Buying a property before it goes to market, known in the industry as a silent sale, is a great way to acquire a home or investment, and should considered as part of any property-buying strategy.
Median-priced properties close to CBDs, transport and leisure facilities will nearly always sell and rent well. Consequently, these types of properties are subject to strong competition once they are listed, and often sell at auction for 5 – 10 per cent higher than their true market value. So if your goal is to buy at or below market value, you need to look at properties before they are listed.
Placing a property on the market brings with it marketing and advertising fees as well as a reasonable time frame, so a number of vendors ask agents to show the property to their database before they embark on a formal sales campaign. Other sellers find auctions risky and are nervous about whether buyers will attend or bid and may take a guaranteed offer beforehand rather than running the risk of an unfavourable sale at auction.
Often, professional investors and buyers agents handpick these listing before they go to market and the public gets what's left. If you want to get ahead of the competition you need to become savvy and learn the techniques of industry professionals.
As a buyers agent we typically snap up to 80-90 per cent of our properties for clients before they are marketed or within the first couple of days of a campaign. Clients of mine have come to rely on our ability to purchase such properties on their behalf. For example, we bought a whole block of seven units over a nine-month period off different owners. Only two were advertised to the public, the other five were silent sales direct to us. Not only can vendors save $5,000- $10,000 on marketing and auction fees, they often get a sale within 24-48 hours, instead of 4-6 weeks.
Whilst a lot of Australia's property market is on the turn, there's still plenty of uncertainty in the market and both agents and vendors would rather get a guaranteed sale, rather than risking the unknown.
To maximise your opportunities in the market, here are Chris Gray's top tips for purchasing a silent sale property:
1. Become better friends with your local real estate agent. The key contact between sellers and buyers, agents are the first to be aware of properties for sale. Make sure they know you are pre-approved for finance, are serious about buying and can make a quick decision followed by a signed, unconditional contract.
2. Get Organised. Make sure you are ready when the right deal comes along. Get pre-approved for finance and have your valuer, building inspector and strata inspector all ready so they can check you are buying the right property at the right price.
3. Tell your friends, family and colleagues you are looking to buy. Often those close to you will know of someone else looking to sell, so spread the word.
4. Use a Buyers' Agent. If you're short of time and don't have the contacts, consider hiring a professional. Buyers' agents, have good relationships with real estate agents, who prefer to deal with them, as they make quicker buying decisions. Whilst you do pay a fee to a buyers agent, they will often get you a better property for a better price which will more than compensate the cost.
ABOUT THE CONTRIBUTOR
Chris Gray is CEO of Your Empire, a buyers' agency that buys homes and investments for time-poor people – searching, negotiating, renovating and managing property on their behalf. Chris has spent over 10 years as the host of 'Your Property Empire' on Sky News Business channel, where he's interviewed various heads of property research companies and major industry figures. Chris is a qualified accountant, buyer's agent and mortgage broker. For more information visit www.yourempire.com.au, www.chrisgray.com.au and follow Chris on Twitter: @ChrisGrayEmpire.