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How to Find Off-Market Listings in Austin, TX

Ryan Rodenbeck

Ryan started in Austin real estate as an investor in 2001. He looked at all investment opportunities — Austin foreclosures, condos, homes for sale...

Ryan started in Austin real estate as an investor in 2001. He looked at all investment opportunities — Austin foreclosures, condos, homes for sale...

Nov 10 22 minutes read

Links Mentioned:

💥http://www.austinduplexagent.com

💥https://www.spyglassrealty.com/blog/handling-real-estate-leads

How Can I find Off Market Properties in Austin, TX 

  1. Find an agent that has access to a list of wholesalers.
  2. Most luxury homes that are sold in Austin are picked over on networks that are only available to the luxury agents that pay for membership.  Many of the homes that make it to the MLS have been picked over and passed on by the buyers that are represented by luxury agents.  It's important that you choose an agent that is in this network.  We are in this network.
  3. Agents have access to Facebook groups that are agent-only and do not allow non-Realtor members.  Make sure you are working with an agent that is part of one of these groups.  
  4. Many consumers, as well as agents, will take to direct mailing certain areas where a buyer is looking for a home.  It's important that the parameters are set and a process is followed, or you will be wasting your time.  
  5. We are involved in smaller, private networks with other brokages that trade listings to each other before they hit the market.  



Transcript

Ryan: Alright, we are gonna go over the five ways you can find off market properties in Austin Texas. Join us in just a second and we will get to it. Okay, so Matt.  Alright, so before we begin, I want introduce myself, Ryan Rodenbeck, I’m the broker, and then we have Matt Edwards, my associate. We're gonna be bringing on, in just a few, minutes one of our other associates, Rene Flores. So we're gonna go to the news in just a second. We have five things, five ways, that you can find off market properties in Austin. number four will surprise you, so stay tuned. Before we begin, if you're watching this on Facebook, type the word “agent” in the remarks below, and you'll be subscribed to future broadcasts. If you're watching this on youtube, hit the “like” button and be sure to subscribe to future broadcasts. 

Ryan: Alright, let's go ahead and get started. So, you know, this is pretty exciting. When you talk about finding a property in Austin, and we talk about affordability, there's a problem and it’s that we have not had a lot of inventory in the Austin market. And what people don't realize is that you can find properties off market if you're working with the right people and you know where to look. So that's what we're going to cover, five ways to find off market properties in Austin.

Matt: Now, just for those who are like: Well, what is off market? So…  on-market is when a property goes to the MLS, and goes the more traditional route, and off-market is cash deals that are done, that never hit the MLS, they never did a for sale sign in the yard per se, that's an off-market deal. And there's companies, and there's people, that specialize in finding these properties, and then they blast them out to try to sell them, mainly to cash investors or somebody who's pre-qualified has their ducks in a row, and can close the transaction.

Ryan: Absolutely.

Matt: And it's actually... What is it? Is it 40% of real estate transactions that are off market? I've read the stats, but I forget. It was a lot higher than I thought it was.

Ryan: Yeah, I don't never being that high, but…

Matt: It may have been 20%, it’s been a while since I read it.

Ryan: That might be luxury, okay? Which, we're going to cover that in a second. So the first way to find an off-market property... And sometimes when I say off-market property I mean a property that's actually coming soon, right? And you don't always get to get a property, or find out about a property, put a contract in, and take it before it actually hits the market. But in this first way, one thing in which you can have advantage, is you'd be the first person to know about it. And then that's by having an agent that can source properties through Facebook only groups where people put either coming soon or pocket listings, right?

Matt: Speaking of that, if you're looking for a home in South Austin, I got three listings all coming up that are technically off market right now, that if you want to get ahead of the curve they're all 3-bed, 2 baths, fully remodeled homes. Fantastic.

Ryan: Yeah, so if you're interested. And by the way, we source these properties all the time. We have an internal group, on our workplace, where we post these properties that we find when they're off market. So again, number one: Facebook only groups. Agents, almost all agents that do business, including myself, will post a property coming soon before it hits the market, in agent only groups. So you got to make sure you work with an agent that is really following these Facebook groups, putting their info out that they're looking, or have a buyer need in a certain area. I can tell you we’ve found  about a handful of these properties just in that one source, every year.

