Property Hub - Investment Insights & Inspiration - Realty Talk: Is ‘off market’ just a hype?

Episode Date: September 16, 2023

Technically speaking there is no such thing as an off-market property if you are dealing with an agent.  If an agent is involved - whether it is advertised/marketed or not, a property must be listed for sale and the proper authorities must be in place so the agent can represent the seller. Joe Tucker and Bushy Martin give great insight today about listings that are referred to as being off-market, how to find them, and if they are really as attractive as all the hype. NEW – Join the Property Hub community on Substack! Sign up to get Australian property news, opinion, and episodes in your inbox: https://propertyhubau.substack.com/ Subscribe to RealtyTalk on the Property Hub channel: Apple Podcasts | Spotify | Google Podcasts | Email Property Hub is a collaboration between Bushy Martin from KnowHow Property, Kevin Turner from Realty, Andrew Montesi from Apiro Marketing and Apiro Media, and Australia’s largest independent podcast network DM Media. Business and partnership enquiries: [e-mail] omnystudio.com/listener for privacy information.

Yeah, it's a great question. There are so many smoke and mirrors and some things to be aware of, but I guess to give it a bit of a definition, an off-market property is a property that's sold without any public advertising. That's Joe Tucker. Joe is a buyer's agent and Bushy talks to Joe about his experience in dealing with off-market properties. You know, technically speaking, there is no such thing as an off-market property if you are dealing with an agent. now if an agent's involved whether the property is being advertised or not a property must be listed for sale and the proper authorities must be in place so that the agent can represent the seller hello I'm Kevin Turner and welcome to

this week's Realty Talks show off-market is a term that's widely used and it's designed to play to the notion that it could be a bargain or the buyer is getting ahead of all the other buyers and therefore it's likely there will be less competition but in reality if you are dealing with an agent and not the seller direct it's a property that must be listed with an agent but it's just not being marketed a true off-market property purchase is one where the buyer not the agent, has sourced the property his or herself and is negotiating directly with the seller. Joe and Bushy are going to give us a great insight

today about these types of listings and how to find them and if they're really as attractive as all the hype. Also today Bushy is joined by Kev Tran with some really great tips to help all buyers. Hey if this is your first time with us this welcome. You're going to find us on all podcast players and through the Southern Cross Austereo Network. If you like the show, and I hope you do, make sure you hit the subscribe button and help us to continue to bring you the best guests every week. We'll be back in just a moment as Bushy kicks off this week's show. Property deductions can save you thousands of dollars each year. To make sure you maximise deductions, you need to work with the most experienced

quantity surveyor in the country. BMT Tax Depreciation is the leading specialist in the industry. They've completed over 700,000 tax deduction schedules for residential investment and commercial properties Australia-wide. BMT guaranteed to find double your fee in the first full financial year deductions. Call BMT on 1300 728 726 today for an obligation-free quote. Realty Talk and your host, Bushy Martin. Now, there's been a lot of talk in buyer's agent circles about the benefits of securing off-market or silent sale properties. And in some cases, there's actually a fair bit of smoke and mirrors around the topic.

So what are off-market properties and how can you access and secure them both safely and affordably? Well, to shed some much-needed light on this often shady topic, we're joined by Joe Tucker, the Director and Head of Research at Property Principles Buyer's Agency Group, as well as being the co-founder of the rapidly growing and highly informative Oz Property Investors Facebook community. So welcome back to the show, Joe. Thanks for having me, Bushy. It's wonderful to be back. I love what you guys do here. Likewise. I always enjoy the fantastic conversations yourself and Jeff have on the Oz Property

