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One of the most intriguing methods of property investment in 2023 is investing in off-market properties. These offer investors a more bespoke and exclusive experience when both buying and selling buy-to-let property, but it can be confusing for newcomers to understand.
The difference between property being sold on the market and off-market property is fairly simple, but for those wondering how to buy a property off-market, the answer means going into more detail.
In this blog, we’ll explain what is off-market property, how to find off-market properties in the UK as well as why both buyers and sellers are choosing it more commonly.
Sounds good? Then let’s get into it!
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By submitting your details you agree to allow RWinvest to store and process the information submitted and receive product information and other communication, as stated in the privacy policy.
Off-market property refers to property that is not openly offered for sale on the market. This means it isn’t on property portals like Rightmove or Zoopla, it isn’t being advertised by estate agents and it won’t be available at auction.
The off-market property market is almost a secret property market, where sellers and buyers use alternate methods of communicating to work out a deal.
Off-market property is not the same as off-plan property, which is important to note. Off-plan property refers to properties being sold whilst they are still being developed or constructed. You may find off-plan properties being sold off-market but don’t get the two terms mixed up.
Many investors are choosing to invest in off-market properties as it eliminates the competition that comes with buying on the open market, making the process of buying an investment property much less stressful.
Buying on the open market means dealing with the high demand for property, which leads to counter-offers, negotiations and other investors chasing after the same property. Not only is this a lot of stress, but it draws out the buying process and can lead to investors paying above-market-value prices.
By choosing to buy off-market properties, investors can expect a much smoother buying process with much less hassle, while potentially being able to snag their desired property for below-market-value prices.
Sellers may choose to sell their property off-market as it offers a confidential transaction. This means they don’t need to disclose the price they are selling for until the sale is complete and recorded by the Land Registry, which is useful for those who may not want neighbours, business contacts or other people in their life to know their house is up for sale.
Celebrities and high net-worth individuals often choose to sell their properties off-market for this reason, to avoid unwanted attention. With their homes likely to be highly expensive, they may not want to draw attention to the transaction.
One property in London sold for a whopping £210 million in 2022, showing how expensive off-market property can be!
Selling an off-market property also means the seller won’t have to deal with estate agents or their fees, while they do not need to worry about hosting lots of viewings and negotiating with a lot of buyers.
This makes the process of selling much easier, so if a seller needs the money fast from their property they may choose off-market.
Also, off-market homes are useful for sellers who are dipping their toes in the market and are still on the fence about if they actually want to sell. It’s a useful way of gauging interest and how their property might be valued before deciding to sell.
There are numerous reasons why both buyers and sellers choose off-market properties, and no two properties are sold off-market for the same reason.
Given that they are not advertised through traditional means, off-market properties can be hard to find. Your property search may be more challenging when looking to buy off-market property.
If you are wondering how do you find off-market properties, then the answer isn’t as simple as going on a property portal or contacting your local estate agent to see what is on the open market.
Off-market properties for sale are advertised through different means, and often it is more work for the buyer to try and find them than it would be to buy a property through more commonly-used methods.
However, there are several routes you can go down if you are hoping to find off-market properties for sale in the UK, such as the ones we talk about below:
Property investment companies often work directly with developers to sell properties to investors, cutting out middlemen like estate agents.
By buying off-market property through a property investment company, you won’t have to deal with competition from other buyers as they are not chasing after the same property as you.
You can also use the experience and guidance that a property investment company offers to help you with the buying process, as often they can recommend solicitors and mortgage deals best suited to your needs as an investor.
Oftentimes, these off-market properties are also off-plan, making it more likely for buyers to find them being sold below market value.
By networking with other landlords and property investors, you will be able to form a solid grasp of how the buy-to-let property market local to you is performing.
With portfolio investors, who own multiple investment properties, you may be able to find out if they want to sell any property they own and buy it directly from them with little hassle.
You can network with investors through social media sites like LinkedIn, where you can find others with common interests and reach out to them.
As well as this, by maintaining a network of investors, you may hear about off-market properties for sale which you might otherwise miss if you just kept to yourself. Word of mouth is a powerful tool and one you should look to use.
If you know the owner of a property you are looking to buy, you could always contact them directly and ask if the property is for sale.
Some homeowners may not be looking to sell their property, but if an attractive offer is made then they might change their mind.
Alternatively, you could buy a copy of the title deeds for the property from the Land Registry, which would tell you the owner’s name and contact details.
While this method is not very likely to be successful, it is another source of finding off-market properties for sale.