Matt: Two months ago.

Ryan: Yeah, yeah. One of our agents here did one last year, there’s an agent here who did two last year. One of them never even hit MLS, which I don't really think is good for the seller, but when you're going for the buyer it’s a whole different story, right? It’s different whoever you’re representing. Number two: direct mail. So I have a client that's looking in Cedar Creek Elementary School District in 78746, and we've not been able to find anything on market, so we're doing two techniques. One of them is direct mail and the other one we'll cover in just a second,  to do it as well. But what we do is we pull the tax rolls from MLS, we import the addresses, and we mail out to any property that, say... it's been with a deed date of like three years or earlier. We’ve had tremendous success with this, I have personally bought three duplexes using this method myself. And I find that if you have the right agent that's using the right tools, that this can be a useful tool. Now look, I want to tell you one thing. All five of these, if you're only doing one of them, your chances of finding a property off market are very low. But if you're working with us, or you’re with another agent that's using all five of these, these can be very good techniques to find off market properties. Number three: Facebook advertising. So I said I was working with these clients who are looking at Cedar Creek. We're doing a multi-pronged effect, we're doing all of these, but the two that we're really hitting the most are that we're doing the direct mail, and then Facebook marketing. The way I do this is I geotag an area, like in this case the Cedar Creek Elementary School, and I put a blog on my page that says “Looking for a property in your school district, and you have been identified as someone who is living in this property.” You wanna say something, Matt?

Matt: Yeah, so I got a question. So you get all that set up, now... do you keep it fairly generic and kind of run them through a funnel or do you take it a next step and actually post a picture and some highlights of the family that's looking for that home in the Cedar Creek area, so when somebody comes through “Oh, it's an actual family, instead of somebody just trying to…”

Ryan: Yeah, so that’s a good point. I did not in  letter, I haven't done that in the Facebook advertising, but I might do that. It might be a good technique. But what we did is we identified... I asked my clients what their criteria was, and they said between 1700 and I think 2600 square feet, with a lot that's like point two two, or bigger. We don't know the beds and baths off the tax rolls, so we're not putting that out there. And their price range is between 600 and just over a million. The 600 is nearly teardown, all right, and the one just over a million, that’s the top of their range, that they want to be completely turnkey. And we tell the sellers that we have buyers that are ready and interested to go, and can make an offer right away, and if you are interested in selling your home to give us a call. We also tell them “Look, we're not trying to do any games here. Our goal is to find a seller that wants to sell property to our buyer.” So if we write in the letter, and on the Facebook post, and in the blog post, that if you're about to work with an agent, no problem. Have your agent call us, we love working with agents. We just want to help our buyer find a home, okay?

Matt: And believe it or not, there's quite a few people that would take a little bit less money not to have to jump through the hurdles of going on the market, being like “Oh, I gotta get out of the house because somebody wants to come see it.” They got dogs, they got kids, they got lives. And that stuff, especially if it's in a hot you know hot neighborhood, in the hot price point, that can be demanding on their time. And if they've got an offer, no problem, somebody who's already looking in that neighborhood, and that's great and it works for them... Yeah, they may leave some money on the table but they’re not being inconvenienced.

Ryan: Yeah, and they may not, right? If they're not working with an agent, we're not trying to double side the commission. We just want to help our buyer. And then there's also people that are like... the first group we did was we targeted people that had a exemption for over 65, right? Age exemption. So we found 600 addresses, we target the first 120, or ones that had the age exemption. These are people that may be going into either a retirement community, or moving closer to their their children so that they can have a little bit more support. So Kelly, do me a favor, let's bring in Rene, and we're gonna go to number four. Hey Rene, so I'm going to introduce Rene Flores, he is one of our agents with Spyglass Realty. Rene has been an agent for at least a couple years now, and been with us for a few months, and Rene's background is as a  wholesaler. So Rene, why don't you do me a favor and tell me what your background is when wholesaling and how you can… We're going to talk about it in the sense of people that aren't investors, and investors. Tell us about the wholesaling process.