Investors community and the great work you're doing in the bias agency space and a really good topic to dive into because something gets thrown around a fair bit. So to sort to set the scene joe can you define what an off-market property is and explain why a property might be sold that way yeah it's a great question there are so many smoke and mirrors and some things to be aware of but i guess to give it a bit of a definition an off-market property is a property that's sold without any public advertising it is a dealing directly with the agent saying hey i've got a deal for you um and and then securing that deal so the client so the so the vendor it doesn't have to do marketing, if that makes sense. We then have other things as well. So

there's off markets that you hear all about, but then there's also things called pre-market, right? That's when they list the property. And these deals are actually some of the more dangerous ones because I hear people like real estate agents, they're not smart. They're very smart. Sorry, they're not smart. Did I say that? They're not silly. They're very smart and they do marketing in a way that gets people excited. So they put you on this list of this off market list, But really, it's just a pre-market list where they advertise the price up a lot more. So the property is worth $500,000 and they're listing it for $520,000, hoping to get some snags and then secure it off market, if that makes sense.

Another point to be aware of is something called post-market. That's where someone has listed a property. They've gone through the campaign. The vendor didn't get their expectations and reality is kind of sunk in and they may be open to talk again or negotiate or or kind of uh getting get excited about that yeah so so i guess the killer question then is why would a property be sold off market uh in that context it's a great it's a great question um but it shouldn't be absolutely in my opinion every single property that you list if as a as a seller you should definitely take it to market because it opens

up the pool of buyers. Now, what we can't overlay is our own presumptions and assumptions about other people's life and how they live. Just because you wouldn't sell your property off market doesn't mean anyone else can't. So I see it all the time where someone's embarrassed, right? We just purchased a property that had nicotine stains all across the room. Someone was smoking in the toilet. The majority was just in the toilet. So they're embarrassed to have people walk through all of their neighborhood. Oh, they've lived there for 20 years. We don't want to do that so um the age of the property if there's some renovation work required people just don't want people traipsing through their house um your deceased estates divorces um uh what's

the four is there four d's death divorce something else is there's a number of them uh kids wanting to sell the property um and when it's split amongst five people they're just like i don't care if i if we make an extra five thousand dollars that's bugger all for all of us so the reason why people do it is they just want the deal done quickly um if you're an investor speaking with an agent about uh those type of deals just um just be just make sure you give the vendor what they want in terms of you're not getting they're not getting the price but what else can they get yeah spot on there's also also and i've locked your thoughts on this one conjecture that there are some, shall we say, lazy selling agents who know that the difference between a $500,000

property and a $520,000 property is only a few hundred bucks in commission to them. So they can offload it through the off-market scenario and do it quickly and get paid. Do you see much of that in your travels, Joe? Yes, absolutely. I see it all the time. I spoke with an agent just the other day and he was telling me how busy he is and how much time he doesn't have and how he would hate to go to this open and all i was doing was solving the problem that he had and said look i can actually get this deal done today's wednesday we're going

to review the contract wednesday and we'll sign the paper tomorrow does that work for you actually yes it would it would be really good because i'm just so sick of doing open homes and i don't want to take this one to the open and perfect done i solved his problem um at the detriment to the vendor um but it definitely happens mate unfortunately it does um but there's this is where the opportunity lies in in property as well because if you're investing in shares all of the information is public knowledge whereas with property there's so many different little tips and tricks and things that you can take advantage of um the the market is inefficient whereas shares are very efficient and everyone's got access to the same knowledge so there are

some good deals out there for sure. Absolutely. And picking the time and knowing the nature of the individuals involved becomes pretty key. And that's where a good buyer's agent like yourself is really good at being able to understand that. Sort of moving forward then, how do you cultivate relationships with real estate agents to gain access to these off-market listings, Joe? So I'm from a small town in the Blue Mountains, right? We enjoy a handshake and a g'day. So that's actually one of the most underutilized things that I see out there. If you're going to invest in a market, get your boots on the ground, fly out to that area. We're talking about a $700,000 property purchase. Go to the area for a day, spend $1,000 on flights,

accommodation, have a nice little holiday, but go and meet these people and shake their hands. So to cultivate relationships, I'm constantly having coffee, beer, chats, everything to kind of meet the people that have the product that i want they have i have the demand and they have the supply so i need to deal with those people so the best way to cultivate um relationships with property is to go out sorry with real estate agencies to go out there and see the agents have a chat with them and just talk real to them um the most important another thing is be respectful um these people don't want to deal with people that they don't like just like any other any other business. So just be prepared. Hey, Mr. Real Estate Agent, I have a budget of $500,000

