It is not uncommon for properties to change hands without having been offered on the open market before. This so-called off market real estate brokerage has its origins in the brokerage of private luxury properties to often prominent buyers. They wanted to avoid public attention and were also prepared to accept a price premium of around ten percent for the discreet brokerage. Today, off market real estate brokerage has long since left this market niche. Commercial investment properties are also often sold in this way.
No exact figures on off market real estate brokerage
It is not known exactly how large the share of off market deals is in the total volume of commercial property sales. Often the discretion extends so far that the real estate agents involved do not even consider these transactions in their market studies. For the year 2017, an estimate for the German market based on an extensive survey is available. According to this estimate, commercial real estate worth 70 billion euros will have been sold in open bidding procedures in 2017; the volume of off-market transactions was 40 billion euros.
Off market real estate – advantages for the seller
At first glance, it seems hardly plausible for sellers to forego an open bidding procedure. Selling against the highest bid is a proven instrument to maximize the sales proceeds. However, the bidding procedure also has some disadvantages. It is obvious that in the bidding procedure the seller must disclose his interest in selling at an early stage. Sometimes this does not pose a problem, but in other cases it does. For example, if tenants or employees would be directly affected by a sale. In such cases, many irritations can be avoided if the property sale is conducted discreetly. A second problem with open bidding procedures is their duration. At least half a year should be taken into account, which in some situations can simply be too long. This is all the more true as a bidding process does not guarantee a successful conclusion. A common problem is the so-called “moonlight bids”. Here, a bidder causes all competitors to withdraw from the procedure by making an excessive bid – and then jumps out himself.
Real estate agents Off Market need a verified customer base
A real estate brokerage off market necessarily presupposes that the real estate agent is well networked in the market. He must be able to assess which potential buyers are interested in the offered property and how it fits into their portfolio. In contrast to the brokerage of private real estate, knowledge of the regional market is not sufficient. The search for investors for larger investment properties will generally remain unsuccessful if it is limited to the regional catchment area. As investment brokers operating nationwide, we use a common database and are therefore able to successfully broker investment properties even off market.
Off market real estate – advantages for the buyer
A major advantage is obviously the exclusive access to interesting objects. When you register with us as a real estate investor, you can also enter a detailed search profile for investment properties. As a registered client, you will receive exclusive information about suitable properties that match your search profile. A further advantage for buyers is to avoid the imponderables of an open bidding process. Off-market properties are not always cheaper than openly offered properties, but they do not carry the risk of prices being driven by speculation to a level not in line with the market. A further advantage is the fast handling of the sales negotiations. We quickly and discreetly arrange a direct contact between buyer and seller. As a buyer you can be sure that you will only be offered properties that have been examined by us. Of course, you can also make use of our further services as a real estate agent for off-market properties if you wish. This concerns, for example, the organisation and implementation of viewing appointments, sales negotiations with the seller and the preparation of the notary appointment, to which we will also accompany you on request.