The Difference Between On-market and Off-market Properties

If you’ve been following my content for a while, you’ve probably noticed that I tend to talk a lot about off-market properties. The reason behind this is that off-market properties are a great source of investment opportunities. 

You can buy way below market value and either save money on your rental property investment or make a larger profit if you choose to resell. Let’s take a look at on-market vs off-market properties at a deeper level!

On-Market VS Off-Market Properties

When we talk about on-market properties, we are talking about properties that were prepared for being sold. Owners who sell on-market are generally ready to sell the property and, in most cases, they have been guided by their realtor. The downside here is that these properties have a price equal to the market value because the owners had time to renovate and stage the houses to increase their worth.

Generally, on-market properties are looked over by dozens of realtors and investors. Although on-market investing can sometimes work, this shouldn’t be your main or only source of properties. This is where we get to off-market properties - the real source of investment opportunities. 

People who sell properties off-market are usually not prepared to sell. They might have opted for this move because of a sudden change in their life. When it comes to selling off-market, there are 7 Ds of Motivation:

• Death

• Divorce

• Disease

• Disgruntled landlord

• Displaced owner

• Debit

• Deferred Maintenance

Any of these factors could be the reason as to why a homeowner would decide to sell off-market. In most cases, these people are looking to get rid of a property as quickly as possible. In order to sell on-market, you need to bring the property up to a certain standard. This often means you have to invest time and money into renovations, which can get quite expensive.

A distressed owner who needs the money quickly or has to move to another location does not have the time to deal with renos and the whole procedure behind putting a property on the market. That is why they decide to sell off-market to investors like you and me who are willing to put work into the property afterwards.

In this situation, the upside for us as investors is that we get to purchase a property at a discounted price that is way below market value. This gives us room to make a better profit if we decide to flip the property, especially if we further invest into increasing its value through renovation.

On the other hand, the upside for the homeowner is that they get to sell the property quickly, collect the money and move on with their lives. After all, they are usually selling because of urgency along with not waiting to disrupt the current tenants with dozens of showings with prospective buyers.