to $550,000. Tell them that. You don't need to, you need to tell them just because it's $550,000 doesn't mean I'm going to pay $550,000. This property is worth $520,000. And then finance, Mr. Agent, I have finance secured. I am ready to go. I need a four bed, two bath within this pocket, not within this pocket. What have you got? And just keep touching base every single week. Hey, Mr. Agent, I saw that you listed that property. Congratulations. Tell me all about it. That's actually exactly what I wanted, but it went for a little bit more than I needed because it's renovated already. Have you got anything like that? Actually, I'm just chatting to the neighbors and they are going to list their property that is an exact replica of that one and it's $30,000

left. Are you interested? Yes, I am. Here we go. Now we're starting to be, we want to be in the inner circle we want to be thought of when they see our phone ring oh great here i'm going to have a good conversation with this person um to just yeah be provide value to the agent know that you're going to pull pull the trigger on a deal and go for it yeah i love it and let's face it everyone does business with people they like so if the agent likes you as a consequence of the interaction and your top of mind then you're more likely to get a sniff at the opportunity so we're Very well said there, mate. Real estate agents and selling agents aren't the enemies.

They're a conduit to the property that you're looking to buy. So very well said. Now, the due diligence process is always important in any property purchase. So what does the due diligence process look like for an off-market property, and how does this differ from a more traditional purchase, Joe? Well, in terms of due diligence, you still have to follow a similar process. You still need to understand if it's in an area that actually fits for you. But it may need some work because it's being sold off market.

It might be as of those scenarios that we were talking about before. So do those due diligences. So have a due diligence clause in your contract, right? And then make sure there's no bushfires, floods, easements, encumbrances, caveats, covenants on the title, all of that kind of stuff. But what you do need to also be aware of is the different types of agents. because some, like we were kind of alluding to before, there are, in my mind, I talk to four types of agents. We have the straight shooter.

These guys are the worst to get off-market deals from, right? They're a large franchise. They always list the property. They always get the absolute best price for their vendors, and they have a strict process. We do the open home on Saturday. We have offers closed on Tuesday, and this is the strict process that we follow hands down no matter what.

We then have the hard nuts. Now, these guys are like a really good hard negotiators, but they are flexible on the process. So if you can get in early access, do something to the deal, you may be able to do it, but just feel that you're probably going to pay fair and reasonable market value because they're really good. And then we have the flexible agents. They're a little bit flexible on both. These are the kind of guys that sit on the fence where they'll give you an off market here or off market there but they're still pretty good at negotiators um and then we have i did have a more creative term for this these types of agents the last type of agent i've i've landed on easy agents because i don't want to offend anyone um but these people are the

ads these are the ones that have the terrible ads right where you see the photos are blurry the the marketing has got you know chat gpt written all over it um and they don't actually get many deals So the high-end franchise guys, they get a lot of deals and they pump through the volume and they make money that way. If you're only doing one deal a month, that's not really enough. So they get a little bit scared and they're willing to do deals. So they need to eat. So those are the type of agents that you want to kind of keep in touch with.

Unfortunately, it's the easy agents. So you've got to have a lot of calls with not so great agents, but they're the ones that are going to provide the deals. And all you do, weekly conversation. Hey, what deals have you got? just letting you know, this is my budget. Email that out with them as well. Do some email blast to the agents that have sold products to you. Don't bother emailing the agents that have house and land packages and all of that. And just say the process that you've got. Hey, as soon as we

go under contract, I've got my inspector who's ready to go. We don't fall through on finance. I've got myself pre-approval and you just make yourself the easiest person to deal with. And then you'll be able to get access to uh to all of those love it now in in relation to off-market properties where you're not really being able to benchmark the price particularly for a first-time investor that's going into this exercise what's the best way to make sure that the the offer you're making is representing a market value for an off-market property yeah that's actually that's actually a great point and this is where i see a lot of first-time investors um get unstuck and frustrated because they spend six months just paying what they believe to be true of market

