What does an “off-market” deal really mean?
[{"id": "g40rzev", "text": "I don\u2019t fucking know anymore. A seller would be stupid not to run a full marketing process these days, given how much pent up capital there is.\n\nMy company recently passed on a deal in Austin, TX that was widely marketed. A few weeks later I get an email from an equity placement broker who says his client is looking for a co-investor on an \u201coff-market\u201d deal in Austin, TX. I said sure send me the info. It was the same deal \ud83e\udd26\u200d\u2642\ufe0f", "replies": [{"id": "g40v2v1", "text": "Yeah I think it\u2019s become a buzzword to make potential buyers think they\u2019re getting a deal. We\u2019ve got some brokers who give us preferential treatment but not true off market deals.", "replies": [], "depth": 2}, {"id": "g40xsh5", "text": "There\u2019s a myriad of reasons an owner may want to market a property privately.", "replies": [], "depth": 2}, {"id": "g411c9p", "text": "In smaller markets you may be right, I work in New York City and the larger landlords here almost never will put something on the market, especially the larger landlords / families for example I work very closely with the Chetrit family and they will never ever ever put something on the market even if they are selling, they will let certain brokers like me know and be very careful who finds out about it", "replies": [{"id": "g411r45", "text": "Why?", "replies": [{"id": "g4158iu", "text": "Main reason is not wanting to give off \"being desperate\" , but also many of these people do not like being in the limelight, they work privately and do not want to be talked about", "replies": [{"id": "g427drt", "text": "Isn\u2019t this the truth. Especially in NY. Having real estate is like having an open checkbook the whole world can see. The less they know, the better.", "replies": [], "depth": 5}, {"id": "g44eaei", "text": "They also don\u2019t want their tenant knowing or staff if they have their own in house team.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "g41cs34", "text": "In small markets too, and for the same reasons.  There are a very limited number of big fish in the small ponds and they don't want everybody in their business.  The biggest sale of my career was an off market deal, a $16mm investment sale, coincidentally, to a private group out of NY.", "replies": [], "depth": 3}], "depth": 2}, {"id": "g420jb3", "text": "Marketing processes take time and may not end up getting an offer that beats the initial one. Things can also change during that time so it may be safer to take the off market offer", "replies": [{"id": "g424p5k", "text": "I guess it depends on the asset class. In multifamily, it\u2019s still a feeding frenzy despite Covid.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "g40x5p8", "text": "Not on Co-Star/Loopnet/MLS/Crexi", "replies": [{"id": "g41dyjo", "text": "Costar, loopnet, mls, and crexi are all jokes for commercial real estate acquisitions", "replies": [{"id": "g41ki28", "text": "Preach.\n\n\u201cI want to be a \u2018real estate investor\u2019 which of these Loopnet properties should I buy\u201d", "replies": [], "depth": 3}, {"id": "g41l8ai", "text": "At least costar has a barrier to entry.", "replies": [{"id": "g41v4bt", "text": "Yeah, a large legal team and lots of money to pay them :)", "replies": [{"id": "g424xde", "text": "A large legal team? With a decent lawyer you can manage, unless we are talking about a huge portfolio with hundreds of contracts. Usually if you have that kind of money, a lawyer is more or less the same ratio as any transaction.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "g41rp0p", "text": "What's Co-Star?", "replies": [{"id": "g41v19c", "text": "Leave", "replies": [], "depth": 3}, {"id": "g42mmra", "text": "It's the parent company if loopnet. They run a number of RE websites and are a huge data firm within the field too.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "g40yryq", "text": "IMO - There's a big difference between an off-market deal in a buyers and seller's market.\n\nIn today's seller's market, every off-market deal I review it appears that the seller is willing to sell their property at some ludicrous number that an asshat might be willing to pay. No broker is going to do a full marketing campaign if they know that the owner won't actually sell at market value.", "replies": [], "depth": 1}, {"id": "g4139u2", "text": "There's tons of people that would sell their buildings at market price, but aren't motivated to sell, and do not want to list their property. Eventually there's a buyer that would be interested in it, so it gets done without ever going on the market.", "replies": [], "depth": 1}, {"id": "g41cfm2", "text": "90% of the deals I broke are off market. I just ask for a listing if the property has tons of potential. \nMy clients tell me what they want, I go look for it, find 5-6 options, get the owners to sign a fee agreement, put a PSA on, walk both parties through the conditions, close, collect fees.