Off-Market Properties

In today's competitive market landscape, on-market properties often do not meet the needs of REC's clients. When this is the case, we are left with two options:

monitor the market and act quickly once the right property becomes available; or
contact property owners to ask if they will sell to our clients.

REC often conducts off-market property search campaigns for our clients and, as recently as this month, these have been successful. When off-market deals work out, there is no greater thrill. But their success rate must surely be below 10%. Consider the following realities surrounding off-market searches:

when sophisticated sellers know they have a special property, they can often maximize ROI by bringing the property to market, because competing buyers drive up the price. In this case, if the owner wanted to sell, they would list the property, and so the off-market outreach becomes a dead end.
most people these days don't respond to much. It's hard to know if we should continue reaching out or if the property owner is intentionally ignoring us because they get so many inquiries. There are inherent inefficiencies.
sellers who read headlines about robust markets know enough to be dangerous and their pricing expectations oftentimes become unreasonable.
does the buyer end up getting a good deal when it must convince the owner to sell in the first place? Making the seller an offer it cannot refuse often ends up being a bad deal for the buyer.
in competitive markets, property owners may be interested in selling but their concern about finding a replacement property (either for capital gains deferral purposes or so that their business is not "homeless") oftentimes outweighs their willingness to sell. Of course there are solutions such as engaging a great buyer's broker to find a replacement property or 1031 exchanging into a Delaware Statutory Trust or tenant-in-common syndication. We can educate on these solutions but how seriously will the seller take our counsel when they know we are the buyer's agent and not theirs?

As you can see, the stars really need to align to program a successful off-market acquisition. But consider the seller who doesn't realize how much their property is worth. Or the owner who wants to sell but just hadn't gotten around to engaging a seller's broker. Or the owner who needs a quick close and doesn't have the time or interest in going through a lengthy marketing program. Off-market acquisitions can produce the ideal solution - one that would never have presented itself on the market. Which approach we take for your next commercial real estate acquisition is your decision entirely and we stand ready to execute on your instructions.

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In today's competitive market landscape, on-market properties often do not meet the needs of REC's clients. When this is the case, we are left with two options:

monitor the market and act quickly once the right property becomes available; or
contact property owners to ask if they will sell to our clients.

when sophisticated sellers know they have a special property, they can often maximize ROI by bringing the property to market, because competing buyers drive up the price. In this case, if the owner wanted to sell, they would list the property, and so the off-market outreach becomes a dead end.
most people these days don't respond to much. It's hard to know if we should continue reaching out or if the property owner is intentionally ignoring us because they get so many inquiries. There are inherent inefficiencies.
sellers who read headlines about robust markets know enough to be dangerous and their pricing expectations oftentimes become unreasonable.
does the buyer end up getting a good deal when it must convince the owner to sell in the first place? Making the seller an offer it cannot refuse often ends up being a bad deal for the buyer.
in competitive markets, property owners may be interested in selling but their concern about finding a replacement property (either for capital gains deferral purposes or so that their business is not "homeless") oftentimes outweighs their willingness to sell. Of course there are solutions such as engaging a great buyer's broker to find a replacement property or 1031 exchanging into a Delaware Statutory Trust or tenant-in-common syndication. We can educate on these solutions but how seriously will the seller take our counsel when they know we are the buyer's agent and not theirs?

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