigns, you are actively seeking out motivated sellers and properties under market value. For more information, visit our guide to learn about off-market property lead generation.
Conclusion
Learning to locate off-market properties will help you grow more quickly. Once you set up systems to regularly locate and assess off-market properties, you’ll be able to start increasing your investment portfolio and ROI.
Whatever method you choose: a bird dog, direct marketing, searching online, or working with an investor-friendly real estate agent, the key to successfully locating off-market properties is consistency. We actually recommend using two or more of these methods consistently to build investment opportunities more quickly.
Frequently Asked Questions
To find real estate deals before they hit the market, you can search for FSBO properties by driving through target neighborhoods. You can also put out direct mailings, advertise, reach out to owners of pre-foreclosure properties, and search online databases. Another option is to hire a bird dog to help you locate off-market properties.
Network as a real estate investor so you’ll start to hear about properties before they hit the market. A bird dog is another great way to find properties quickly. Our guide can help you learn more about using a bird dog to locate real estate deals before they hit the market.
No longer on the market does not necessarily mean sold. It could mean that the property is in contract but that the deal is not finalized. It could also mean that the property did not sell but that the listing expired.
If you find a property that says it is no longer on the market, it’s worth contacting the listing agent to learn the specific situation. This can be a great way to find off-market properties.
For rental properties, you can find deals by working with an investor-friendly real estate agent to locate properties under market value and by searching for off-market properties.
When you purchase a rental property, you’ll purchase under market value, make any repairs, and quickly find tenants.
If you follow the formula of buy under market value and charge rent at market value, you’ll earn cash flow from the beginning while building long-term equity on rental properties. Check out our guide to buying rental properties to learn more.