value. So what happens is when you list a property, you will see it all the time. When you go on a for sale listing, it'll say under offer, under offer, under offer, under offer. So those properties have sold, but they're not yet unconditional. So the agent hasn't sold them yet. So then you go to the sold section and it says this property here sold for 500. This one sold for $510,000. This one sold for $511,000. Oh, great. Well, the property price is around that $500,000 to $510,000. However, be a little bit more creative. Call every single agent on that under offer list and just have a chat with them. One, they'll have access to other deals that you can work. And two, if they like you, they will tell you what the price is. Now, they shouldn't

do this. It's a bit of a risk because if they fall through, they can tell you the amount. So they generally don't but you will eventually if you call 10 you know five of them will tell you and you'll say that's 520 that's 520 that's 520 that's 520 i am now operating in a 520 marketplace so that is my that's my top tip for finding out what is true real market value having a conversation with the agent um and i also like to pin agents against each other so if you see one agent has a listing for 520 and another one has another one for 520 why is this property better um and then they'll tear that one down and then they'll tear that one down and it just gives you some insights uh into the local market as well so yeah love it no i love that interplay so we're

just to sort of bring to a close then what challenges have you encountered in marketing off-market properties and how have you overcome them joe well the biggest challenge is the the uneducated um i see it i see it all the time where people buy an off-market opportunity that was sold to them by an agent as an off market, as a way to just say, hey, it's off market. This means it's really good. And people just say, off market, really good. No, you still have to do the fundamental research and the due diligence on the property and make sure that your price that you're paying is accurate. So for me, it's not an email database list. Rarely are there many good deals on them. It's more about phone calls. Pick up the phone. Pick up the phone. They will tell

you you'll be able to get deals and you'll help solve their vendor's solution of wanting you know wanting to get rid of the property um other challenges is time you need time to be able to do this so be very selective with the few agents that you work with and then just hone in on the ones that you believe like break it down don't go to the straight shooters because the straight shooters aren't going to give you anything and you're going to waste a phone call so go to the easy agents and the flexible agents and just focus in on those guys and just call them all the time hey hope you're well joe again another chat let's do it what have you got well and you're building relationship as well which is which is again i need to reinforce that we're not on the property

game we're actually in the relationship game and uh the more you're building relationships and you're more getting the understanding the more opportunity you're going to get and the easier the exercise is going to get one one other thing yeah that's actually a really really good point the the most important thing if you're an investor um is ask the agent if they do rentals you know if they lease properties now are you you know do you guys do property management yeah we do great well if we have a good relationship with a property manager real estate agent we will list back that rental to them. Now, for me, I have my own team of expert property managers that we work with. But when I was an individual investor, I would 100% save $10,000 because this agent wanted

that rental listing. So if they do have a rent roll, ask the question and say, hey, great. Well, if I have a good relationship, you will get the rent roll. Now, legally, absolutely, they cannot make that as a part of the deal. It's got nothing to do with the deal. However, you're planting a seed of value and they will they will literally i'm about to exchange i just got a missed call i have exchanged on a deal because of that purely because of that it's ridiculous um so i'm yeah looking forward to doing doing the project when we get that one going but anyway but a really good tip that is a really good tip it's it's sowing the seed of future opportunity because a smart selling agent knows that the value of his selling agency is actually his rent roll. So if you're able to

sort of dangle that carrot with the opportunity, if they're any good at what they do, then they'll pick up the management, then that's an added incentive. So it's, as you say, it's not all about price, it's about picking the things that are important to both the vendor and the selling agent that's going to make you stand out of the crowd compared to everyone else that might be looking to try and secure that property. So look, as always, Joey, I want to thank you for providing a really proper perspective on off-market property opportunities and i encourage everyone who's listening who wants to find out more on the topic to reach out to you at propertyprinciples.com.au as well as come and join you and the tens of thousands of others on the country's best safest

most informative property community on your oz property investors facebook forum so thanks again for all your words of wisdom on the show again today joey love it bushy thank you so much for taking the time we will catch up again in no time i'm sure look forward to it thanks joey Successful property investment is a game of finance. Do you have the right team and the right game plan? Realty Talk is brought to you by KnowHow Property. More than mortgage brokers, Bushy Martin and his team of investment architects set you up with a sustainable strategy structured to lower your costs, tax, risk and stress while increasing your capacity for growth.

