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The Best Off-Market Property For Investors

January 06, 2021
Buying a Property

What is an off-market property?

An off-market property is simply a property that isn’t listed on the local multiple listing service (MLS).

About 11% of properties are sold off-market, and it's well known among savvy investors that if you're looking for the best deal––buying a property off market is the way to go.

Off-market listings, otherwise known as pocket listings, can be bought significantly under market-value from a wholesaler or directly from the seller, with zero commission paid to an agent or broker.

Most savvy investors know that if a property ends up on the market, it's already overpriced and not worth it. This is especially true for distressed properties.

The top-tier investment properties that do end up on the MLS are snatched up within a day, typically by investors who have relationships with investment-savvy agents sending them the best deals.

Although off-market is by far the sexiest word in real-estate right now, that doesn't make them easy to find.

Most investors will spend hours signing up for wholesaler email lists and perusing through Facebook groups just to maybe find an off-market home that 5 other investors have put offers on already.

That's where we come in.

At Lofty AI, we've built a free platform with hundreds of off-market properties sourced directly from high quality, vetted wholesalers across the US.

In this blog post, we'll be breaking down the old, outdated methods of finding off-market properties as well as our new, automated method.

Let's get started.

Lofty AI off-market listings
Lofty AI off-market platform

How to find off-market properties (the old way)

The old-fashioned methods of finding off-market properties involve establishing relationships with wholesalers and convincing those wholesalers to add you to their buyer email lists.

Wholesalers put in the nitty-gritty work of finding distressed properties, that very few investors want to do themselves.

This involves driving for dollars and searching for run-down distressed properties, cold calling absentee owners, and running direct mail and email campaigns.

We'll be going into more detail on how to find off-market properties without a wholesaler later. For now, let's walk through the old-fashioned methods of getting off-market properties from wholesalers.

Overloaded with work

1. Wholesaler email lists

The majority of real estate investors get their off-market listings from wholesaler email lists.

The definition of a wholesaler is a middle man who matches a seller's property with a potential buyer.

Most wholesalers sell the majority of their properties to repeat buyers who have bought their properties before. This is because most "buyers" aren't serious and waste wholesalers' time. If there's one thing wholesalers hate, it's non-serious "tire-kicker" buyers.

It's often quite difficult to convince a wholesaler to add you to their email list––because they have no way of knowing if you're a serious buyer or not.

You could also be daisy chaining them, meaning you're a wholesaler yourself and are looking to promote their property at a higher price and take a cut of the deal. More on daisy chaining later.

The best way to meet wholesalers is on Facebook, through a referral, or at networking events.

2. Facebook groups

Another old, manual method of finding off-market properties is via Facebook groups.

There are dozens of local real estate investing Facebook groups where wholesalers will post properties, and interested buyers will comment their email addresses under the posts hoping to be added to the wholesaler's buyer list.

The issue with properties posted on Facebook groups, is that the person posting the property often doesn't actually have it under contract. Most of the time, they're just daisy chaining.

As mentioned before, daisy chaining is when a wholesaler finds a property under contract by another wholesaler, and advertises it as his/her own property with some marking up the price. And then another wholesaler does the same, and so on and so forth (hence the "chain").

The problem with daisy chaining, is that the property gets continually marked up by each wholesaler, because they all need to get their cut. So after 5 daisy chains a property could be 20%+ more expensive than the original wholesaler was marketing it for.

3. Networking events

A large number of real estate investors get their off-market deals from local REIA (Real Estate Investment Association) groups.

All major cities have REIA groups that you can join by typing in your city + REIA on google––then typically paying a monthly fee to join.

There are also real estate investing networking/meetup events where you can meet wholesalers as well.

These events may pay off, but are extremely time consuming. You also never really know if the person you're talking to is wasting your time or not.

Distressed off market home

How to find off-market properties (the new way)

At Lofty AI, we've built a free platform where investors can instantly see over a thousand off-market properties across the US, in seconds.

From there, you can view property details, look at pictures, and make an offer directly within the platform.

No Facebook groups, email lists, or networking events.

Just a simple platform with a bunch of vetted off-market properties. Think of it like Zillow, but for offmarket properties.

Here's how it works:

Click the orange button at the top right of this page that says "View Off-Market Listings"

Then, you'll be taken to a website that looks almost identical to Zillow.

The difference is, you won't find any of these properties on Zillow. All of the properties are off-market and sourced from the best wholesalers in the US.

You can then filter between multiple property types including:

  • Single Family Homes
  • Duplexes
  • Triplexes
  • Fourplexes
  • 5+ unit properties
  • Condos
  • Townhouses
  • Manufactured
  • Office
  • Retail
  • Land

You're also able to filter the price, square footage, year built, beds/baths, and more.