Often, you may be able to buy directly from property developers if they have a new-build development or cluster of new homes under construction.
By contacting them directly, you can expedite the process of buying the property and get a better understanding of where you are putting your money.
Some developers work exclusively with property investment companies, so may direct you towards their chosen partners to handle the sales process.
Once you have found how to access off-market properties, the next step is to make an offer and buy your chosen property, be it your dream home or a buy-to-let investment.
While the sales process is more streamlined and quicker than with on-market properties, there are some things you need to be aware of.
You need to know as much as you can about the off-market property before you decide you want to buy it. If it isn’t listed online, then this will involve you doing your own research.
Try to find out the floor plan, room measurements and layout of the property, either through photos and videos or by viewing the property yourself if the seller can host viewings.
Finding an accurate valuation of off-market property is much harder than it is for on-market property. You’ll need to know this to help calculate the rental yield if you are buying to use it as an investment property.
With on-market sales, potential buyers can get a good estimation of the property’s value by seeing what kind of offers are being put in for the property. Without this bidding war, it can be harder to know if the property is being valued correctly.
Look at similar properties in the area to see what prices they go for as a rough guide, either by using property portals such as Zoopla or Rightmove or by contacting a local estate agency to see how they value property in the area.
You can instead hire a professional surveyor to give you a valuation of the property. This is best for those inexperienced in property investment who may not know how to accurately value properties. You can find qualified surveyors on the Royal Institute of Chartered Surveyors database.
Alternatively, if you are borrowing a mortgage to pay for the property, your mortgage broker will value the property themselves to ensure you will make enough money from the property to repay what you are borrowing.
The next step is to make a fair offer on the property. This is likely to be below the seller’s asking price, as you will have to negotiate between the initial offer and the asking price to come to a fair deal for both sides.
If you are buying the off-market property for investment purposes, you won’t need to sell your home first, making the process of selling a property much smoother.
If you are buying using a buy-to-let mortgage, you’ll need to attach your Agreement in Principle to show you can fund your offer.
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Once your offer has been accepted by the seller, you will both need to instruct solicitors to help you complete the sale. They’ll handle the contracts and legal side of the deal.
Because buyer and seller are dealing with each other directly, there is less hindrance than with a property sale on the open market.
If you are buying the property using a buy-to-let mortgage, it’s at this point that you’ll need to give them your solicitor’s details to begin the process of borrowing the money.
It’s now that they’ll conduct the valuation before releasing the funds into your account.
As with any land transaction, there is a lot of paperwork to be filled out. While your solicitor will do most of the heavy lifting, there are some important documents you’ll need to provide:
After you have done this, it is simply a waiting game while your solicitors work out the details of the contract to ensure both sides are fairly compensated. Once this is done, you can transfer funds to the seller, exchange contracts and complete the sale.
The last step is to collect the keys to the off-market property you have just bought.
The hardest part of buying a property off the market is finding the right one. Try contacting property investment companies and developers to see what exclusive properties they have to sell.
One of the main reasons sellers choose to take their property off the market is confidentiality. They might not want people in their lives to know their property is for sale, or the sale price they have agreed upon.
Alternatively, it could be a strategy to gauge interest in their property without being inundated with offers from potential buyers.
Off-market sales make up a larger portion of the housing market than you might think. In London especially, selling a property off-market is becoming more and more popular.
This is Money reported that 22% of house sales in London were off-market in the last three months of 2022. This is up from 11% in 2019 and only 8.4% in 2018.
For the rest of the UK, the number is closer to 10%, still a surprisingly large amount of properties being sold when you consider the number of transactions that occur each year.
Looking for some of the most exclusive off-market properties in the UK? Here at RWInvest, we partner with developers to sell buy-to-let properties directly to investors. No middlemen, no hassle, no bidding wars.
With over 18 years of experience, we have a proud track record of delivering high-quality off-market properties in some of the best places to invest in the UK, with high rental yields and stunning amenities.
Our dedicated teams help guide you through every step of the buying process to ensure it is as stress-free as possible.
You can invest in our latest UK property development, the serviced accommodation block Rice Works Liverpool, from as little as £40,500!
Contact us today to learn about our current stock of off-market properties.
John is a property writer here at RWinvest. With a close eye on property market news and updates, John writes detailed and informative articles on a range of topics that are helpful for anybody looking to invest in UK property.
By submitting your details you agree to allow RWinvest to store and process the information submitted and receive product information and other communication, as stated in the privacy policy.