Know How has helped over 1,900 homeowners and investors secure more than $800 million in property wealth. So get set to live more, work less and live your legacy. Want to know how to invest in your freedom? Visit knowhowproperty.com.au This is Realty Talk, powered by realty.com.au Are you struggling to get onto the property ladder and to buy your first property? Does it all just feel too tough and too overwhelming? How can you overcome the seemingly unsurmountable challenges to secure a property and then go on to join the ranks of those who continue to build wealth through this timeless asset

class? Well, if you've listened to Kev Tran's recent interview here on the Property Hub, where he downloaded the biggest mistakes that potential property buyers make, you'll remember that it all revolves around the importance of changing your financial habits and your mindset. And as a property investor turned buyer's agent with highly acclaimed data-driven agency Investor Kit, he joins us again today to share his top five tips for property buyers. So welcome back to Realty Talk, Kev. Thanks so much for having me back, Bushy.

Good to see you again, Kev. Now, sort of to get into the heart of the subject, can you start by sharing the sort of headline bullet points on what are your top five tips for property buyers? And then we'll do a deep dive into each one of them individually. Yeah, absolutely. So the top five tips I have would be to reduce your costs, buy an established house, pay yourself first, eliminate credit cards or understand the impact, and periodic financing or refinancing of your portfolio. Well, I thought that's a really good list. So let's sort of start breaking them down individually now.

And to kick that off, what are the best ways to actually reduce costs then, Kev? so i think to like when you're starting your portfolio or you know when you're starting out in a buying property if you can uh you want to be minimizing your your expenses and your costs right so that you can maximize your borrowing capacity really so if you're younger and you have the opportunity to be living at home um definitely take make the most of that um so you know you've got more that you can save up and obviously you can tell the bank as well that you're still living at home and you're not paying that rent that's definitely going to help if you're not living at home and you're renting potentially think about if you can for like a

short term maybe like some share house arrangement or having housemates to really maximize that because obviously the biggest expense we have is is our home most of the time absolutely spot on let's go on to number two then why do you believe that buying an established house is the way to go yeah so established as opposed to buying new and then house as opposed to buying um a strata title department or townhouse so um why established established because you're typically going to be buying in an area that's already you know well established so you're buying existing stock where there is high demand for it currently which you know of and there's a lot of established data out there as well that you can look into um as opposed to buying

new which typically you're going to be looking at if it's a house and land you're more on the fringe suburbs which um not to say it won't be successful but it's a lot of unreliable data to go off you don't know how many owner occupies versus renters um and typically there's going to be more supply there um and then why a house as opposed to an apartment um where we're getting more uh statistically um and historically looking at you see more capital growth with houses that outperform strata total properties yeah and they're really good points i think there are instances where a new build property even if it's in a tightly held scarce uh existing area where there's not buckets of greenfield stuff that can it will dilute the growth uh there are instances

where there are definite stamp duty advantages and and full tax appreciation benefits that will reduce the holding cost of those properties but the biggest challenge now in the build space is the uncertainty around time, quality, and cost given the big challenges that the construction industry faces. So certainly a safer bet to look at established properties and 100% agree that homes are going to outperform from a growth perspective over units and apartments.

