Off-market properties can be an amazing opportunity to look into.
In the world of real estate investing, securing a great deal can make all the difference in maximizing profits. Today, we have an exciting case study to share with you, detailing how one of our clients capitalized on an off-market opportunity, saving a significant sum of money in the process.
As a real estate investor and broker, our team is constantly presented with exclusive investment opportunities from wholesalers. These off-market deals provide distinct advantages, and we’ll walk you through how our client took advantage of one such offer.
Our client was approached by a wholesaler who had a property under contract with a price tag of $500,000. After thorough research and analysis of comparable properties, the true market value of the property was estimated at $600,000. Recognizing the potential for savings, our client jumped on the opportunity.
Purchasing the rights to the contract at the offered price of $500,000 meant our client secured the property at a discounted rate. In addition to the purchase price, they had to cover an assignment fee of $20,000 to the wholesaler and a $20,000 commission to us, bringing the total cost to $540,000.
Though it may seem like a substantial sum, the reality is that our client saved $60,000 on the property’s actual market value. This translates to a remarkable 10% discount on the purchase price.
As with any real estate transaction, there are pros and cons to consider when dealing with off-market properties.
1. Discounted prices. The most obvious advantage of off-market deals is the potential for significant savings on the property’s market value.
2. Limited competition. With no bidding wars or negotiations involved, once a buyer confirms interest, the deal is quickly secured without the risk of being outbid.
1. Fewer contingencies. Off-market deals may require buyers to make offers with fewer contingencies, meaning there is limited room to back out of the deal if issues arise.
2. No inspection period: Often, sellers in such deals expect buyers to waive the inspection, financial approval, and other customary contingencies, making it crucial for buyers to be cautious and conduct thorough due diligence.
3. Fixed closing date: The closing date is predetermined in these opportunities, offering little flexibility to buyers.
Buyers have several financing options for off-market deals. They can either be preapproved for the purchase price and pay additional fees on the side or seek financing from private lenders, subsequently refinancing to minimize initial capital expenditure.
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If you have any real estate-related inquiries or wish to discuss whether off-market opportunities are right for you, feel free to email us directly or call (514) 917-6284 to speak with one of our experts.