Once you find a property you're interested in, click the property card, and you'll be taken to the property page with more information including rents, ARV, whether the property is occupied or vacant, and much more.

If you're interested in making an offer, here's how the buying process works:

Lofty AI off-market properties
Lofty AI off-market platform

Buying process

  • Make an offer: Submit your offer via the Make an offer form. It's 100% free to submit an offer. You will never pay any fees to Lofty AI or the wholesaler at any time.
  • Vetting process: A Lofty AI representative will reach out to verify you’re a serious buyer willing to close quickly. We will also answer any questions you may have about the property.
  • Assignment Contract: After verification, we will send you the wholesaler’s assignment contract to sign electronically. The closing date will be written on the assignment contract. The contract must be executed within 48 hours.
  • Due Diligence: After the assignment contract is signed, you will be connected to the property wholesaler via email. You will be able to request due diligence on the property with a minimum of 48 hour notice to the wholesaler.
  • Earnest Money Deposit (EMD) must be wired to the Title Company within 24 hours of Assignment Contract signing. EMD amount varies depending on the deal.
  • Closing Costs will be outlined on the final settlement statement and vary depending on the deal.

At Lofty AI, our goal is to bring transparency and trust to the real estate wholesaling process by matching vetted buyers with high-quality wholesalers.

How wholesalers find motivated sellers

There are a number of ways wholesalers find motivated sellers.

Keep in mind, a wholesalers goal is to find a motivated seller and put their property under contract, then flip that contract to an investor for a profit, or spread.

Let's walk through a few of their methods below:

Driving around

The most common way wholesalers find motivated sellers of distressed properties, is to literally drive around neighborhoods looking for signals of a motivated seller.

These signals include:

  • Newspapers and mail piling up on the driveway or sidewalk
  • Overgrown front lawn and neglected landscaping
  • Run-down properties
  • Empty lots
  • Signs on the lawn/driveway advertising closures

Investors are essentially looking for a property an owner doesn't care about, and would likely be down to sell under market-value for a quick profit.

Local county tax office

As mentioned previously, absentee owners are a great group to target for wholesalers.

This is because the owners don't actually live in the property, often times aren't renting it out, and are probably open to selling at the right price.

Typically, absentee owners are absent because they had to move out due to a divorce, a new job, or a multitude of other reasons.

To obtain a list of absentee owners, wholesalers will go to their local county tax office (if they don't have a website) and ask for a list of properties where the address of the property an owner lives in is different than the distressed property the wholesaler found.

Tax accessor's office

Direct mail and email campaigns

This method involves compiling a list of potential motivated sellers through public records.

Investors will look for specific types of info in public records hinting that an owner is a motivated seller.

These include:

  • Death of a joint tenant
  • Recent foreclosure
  • Owner is of old-age
  • Absentee owner
  • Property has been on market for an extensive number of days

The biggest issue with public records data is that it's updated very infrequently and everyone has access to the data if they wish, so there's no real competitive advantage.

Once investors have put together a list of motivated sellers, they'll then send out thousands of letters and emails asking these owners if they're looking to sell their property.

A 1% response rate for these mail-blasts is considered a successful campaign.

Cold calling

Similar to direct mail campaigns, wholesalers will go through public records and compile a list of potential motivated sellers.

They'll also find their phone numbers and cold call them. 

As you can imagine, this converts at a very low rate just like direct mail campaigns.

Craigslist

Plenty of wholesalers today still use Craigslist to try and find motivated sellers.

But, unless they've built a scraper to automatically acquire Craigslist data on a daily basis, they'll need to to regularly monitor the properties section for new deals––which, as you can imagine, is very time consuming.

If you're going to take this approach, you're going to want to make sure to track deals that have been on Craigslist for a good amount of time, as this is often a good indication of a motivated seller.

You also want to remember to update your notification settings so you get email alerts when new properties come onto the platform.

Craigslist property section
Craigslist property section

Contact local attorneys and inspectors

Local attorneys are often working with clients who are needing to sell their homes due to divorce, probate, bankruptcy or any number of stressful situations.

It's generally best practice to network with attorneys at local business events, but some are open to direct mail as well.

When searching for a local attorney to get motivated sellers from, you want to find a lawyer who practices the following types of law:

  • Family law
  • Real estate law
  • Estate/Probate law
  • Bankruptcy law

Like local attorneys, county inspectors are another group of people who tend to have inside knowledge about their local market.

For example, county inspectors may know of property owners who have had zoning or expansion issues with their property which could correlate with a motivated seller.

Closing thoughts

If you're looking for a deal on an investment property, off-market properties are the way to go.

By offering less competition and flexible negotiations, off market real estate can provide investors with much wider profit margins.

At Lofty AI, we've built the only free off-market property marketplace trusted by both buyers and sellers.

To request access to our available off-market listings, just click the button below.

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