So some really good points there. Next one then, what do you mean by pay yourself first? Yeah, so I guess the remaining three kind of revolve around finance, which is obviously really important when it comes to your property portfolio journey. um paying yourself first is uh just about it's just about budgeting so when you get paid um if you're like myself when i was a bit younger um you know struggling to work out um you know savings

being consistent is when when when you do your budget um the easiest thing that i could work off anyway was okay how much can i put towards um saving per month and then just do that as soon as get paid so once the pay slip or the pay comes in take a whole chunk out into a different account savings account or even you don't need to transfer to the bank account where you can't access and that way whatever you've got remaining you've already worked out you can spend it for you know your rent or your food going out but at least you've already paid yourself the savings spot on versus what most people do is the opposite they they either save or invest what's left and quite often there isn't much so i'd love your thoughts on that uh next one then kev what are

the impacts and benefits of eliminating credit cards as you say yeah i mean um all the time and i also had when i was younger as well was unnecessary you know limits um and i think the banks probably um you know can be a bit responsible for this as well as you know when you get a bit older uh they kind of send you your first credit card or offer you anyway one so i think what i learned um throughout my journey was credit cards are a liability so let's say for example you've got a five thousand dollar credit card limit and you don't owe anything on it you pay everything off and it's just sitting there as a backup or whatever uh the banks will see it as a five thousand dollar liability so your borrowing uh power um reduces so being being

conscious about that if you don't need it potentially just get rid of it especially when you're going for a loan spot on that really good advice because what a lot of people don't recognize. And given the finance broking team that's behind the know-how exercise, we know firsthand that for every $1,000 of limit you have on a credit card, it reduces how much you can borrow for a property loan by between $4,000 to $7,000, depending on the lender that you're talking to. So it does have a massive impact. And car loans and personal loans have a very similar impact on reducing your borrowing capacity. So really important to eliminate those. uh now uh your last point which is also a very good one uh how does periodic refinancing help

kid yeah so this is when you you've already got a property or a portfolio a lot of times where we've got options to do you know principal interest or interest only um sort of uh loan structures typically for myself i've got interest only for my ones uh with an offset account um and they're not indefinite terms you know typically you know one to five years interest only terms so by at the end of those um the time period um it's just a habit for us to then go and do refinance to make sure that we're getting the best rates but then also it's a chance for us to get a value out to to have a look at the property's value to see if we have any equity that we can leverage spot on and that both of those are really important because uh what a lot of

people don't realize around the financing aspect is that the bank's appetite for finance changes almost on a weekly basis. So while a lender might be the best solution today, in a month, three months, one year, two years time, they're not likely to be given the 40 odd lenders and the 2000 odd loan solutions that home borrowers and property investors can invest in. So really important as you say to refinance roughly every 18 months to two years because that's a good time to see how it's passed and that will also give you a chance to re-tech your equity from the valuations you spoke about and the buying capacity that might come out of that so I have some really good thoughts there Kevin. Again I want to thank you for these very timely reminders and yet again

you've reinforced the importance of changing your money management mindset and habits as success in securing property, as you and I both know, and growing your wealth is not about the bricks and water. It's about your financial education. So for anyone who'd like to learn more, just reach out to investakit.com.au. And thanks again for joining us on the show today, Kev. Thanks, Bushy. Appreciate it. Property depreciation is the natural wear and tear of a building and its assets. Property investors can claim depreciation as a tax deduction each financial year. depreciation is a non-cash deduction this means you don't need to spend any money in order to

claim it on average bmt tax depreciation find residential investors almost nine thousand dollars in first full financial year deductions call bmt on 1-300-728-726 today for an obligation free quote subscribe now to realty talk it's out every week and that brings us to the end of this week's show. Big thanks to Kev, Bushy and Joe for a great show. Make sure that you don't miss any episode of Realty Talk or Bushy's Get Invested podcast each week by subscribing to the Property Hub now on your favourite podcast player or wherever you are listening to or watching this show. Thanks to our supporters and content partners, realty.com.au, BMT Tax Depreciation, know how property finance, get rare property

and apparel marketing. I'm Kevin Turner and on behalf of Bushy and the Property Hub team, we look forward to seeing you again next week.