There has been plenty for homebuyers to think about this year.
On the one hand, record low mortgage rates are now encouraging many renters to reconsider the rent versus buy equation. The mortgage repayments for owner occupiers with 20 per cent deposit and low serviceability risk, are very low. Put simply, in many areas it's 'cheaper' to buy than to rent.
On the other hand, restrictions on movement and other measures related to COVID-19 have created a good deal of uncertainty in the minds of many prospective buyers. Obviously, the confidence level of buyers is strongly connected with their personal circumstances, and particularly a secure job, and financial backing from the 'bank of Mum and Dad', that is now the fifth largest lender in the country.
Adding to these challenges, stock levels have at various times been running at around decade lows, as owners have largely opted to wait things out, at least until the traditional spring selling season.
This is often the case where owners hold a 'Grade A' property, particularly houses, in areas with good access to a major employment hub, i.e. houses in popular areas that generally enjoy strong demand.
Both new listings and total listings have been exceptionally low in certain Australian cities this year, meaning that some buyers are finding it more difficult than usual to find the property they want.
What are 'silent/off-market sales'?
There are several different terms that you may hear in real estate parlance, such as secret sales, off-market sales, silent sales, and other variations on this theme.
Typically, what these terms refer to is properties selling before and in some cases without the public getting to hear about the property being for sale, with the listing never appearing in or being advertised in the mainstream property portals.
There are many potential reasons why properties might be sold in this way.
Often families aren't keen to have a series of disruptive open homes, others may be looking for a quick, private, or discreet sale, some deceased estates are sold privately without a listing, and sometimes portfolio investors find ways to begin liquidating their portfolio via trusted sources. It may be logistically tricky to list and sell a property that's tenanted, while some sellers fear going through a nerve-wracking auction process, and other vendors simply want to save on advertising and marketing costs.
In other cases, that buyers should pay special attention to, the owner who had had strong intentions to sell, has been approached by a seller's agent who committed to achieve a certain price without having any campaign. Owners often have 'Grade A' properties in popular areas and can simply withdraw them off the market.
The reasons could vary widely; but the result is that a proportion of properties, some of them have strong medium and long-term projections, will always be sold off-market.
On buying off-market
Just because a property is bought off-market or in a silent sale, it doesn't necessarily always follow that the buyer gets a cheaper price or an amazing deal (although this can certainly be the case where the vendor needs to sell and settle as a matter of urgency).
Vendors are, after all, rarely keen to dispose of properties for below their true market value, for obvious reasons. This is particularly the case for houses in popular areas.
Despite some of the marketing hype, most buyer's agents don't have huge databases of 'secret' off-market properties as such.
More commonly, an experienced buyer's agent will have built strong and trusting relationships with a wide network of selling agents, and as a result can access off-market sales or gain early or preferred access to property listings. Also, an experienced buyer's agent will be able to assess the fair market value of the property and its short and long-term projections.
This is beneficial for buyers who are struggling to find the property they want, and it can also mean that they can negotiate better and secure an attractive deal by buying with little or no competition, while often allowing flexibility around timing and terms.
This is especially useful when stock levels are low, or in a hot market where stock is being shifted quickly and buyers are looking for high quality properties.
While some silent sales are genuine off-market deals, sometimes listed on general authorities, others are simply bought pre-market by buyer's agents before the property has been properly prepared, cleaned, photographed, and staged for listing. This happens as an experienced and well-connected buyer's agent can get an early access and assess the 'fundamentals' of the property and its suitability for his client.
While individual buyers will naturally struggle to build the same level of trusted access as a buyer's agent with their buyer lists and a consistent stream of qualified buyers with mortgage pre-approval to buy, there's no reason that you can't get to know the local agents well in your chose location of purchase.
If you can show that you're a serious and motivated buyer, and let the key estate agents in the locality know exactly what are where you want to buy, you can still buy quickly and efficiently before most buyers even get to inspect a property. You should know, however, that many sellers agents limit the early access of private buyers as unexperienced buyers often place too much emphasis on the presentation of the property and show little interest if the property is not well presented.
Finding the right property for you
When stock levels are low, this can mean that buyers need to work harder to find the property they want, particularly 'Grade A' houses in popular areas.
And, yes, when stock on the market is very tight this might even mean though old-fashioned networking, word of mouth, letterbox drops…or even door knocking!
An experienced buyer's agent may or may not already have an off-market property suitable for your needs, but they can certainly strive to find what you're looking for, often using channels and methods that the wider public is not aware of.
A final and cautionary note: when buying off-market it is critical that you have a high level of certainty about the market value of the property.
If you're buying without competition then by definition there will be less market transparency, so undertaking a detailed review of comparable market sales is essential.
If you'd like full-service assistance from one of our licensed and trusted buyer's agents, including market research and potentially sourcing 'off-market' deals or silent sales which most buyers never see, please see our WeFind service here.
If you know where and what you want to buy, but your budget doesn't extend to paying for a full service buyer's agent fee, please see our more affordable WeBuy service here, which can help to negotiate thousands off your purchase price and de-risk the purchase exercise for you, reducing time, cost, and stress.