\nThe property(ies) never hit the market.", "replies": [{"id": "g41nuya", "text": "Well then I\u2019d love to tell you what we\u2019re looking for", "replies": [{"id": "g41ou2w", "text": "If it is 10% cap rate 50+ units MF in good neighbourhoods just get in the queue lol\nBut now not kidding, I just do land and multi-family and the only way to get decent deals in my location is going off market. But then it all starts with the buyers not the other way around.", "replies": [{"id": "g41p4um", "text": "We\u2019re definitely looking for larger than 100 units. Just wrapped up a $6m raise for 426 units in MO. Can you share what markets you\u2019re in?", "replies": [{"id": "g41pzan", "text": "I'm in Western Canada with reach throughout MB, AB, and BC.", "replies": [{"id": "g41q3i1", "text": "Ah gotcha.", "replies": [{"id": "g41qb22", "text": "If you still don't have a broker, I can refer colleagues throughout the US who specialise in MF.", "replies": [{"id": "g41qk9c", "text": "We have a couple we like working with in KC but always looking for more connections. Capital is not our problem.", "replies": [], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "g41gzk0", "text": "Means nothing", "replies": [{"id": "g49rkia", "text": "This is the right answer. It's meaningless broker jargon.", "replies": [], "depth": 2}], "depth": 1}, {"id": "g41l20x", "text": "\"Off-market\" means is not in the MLS nor advertised anywhere. Besides that, it is a trigger word.", "replies": [], "depth": 1}, {"id": "g41p55n", "text": "Buyers are hungry and true sellers know who owns the piranha tanks and what they like to eat.", "replies": [], "depth": 1}, {"id": "g41zw3s", "text": "I just sold my 100+ units off market. I\u2019d been getting 3-5 calls for the last couple years. One day I got very frustrated with my management and one of the more persistent private equity guys called. He wanted to do it with no agents but honestly I needed one to guide me. I called the agent that sold them to me, and he priced it all out and it was waaay higher than I expected. Since I found the buyer he only charged 1.5% and it was money well spent. \nHe\u2019s been helping me with the 1031 exchange too, and bringing me \u201coff market\u201d deals. This has been deals that are going to be put on the market but he has lots of connections and calls everyone to ask what they have coming up. That way I\u2019m first in line.", "replies": [], "depth": 1}, {"id": "g4248w7", "text": "I've had two off market deals in 3 years.\n\nFirst was from a friend who I was texting with. He made a random comment saying he wish he could sell his house, I had been to his house and was like \"well Ill buy your house\", he asked really and I said I'll be over in 15 mins to talk about it. Closed on it 3 months later for my first house / personal property.\n\nSecond deal was from another friend who is an arborist, he was injecting some of my bitch trees for bores. At one point I mentioned I was looking to buy a rental property, he says something along the lines of his wife inherited this crazy multiplex and has been talking about selling it. Closed on it 6 months later. \n\nBoth deals never went to market and weren't really even for sale.", "replies": [], "depth": 1}, {"id": "g42xwoe", "text": "My last deal seems fit:\nBroker in my brokers office said she had 2 properties her dad (the owner) was going to start preparing to sell. We jumped on it, got all details and worker a deal for one before it ever crossed any one else\u2019s eyes. \n\nI should note, had this gone on the market it would\u2019ve been a bidding war and easily gone for 30% more.\n\nHowever, my broker and this broker wanted to work together and I have a reputation in my local market of closing efficiently (pending nothing major) when under contract. This is was the seller\u2019s main concern given her age/health.", "replies": [], "depth": 1}, {"id": "g4h6yrr", "text": "There are two \"off-market\" deals, as far as I'm concerned.  There are people who are trying to sell their asset but don't want to list it and want to use it as a buzzword.  Then there are \"real\" off-market deals where the seller wasn't considering to sell but the buyer convinced them and made an offer.  We did one recently.  Two run down restaurants on the same lot.  Owner of the lot wasn't really looking to sell but we made an offer and they accepted.", "replies": [], "depth": 1}]