Off-market buys all about who you know
Despite property listings across the country slowing to a trickle of what they were pre-COVID-19, sales transactions are still taking place.
The key difference is that there has been a surge in properties being sold off-market. It’s in these circumstances that buying a house becomes much more about who you know.
Off-market transactions take place in such a way that the deal is done before the property ever shows up in the public domain.
For the most part, off-market properties are just pre-listings, meaning the owners intend to list them but are looking for a buyer before they hit the real estate portals. However, true off-market listings occur when buyers want additional privacy or there is uncertainty in the air, which is what we are seeing now.
Aussie Property Melbourne buyer’s agent Steve Janes told Australian Property Investor there had been a sharp increase in the number of properties being presented off-market.
“Since the onset of COVID-19, the number of off-market opportunities being presented to me has significantly increased and it appears a greater number of off-market transactions are taking place,” Mr Janes said.
A combination of low interest rates and favourable buyer terms, such as finance clauses and vendors being flexible on price are attracting astute investors and first home buyers, Mr Janes said.
“During the early stages of COVID, of course there was a lot of apprehension, but gradually as we move towards a new normal, I am experiencing increasing demand from both demographics,” he said.
“Now is a fabulous time for many first-home buyers to enter the market and potentially benefit from stamp duty savings and exceptionally low interest rates.
“For many, it is quite possible home ownership is now more affordable than renting.
“Further attracted by reduced costs and discounted prices, a small number of proactive investors are also keen to expand their portfolio and benefit from greater returns, rarely seen in recent years.”
Despite the rise of off-market listings, Mr Janes warned that investors should place an emphasis on quality and high performance in preference to a reduced price.
“Portfolio performance relies heavily on long term and consistent appreciation, therefore, when guiding clients, I prioritise quality and predictable future demand over entry price,” he said.
“Purchasing at the right price affords a great opportunity to build additional or instant equity, however, the laws of long-term appreciation remain unchanged and seldom have I seen both forces simultaneously on offer.
“Broadly speaking, it is natural for investors to pause during market downtrends and or times of uncertainty, however, I focus on true performance, assessing the likely long-term return from your investment.”
Surge in off-market listings
Real Estate Buyers Agents of Australia president Cate Bakos also reported a sizable increase in off-market listings.
“I’d confidently say our ‘off-market’ alerts have more than doubled,” Ms Bakos said.
“Vendors don’t see the value in the advertising costs during a period where inspection numbers are physically restricted anyway.
“Secondly, vendors are naturally worried about the increased risk of COVID-19 exposure to their home and are relying on the agent’s ability to screen and shortlist only the most committed and purchase-ready buyers.”
Ms Bakos said she believed investors looking to get the best value buy needed to act fast to capitalise on current market conditions.
“Do the price research, act swiftly and decisively, or better yet, get a professional who is privy to the larger numbers of off-markets,” she said.
“My best advice to buyers is to grab a great property at a fair price quickly.
“Holding out for a bargain could result in tears; either they risk totally missing the boat or they buy a bad bargain for the sake of buying cheaply.”