Do you have an Ace Up Your Sleeve? An On- and Off-Market Report- August 2017
I did a fun video this month that talks about the market, but without too much detail. If I can put a little more color around it, I thought it might be fun.
First, the summer is just about over, for better or worse, and we’re seeing a lot of activity in the market.
A few characteristics:
Continued Low Mortgage Rates
Sellers getting more realistic with expectations
Mayoral Election Year in which we don’t expect real estate taxes to increase
Add to This:
Very low rental prices with lots and lots of concessions. Some concerns that vacancy could tick over 5% and thereby to away with rent regulation. Don’t get your hopes up. But it does…
Keep a lot of would-be renters in rentals, and out of the sales market. We’re also seeing…
A lot of sellers shy to put their apartments on the market due to…
Low Inventory, which coincides and creates…
Slightly lower velocity of sales, resulting in…
Slightly lower absorption rates (which is still a good thing, though more inventory would bode even better for the health of the market)
And so, in this market, the challenge remains to find value and good deals.
In commercial real estate, it’s quite common for buyers/investors to purchase “off market.” This would mean that an investment sales agent would quietly shop a property to investors in the hopes of making a match between buyer and seller without the impact of the limelight and press in the marketplace.
Sometimes you want an ace up your sleeve
In residential real estate, though, it’s more common than you might think. In some cases, apartment sellers don’t want the limelight, either. Or they want to avoid doing an entire staging and marketing process. Or they want to test the market before going broadly to ensure that pricing is accurate. Or they want to test the agent and his follow-up and ability to produce. That is, they prefer to see if an agent has a buyer up their sleeve. Or perhaps their firm.
This work is yet another way in which my team and I work to add more value for our buyers and sellers. We work on putting together off-market deals in a few ways:
First, I work through my own channels. Working as I do, where about half of my business is buyer-side and the other half seller-side, there have been opportunities even in the last 6 months to bring together buyer and seller just from my own buyer list. In one instance, I had sold many apartments in a building and had a number of buyers who had lost out on a particular apartment. We were able to make a deal on a two-bedroom unit and had a very happy buyer and seller.
I hear the story often that a buyer was targeting a specific building. There is no question that knowing who is looking for what, and keeping detailed notes over time, will allow us to sometimes pull a rabbit out of a hat.
Second, the corollary to this is the volume of sales that I do in specific neighborhoods. If I track which buyers come into every listing I sell, then I am able to market to them quietly and sometimes find a buyer for an off-market property, even if I’m not already directly working for them.
Third, doing an off-market deal through my firm. Since over 37% of our business year-in and year-out has been by bringing together buyers an sellers through different agents in the firm, it would stand to reason that we might be able to make sales happen quietly and quickly this way.
I want to be clear. This is very different than a “pocket listing,” where an agent isn’t sharing exclusive listings with other firms. This is a situation where we’ve been directed by our clients to try and find a buyer without public marketing.
If this sounds like a situation you might want to discuss further, please reach out!