The following Q&A was completed as part of our conversational Commercial Real Estate FAQ Interview Series, we hope you find it helpful:
“Off-market” has become something of a marketing gimmick in recent years, but that doesn’t mean there aren’t genuine off-market properties available. Smaller investors or companies can make calls to see if any off-market properties are willing to be sold, and while you may get many “no” answers, you will eventually get those “yes” answers you’re looking for. While one may pay equal to what they would on-market, they get the benefit of making their decisions without pressure.
Richard Wilson: How can, besides going through a special servicer – people talk about “off market real estate”, I mean it’s kind of not even a term people like to use the last 10 years because it’s gets used so often. People will say “Oh, this is off-market” and they’ll e-mail 400 people saying it’s off-market..
S.L. Van Der Zanden: Right.
Richard: You know, well now it’s on market because you’re telling people about it on some level. So, in your experience, what are some legitimate ways to source distressed or off-market properties that an investor or investment firm could learn about by listening to this interview?
S.L.: Sourcing off-market is something we do, our investment sales group, because we’re a small company, really can’t compete head to head with a CBRE or the other guys. They have fabulous marketing materials, and great stories, so what we do is we use a service that provides sales data on transactions, and we separate out the ones that have ownership information and it isn’t currently listed on the market. We’ll call them to see if they have an interest in selling, and it’s a lot of calls to get to a yes, but it happens. And then you’re very careful about showing, not one by one but very few people, to keep that aura of being off-market. And people love to buy when they’re not competing directly with someone. Even though they might pay the same or more, it’s a feeling that you’re not being pressured that people like.
Richard: Otherwise might be jerked around, and lose it by a dollar, or some escalation clause…
S.L.: Right, right.
Richard: Makes sense.