There is a rumbling of growing disbelief amongst property buyers in Brisbane. In the current market, there are so many buyers competing for so few listings that almost all well priced, good quality properties are selling within days of listing and with multiple offers from eager buyers. Some of these properties are selling well in excess of the asking price, setting new benchmarks for prices in the area.
But causing more frustration are the properties that sell without going on the open market. Imagine this: your ideal property has just sold and you had no idea it was for sale. How did this happen you ask yourself? You have been spending hours on realestate.com.au and domain.com.au. You have met dozens of agents at open houses and told them what you want. Yet there it is – the perfect house in the ideal location and it sold for a price that is within your budget.
Welcome to the underground property market. Sometimes referred to as ‘silent listings’, ‘off market deals’, ‘private sales’ or ‘selling a secret’, these transactions are happening around you all the time.
It is a fable that all sellers want the highest price for their property and are prepared to do anything to obtain it. A seller’s motivation could fall into one of 3 categories:
2. speed of sale
Let’s face it, most sellers fall into category 1 and in the current market they are finding their needs are satisfied in a reasonable timeframe as long as their list price is not excessive. Price driven sellers are usually prepared to invest money in marketing their property and may choose auction as their method of sale.
Sellers who are motivated by a strong need for a timely sale are also finding the current market is providing them with the speed of sale they seek, together with a strong pricing outcome. These sellers often have extraneous circumstances with specific deadlines driving their sale process. They may have been transferred to another city for work, or perhaps they have purchased another property that is subject to the sale of their current property. Properties being sold by sellers with a focus on speed are often well priced when they are advertised but in this market it is the buyers who are pushing the final sale price up over what would have been a fair price.
The underground market is largely fuelled by sellers who have a strong need to maintain their privacy. Whilst it can dramatically decrease the potential buyer pool, and therefore not maximise their sale price, for some people the value of maintaining their privacy far exceeds an extra $10,000 or $100,000 on their sale price. There are many reasons a seller may wish to have a quiet sale: divorce, ill health, loss of employment, public profile, victims of crime, the fear of open houses; the list is endless. Herein lies the opportunity for active and savvy buyers to uncover these little gems and seize the opportunity to satisfy the seller’s need for privacy whilst securing a property at what can be a good price even in a rising market.
You may wonder how often these deals take place and the answer is – more often than you think. On average we are told about 8-12 underground opportunities per week. In August of the eleven properties we purchased, seven were never released to the open market.
You can access the underground market but it takes lots of time and dedication. It is unlikely that you will get private sellers contacting you to discuss their properties, that segment of the market will contact Buyer’s Agents because we have a number of buyers ready to go. But if there are certain properties in certain streets that interest you, it might pay to knock on a few doors.
The key to accessing the underground market is constant contact with real estate agents. Start by visiting the properties that are for sale in the areas you want to buy in. Talk to the agents and be friendly, you need to develop a mutual respect and gain their trust because they are going to tell you about their hidden secret listings. If you are too aggressive or unfriendly you will be memorable for all the wrong reasons and nobody will want to do business with you.
During business hours call the agents you have met and talk to them about your requirements. Follow up with an email. Once trust is established an agent is likely to tell you about properties they have appraised prior to putting them on the open market.
Keep in mind that real estate agents meet dozens of people every day and speak to hundreds of potential buyers every week. A real estate agent’s primary role is to find properties to list for sale so their communication focus is on speaking to potential sellers. It makes sense, in this market where listings are tight, real estate agents have less time for buyers and dedicate more time to finding their next listing.
To stand out as a private buyer you have to be persistent but not a pest. The value of getting access to the underground property market cannot be under estimated.
Deborah Baulch and Elizabeth Strutt live in Melbourne. Both work full time and are active in their local community.
As part of their plans for retirement, their financial advisor recommended they use a Buyer’s Agent to purchase an investment property in Brisbane.
Deb led the initial investigations. After several phone calls they came to Brisbane for a meeting and decided to appoint Property Pursuit to work towards their goal of an investment property in Brisbane.
Deb and Liz had a broad brief: 3 bedrooms house with some potential to improve and add value within 10km of the CBD. A list of 8 suburbs was agreed upon based on their Buyer’s Agent’s research.
Within 4 weeks a private seller contacted their Buyer’s Agent about a property in Kedron, which was one of the suburbs agreed upon. The property fit well with the brief: A 3 bedroom post war house on 405m2 with a North facing rear. The internal condition was good – the kitchen was renovated in 2007, polished timber floors, original bathroom but very functional. Importantly there was a tenant in place and the house had loads of potential.
Recent comparable sales indicated a market value of $560,000-575,000. After negotiating directly with the seller, the property was secured for $540,000 which was well under budget.
Deb says “We knew a little bit about Brisbane because we have family there. But we also knew enough to know that we needed help identifying the right areas and the right properties.”
“With both of us working full time it was impossible to put in all the time and effort we needed to identify and research all of the options. It was a real surprise to hear about so many properties that were not on the internet.”, says Liz.
Since the seller was representing themselves, they didn’t have to pay a commission to a real estate agent. That meant there was a financial benefit for everyone.
“When this property came up through a private seller, we were really pleased to be able to purchase it for less than we would have paid if it was listed through a real estate agent.”
Deb and Liz are just one of the growing number of buyers who have worked out how to tap into this underground market.
Property Pursuit – Buyer’s Agent and Property Advisors