Do You Really Think It Is a TRUE Off Market or Pocket Listing?

[Dan Handford]

Brokers are probably the best resource when it comes to finding "off market" or "pocket" listings in most markets. Usually 2-3 brokers will dominate most markets when it comes to multifamily apartment syndication deals. 

Does anybody really think these are truely not marketed to anyone else? 

I believe that no deal is a true off market deal. 

It may be not marketed on loopnet but a broker would not be doing their seller a service by only giving a listing to one buyer. 

Right?

[Brian Burke]

@Dan Handford yes there are off-market deals.  The basically fall into three categories.

The first is where the seller is trying to hire a listing broker, so they call all of the big brokerage shops to get a BOV (Broker's Opinion of Value), and they tell the broker that they can share the deal with their clients.  Here, the broker calls all of his clients to peddle this "off market listing" hoping one of them will buy it.  If one of their clients buys, the broker is assured a commission.  If they don't, it's a roll of the dice whether they get the listing or not--some other broker might get the listing and the other brokers get nothing.  These are sometimes good deals, more often they're just average because every broker that the seller called has called all of their clients and by the time it's all said and done everybody knows about it.

The second is where a seller wants to sell, but doesn't want anybody at the property to know it's for sale, or doesn't want a bunch of tours, or doesn't want to wait for the broker to make up a full package, market the listing, take offers, etc.--or whatever the reason is.  They just want the broker to bring the best offer they can from the best buyer they can as soon as they can.  So the broker calls a few of their best clients and finds one to buy it.  These are usually the best off-market deals and you'll only get these if you have bought from the broker before or have otherwise built a very solid relationship with him or her and have a verifiable track record.

The third type is the one that is overpriced and no broker wants to embarrass themselves by taking it to market, nor do they want to spend any time or money marketing it if they know it isn't going to trade.  So they call all of their worst clients, the most inexperienced, and/or the ones that are most hungry for a deal and see if they can find a sucker.  This is by far the most common "off market" deal and the one you are most likely to see bought by an inexperienced or relatively inexperienced syndicator...or a 1031 buyer that doesn't want to cut a check to uncle Sam.