Posted: November 30, 2016 by Eli Randel
WHAT THE H DOES “OFF-MARKET” MEAN ANYWAY?
What makes a deal “off-market” when the offering is being shared on LinkedIn or broadcasted (“marketed?”) on real estate search engines and web platforms designed for mass distribution?
Once, an off-market disposition strategy was generally employed for speed or discretion. A seller would show a deal to a select few known-closers to: dispose quickly; “save” a small broker fee; or avoid alerting sensitive parties to a sale. The buyer would receive an exclusive (or semi-exclusive) look at a deal in exchange for confidentiality and speed. Sometimes Buyer could negotiate an opportunistic price for their willingness to navigate unique situations or a discount could be a result of Seller failing to price the property in the open market (offsetting any “saved” commissions).
Today “off-market” deals are broadcasted and promoted on social networks, real estate search engines, and mass marketing campaigns to unknown entities. Where the deal type was once Match.com – a way for qualified and compatible parties to privately connect – the off-market space has sometimes devolved into Ashley Madison – a forum for nebulous characters and activity.
When thousands of buyers can access the same deal, what makes it “off-market” and what other challenges and questions emerge?
- How many other buyers are reviewing the opportunity, and how many have already walked away?
- Is there a daisy-chain of brokers and platforms “representing” the deal and opening the door for fee disputes and market confusion?
- Am I negotiating with a party that has any authority with Seller? Will a potential offer be properly received?
- Is the provided deal information: based on reasonable assumptions, from the seller, and accurate?
- Is Seller motivated or did they simply tell an inquiring party: “I’m not in the market, but I would consider selling if I could get (insert unreasonable price)”?
- Is the deal a repackaged version of someone else’s listing?
While true off-market circumstances still exist, should be taken seriously, and there are great brokers who have unique access to those opportunities, the unfortunate reality is most often the term is used as click-bait for a party to either a) engage with buyers when a lack of an exclusive listing won’t allow them; or b) to give sizzle to an otherwise less-than-executable deal.
Instead of looking for a needle in the large and sometimes deceptive haystack, go to www.crexi.com. CREXi is the best way for buyers to utilize technology to discover REAL commercial deal opportunities with the nation’s best brokers. Our aggregated marketplace has over 5,500 verified listings (and exponentially growing). Speaking with the top listing brokers and demonstrating an understanding of the market and an ability to execute, remains the best way to get exposed to every deal in a market including the oft-elusive truly off-market opportunity.
Eli Randel is Director of Business Development based in CREXi’s Miami office. Eli spearheads CREXi’s growth and sales throughout the east coast as well as overseeing the national sales team. Prior to joining CREXi, Eli was director of dispositions for Blackstone’s Invitation Homes. Eli has also held management positions and production roles with Cohen Financial, Auction.com, LNR and CBRE where he began his career spending three years in Investment Sales before leaving to obtain his Master in Business Administration from the University of Florida.