Off Market Premium vs Off Market Bargains
Mar 15, 2023
Does buying off market mean you’re likely to get a good deal? Or do you actually have pay to a premium?
Off market vendors fall into 3 main categories:
- Desperate quick sellers
- Opportunistic sellers who will only sell for a premium
- Normal committed sellers.
It is pretty obvious that if you buy from type 1 you could get a bargain, while if you buy from type 2 you will probably need to pay a premium.
But what about type 3? These are the same sort of people who go to market with a traditional campaign, so what sort of price would you likely be paying if you buy off market from such a person?
In this case you generally need to pay what the vendor believes they can get if they go to market.
Sometimes you have to pay a little bit more so that they feel confident they’re doing the right thing. Sometimes you get to pay a little bit less because they will discount the price to avoid the hassle and expense of going to market.
But the biggest factor in whether you can get a bargain by buying from a committed vendor off-market is what the vendor believes they could get on the market.
If their expectation is lower than actual market you can probably get a bargain.
If their expectation is higher than actual market then you would probably need to overpay if you want to buy it off market.
Always ensure you are conscious of which of these scenarios you are in when you decide to proceed with an off market purchase.