Rene: Okay, so thank you for having me on the show, you guys. So when I started into real estate, it was about three years ago, and I was a wholesaler for a company here in Austin for two years. And during that time I got to learn what a wholesaler does. And what that is is to find a property and to get in contact with homeowners who are you know okay, as Matt said earlier, with getting that other house at a discount. And a lot of the times these wholeRyasalers are working for investors, and so what they what they do is they build relationship with the homeowner and try to get these properties under contract. And once I have them under contract they'll go ahead and either they'll flip that contract over to the buyer, which is the investor, or if they have funds, they'll go ahead and do a double close. And what they'll do is they'll close on the front side of the contract, and they'll go ahead and sell the house to the investor. So that is one of the two ways that the wholesaler makes… I guess it’s not commission, but when he flips that contract is how he makes his money.

Matt: And at a wholesale company they probably only do that when they could make more of a spread versus just the assignment for you, right?

Rene: Well, right.

Ryan: Let me back up just a little bit for, kind of, the laymen that are watching this that have not done any investment in property. So what Rene means is, basically, that what a wholesaler did will do is they will get a property under contract and then they put in the contract, whatever their name is, and or signs. So once they get under contract, then immediately, if they're not working with one particular investor, they immediately try to push this out to multiple agents saying “Hey, we've got this property. It's under market by X amount. Do you want to buy it?” They set up a simultaneous close. So what happens is, when they closed on that property, that's on the simultaneous close, there's a spread. So in other words, to make it simple: wholesaler buys a property that’s worth $250,000. They may get this property under contract for $230,000, then they're gonna they're gonna resell the contract at $235,000. That's a typical scenario, wouldn’t you agree Rene?

Rene: Yes.

Ryan: Yes, so the buyer is going to pay five thousand dollars more than the wholesaler paid for it, but who cares? You're trying to find a property right? Now, what I think is gonna be... This isn't gonna be for everyone, because most of these properties have issues. What are the kind of issues you see with these properties?

Rene: So a lot of these properties, they're gonna foundation issues, they're gonna need a new roof... basically your major mechanicals, you know, a new AC, new roof foundation, and electrical. But there are some diamonds in the rough, I like to call them, where if you are a homeowner who wants to go ahead and live in the house, you're not per se an investor, and again as Matt mentioned, if you have your ducks in a row, you can get into this house and you can actually act as a wedge. Because an investor needs to purchase that house at a… he has his own formula, and you, the homeowner, you're not really looking to get the profit immediately. So you can act as a wedge and pay more than that investor. So I think it's a great way, if you're gonna wanna go that route. You know, obviously, the house is not gonna be a total redo. It's gonna maybe have some cosmetics. You know, carpet, paint, flooring, and stuff like that. But again, it all depends on the house. A lot of times I did see, probably about 75% foundation issues, and then you have your roof, paint, carpet,  flooring and stuff like that.

Ryan: Yeah, so in this most cases, if you're gonna be in this business,  is one of the methods you're gonna employ, or one of your agents is gonna employ… You need to do a couple of things. The wholesale price, in most cases, does not include the commission. So if the property is $300,000 then you're gonna have to write a contract for $309,000 if you're working with a real estate agent. I have  bought wholesale properties, I've helped some of my buyers buy wholesale properties, and so that's thing one. Thing two is, in nine times out of ten, probably ten times out of ten, you're gonna need to have a budget to be able to renovate this property, okay? Not all of them have foundation problems, I've found, but there at the very least you're gonna probably have cosmetic issues. But, like I said, if you're looking for a property in Austin and you've got a budget for some repairs, or you can do a FHA 203k, I think it is, where you can have a renovation loan. The other thing you can do and, it's been pretty prevalent, is that if you've got a family member that's willing to—if you don't have this kind of this kind of money—is that you have a family member, that's willing to front the money to make the cash purchase, you can buy the home, you can renovate it by cash. Renovate it, what’s called delayed finance, and then within six months you're able to refinance the property up to 75% LTV. Now, I want to talk a little bit about the investment aspect of it. So we work with a lot of investors, and what I have found in most cases, is that a lot of them say that these are flips, but usually when I've looked into them I found that there's not enough spread for what I would call a professional flipper. If you're an amateur flipper, and you're okay with making a little bit of money that's okay, but there is a lot of opportunity for investors to buy properties that are buy & hold, that you walk into a property with some equity, which is always the goal when you want to do a buy & hold.

