Off-market buys: why there are *less* good opportunities Melbourne right now

I’ve written a lot about off-market properties because they are a popular, but often misunderstood concept. Selling agents sometimes mislabel them, a lot of buyer’s agents use them in their advertising spiel, and plenty of buyers fall prey to non-quality or over-priced off-markets. It’s unfair, though to suggest that there aren’t some great off-market opportunities out there, and we have been privy to them over the years.

However, this year, they are harder to come by. And there is an important technical reason.

Firstly, let’s remind ourselves of the two categories of off-market; situational and opportunistic. We know from past articles, opportunistic off-markets aren’t that great. They are essentially the properties that are either overpriced or flawed. The vendors are opting to take advantage of the market conditions to sell something that is ordinarily hard to sell due to a specific compromise or flaw, or they are trying to achieve an extortionate price.

In a softer market, these types of sales would be disregarded by buyers. In a tough seller’s market though, these vendors may get lucky.

It is the situational off-markets that we are interested in. They do come up, and tight agent relationships can benefit buyer’s agents and buyers alike. Common situations that precipitate a genuine, situational off-market sale include:

• A vendor who has just purchased, (or is intending an imminent purchase) and needs their sale and purchase dates to match in order to meet their financial obligations at settlement, and they have determined that they have insufficient time for an auction or regular sale campaign
• A motivated vendor who is trying to sell a tenanted property that is either difficult to advertise, or doesn’t present well,
• A vendor who has very specific requirements that require unusual terms, (such as an arrangement to continue renting their own property for a period of time after settlement),
• A vendor who wants a particularly anonymous sale for privacy/sensitivity reasons,
• A vendor who is unwilling to have multiple buyers walking through their property for personal reasons.

While some of these abovementioned reasons do present opportunities, it is typically the first reason that is th dominant driver of off-market opportunities.

……and they have determined that they have insufficient time for an auction or regular sale campaign

There is a critical difference between our 2020-2021 spring markets in Melbourne, and previous markets. Our public auction restrictions, combined with our delayed spring start following an epic lockdown period, our pent-up buyer demand and our painful one-on-one inspection requirements have all combined to create a perfect storm for vendors who want a fast sale.

Never before have we experienced this heady, fast-auction activity and agent-willingness to pivot so quickly. Vendors would have previously anticipated a four week, auction campaign with public open for inspections offered two or three times per week for all and sundry to attend. Agents previously would gear up for a busy spring season between September and Christmas eve, conducting a busy day of back to back auctions on Saturday and working their buyer lists and open for inspections during the week.

Now they are completely hampered with an intense schedule of private, one-on-one buyer appointments and most have limited their vendor’s campaigns to a couple of weeks only. Buyer offers are flying, left right and centre. New stock is coming on at pace, and pipelines are still full.

Agents know it, and vendors know it. In Melbourne right now, deals are getting done very quickly.

It’s without surprise that vendors are feeling confident that they can take their property to market and anticipate a quick result. Many are loathe to have their agent only show one special buyer through – these vendors know that buyer competition is rife and they know that a series of nice photos and a short campaign has every likelihood of delivering a pleasing result.

Agents are actively sharing these ‘short campaign’ opportunities with a higher number of buyers, and as this sms below demonstrates, the opportunities do exist but buyers are plentiful and those who are keen need to move fast.

Even those campaigns that commenced with a two or three week campaign length intended are selling quicker than planned. This alert on the Friday went out to interested buyers and a boardroom auction on the Monday ensued.

Calendars have auctions scheduled for every day of the week. Gone is the notion that Saturday is game-day.

In Melbourne this spring, every day is game day.

We have pivoted effectively to meet the demands and restrictions of this market, but one element that has lost some of its potency is the exclusive, situational off-market property. A large proportion of those vendors can now have their day in the sun too.

It won’t stay like this forever, but while demand is excruciatingly high and online auctions are so accepted, off-market sellers have more options to effectively drum up buyers.