Matt: Right, and Rene you may notice, to dive a little deeper in Ryan’s point there, most flippers look at purchasing at 70% ARV, which is after repair value, and most of these homes that come from home sellers are always coming into the market at 80% ARV, which leaves very little room for the remodels, unknowns, contingencies, things like that. Whereas if you're coming in at 80% and doing a long term buy & hold rental, you're not putting nearly as much money in on the remodel, you have some equity there, and it's a great buy for that. Am I right, wrong?

Rene: No, yeah. You’re exactly right. A lot of the professional flippers, they're looking at 70% minus your repairs. As you mentioned, a lot of wholesalers, they get a pretty bad rep just because they are coming in at 80% and they're trying to market or flip that to investors as a flip. And, as you mentioned, there's just not enough room there, because you do have your holding costs, and you have unexpected repairs that do come up. So a lot of these deals, again, if you wanna buy & hold they're great, especially a lot of the cosmetic ones, are a great opportunity to have a wholesaler on your team along with your real estate agent. And again, if you want to  go ahead and live in the property, and you have your ducks in a row, you can go ahead and definitely... Actually, my wife and I are looking for our next home, and we're thinking about getting one that's more of a fixer-upper, cosmetically, and to get it you know below market. But you're right Matt, a lot of the times, the wholesalers are typically coming… I've seen a couple wholesalers at 75% minus your repairs, but a lot of them are hitting the 80%.

Ryan: Yeah, well, so I want to get to the last method for buying off market properties, and this is for luxury home buyers. And I found this is a very good method to help find a property that’s off market, and I think the stat that you were probably referencing earlier, Matt, is luxury homes. I would say, it could be 30 to 40 percent of them, don't even make into the MLS. And so there's a group, and I’m a part of it but I’m not even gonna mention their name, but there’s a group in Austin that is a luxury group where the luxury agents will basically post listings, unto this site, and it gets distributed to all the other luxury agents that are in this group. They do an open house once a month, for all the agents to come through. Now, what you need to know about this is, if you're looking for a home, especially a luxury home, every home—and it has to be over a million dollars—you’ll see that some of these homes that don’t actually sell on there, when they go back, and hit the market, they go at a reduced price. So you're gonna pay a premium for a luxury home on this site. And that's okay if you’re not money conscious and you want a really good home, because these are luxury homes that have their turnkey, you don't put anything into them, or at least most of them. And this is an opportunity that you probably would have. If it's a great home, it will not make it to MLS. And this is why that stat is so high. If this is a great home, and it's put on this network, it cannot be seen by anyone except for the agents that pay to be in this network. And when I say “pay to be in this network,” I don’t even think they make any money off it. It's such a low fee, it just helps them operate with stuff. So if you're interested in buying a luxury home, the very first place I would start would be making sure that your agent has access to luxury networks. And if your agent doesn't have access to that, you may want to think about hiring one that does, because premo properties start at this network, and then the ones that don't sell on this network—not all of them but most of them—actually start on this network, and if they don't sell for a certain reason, they go on to MLS at a reduced price. I can tell you we sold about three homes last year through this. One of them never made it to MLS, we put it on a luxury network, we had several people that were interested in it… and also, when I tell my sellers to put it on this luxury network, this is the place you put it at, where you want to test the market. You want to see if you can get just a little bit more than you would on MLS. It's a good way to gauge whether your MLS price is going to be responded to or not. So yeah, so those are five different ways that we have identified, for our home buyers, and our clients, to find properties off market. and I think if you employ all of those five ways, even if you're under a million dollars, you have the four great ways. I think if you're working with an agent that employs all four of these methods you got a leg up from the competition, because I could tell you that most of them don't even know one or two of them. So this is a big deal, and this is why you hire a professional. This is why you don't hire an agent that's salary. So look, alright. We've got a great broadcast next week, for those of you are interested in social media marketing. I am going to be interviewing a Instagram Wiz. So you can see us next week. If you liked what you saw today, put a like on Facebook, put a like on YouTube, and subscribe on Facebook by typing the word “agent.” And if you're watching this on Youtube then hit the subscribe button. Rene, thank you so much for joining us and giving us this insight.

Rene: Thank you for having me.

Ryan: Yeah, yeah. We will see you guys later.

Matt: Until next week.



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