Got an Off-Market Offer in Los Angeles? How to Tell If It’s Fair (Without Leaving Money on the Table)

You get a call, a postcard, or a DM: “We have a buyer for your building—no listing, quick close.” Off-market offers can be real opportunities. They can also be underpriced or loaded with terms that hurt your net. Here’s a simple, owner-first framework to decide what to do next.

The 60-Second Gut Check (answer yes/no)

1. Is the buyer specific? (named fund/principal, not “we have buyers”)

2. Do they state price and terms (deposit size, contingency length, financing)?

3. Have they closed nearby in the last 12–18 months?

4. Are they willing to share proof of funds or a lender letter?

5. Will they sign a short, clean LOI within a week?

If you can’t get to “yes” on at least 3 of these quickly, treat it as exploratory—not a deal you should lock up yet.

Price Test: Use Stabilized NOI (not hope)

Most off-market offers anchor you to in-place income. Fair value usually reflects supported stabilized NOI (what a reasonable buyer can achieve within 12–24 months), minus believable costs to get there.

Quick math:

Stabilized NOI = (Market Rent × Occupied SF) + (Rent Upside on Renewals) – (Vacancy/Collection) – (Normalized Expenses)

Value (range) ≈ Stabilized NOI ÷ Market Cap Rate (± adjustments for risk/work)

Example (simple):

• In-place NOI: $185,000

• Vacancy: one 1,200 SF shop likely to lease at $36/SF/yr → +$43,200 gross → +$34,000 NOI after expenses

• Stabilized NOI ≈ $219,000

• If similar assets nearby trade ~5.75%–6.25% depending on lease quality, value range ≈ $3.5–$3.8M before credits/TI assumptions.

If your off-market offer is pegged to $185K NOI and ignores a clear, supportable path to $219K, you’re probably leaving money on the table.

Terms Can Add (or Subtract) Six Figures

A “higher” price with loose terms can net less than a slightly lower price with tight terms.

• Deposit: Meaningful initial deposit (e.g., 3–5% of price) after a short feasibility period.

• Contingencies: Keep diligence tight (e.g., 15–21 days for docs/inspections) and financing specific (clear dates, not open-ended).

• Estoppels: Set a realistic threshold (e.g., 75–80% by income). One unresponsive tenant shouldn’t tank the deal.

• Prorations/Credits: Prorate on actual rent collected; define NNN/CAM reconciliations to avoid closing-table surprises.

• Assignment/1031: If you plan to exchange, include assignment rights and cooperation language from day one.

• Access/Disruption: Limit buyer contact with tenants until contingencies are firm; require notice and coordinated tours.

Rule of thumb: If the offer doesn’t specify deposit %, contingency lengths, and estoppel threshold, it’s not “real” yet.

Comps Without the Noise

Block-by-block matters in LA. Use comps to support your NOI path, not to chase a number.

• True peers: similar street feel, tenant mix, parking, visibility, and condition.

• Adjustments: market rent deltas, remaining lease term/bumps, capital needs (roof/HVAC), and vacancy risk.

• Debt reality: today’s DSCR and rates affect value. If the buyer’s lender can’t underwrite your story, the price will retrade.

Ask the suitor, “Which three nearby sales are you using, and how did you adjust them to our building?” If they can’t answer clearly, proceed cautiously.

Should You Invite a Second Bid? (Often yes)

You don’t have to “go on the market” loudly to test price. A short, controlled exposure—10–14 days to a handful of qualified buyers (local exchange buyers, private capital already closing in your submarket)—often improves both price and terms.

How to keep it quiet:

• Use anonymized teasers and scheduled tour blocks.

• Share a clean data set (rent roll, T-12, leases) under NDA.

• Give the original suitor a fair shot in best-and-final.

This protects tenant relationships while confirming you’re not selling at a discount.

Red Flags With Off-Market Buyers

• “We’ll figure financing later.” Means delays or price cuts.

• Tiny deposits + long contingencies. Cheap options, not real commitments.

• Aggressive assignment rights. Could be wholesaling your deal.

• Vague environmental language. Opens the door to endless extensions.

• “Price is firm but terms are flexible.” Translation: more retrades coming.

When Taking the Offer Makes Sense

• You value speed/certainty over squeezing the last 1–2%.

• Price is within your supported range on stabilized NOI.

• Terms are tight (big deposit, short contingencies, lender engaged).

• You’ve pressure-tested with at least a couple of credible parties—or you’ve documented why that isn’t practical (estate, timing, privacy).

If those boxes are checked, sign a clean LOI, move quickly to PSA, and keep momentum through escrow.

What to Put in a Short, Clean LOI

• Price range pending confirmatory diligence

• Deposit (amount + when it goes hard)

• Diligence period (calendar days, specific deliverables)

• Financing (lender letter or proof of funds attached)

• Estoppel threshold and responsibility

• Assignment/1031 cooperation

• Closing timeline and access rules

• Confidentiality (no tenant outreach without consent until diligence is firm)

One page is fine—specific beats long.

FAQ

What’s the biggest risk with off-market offers?Anchoring to in-place NOI and ignoring a provable path to higher income. That, plus loose terms that enable retrades.

Do I have to tell tenants I’m selling?Not during early diligence. Coordinate tours and communications to minimize disruption, then collect estoppels once contingencies are tight.

What if I have vacancy?Present a simple leasing plan (market rent, TI/free rent norms, timeline, broker fee). Buyers pay for upside when it’s supported.

Can I avoid a bidding war but still test price?Yes—run a quiet 10–14 day window to a short list of qualified buyers. It often improves your net without going fully public.

When should I just accept the offer?When it lands in your supported value range and the terms protect certainty (deposit, contingencies, financing, estoppels). Time, taxes, or privacy may justify moving fast.

Bottom line

Off-market offers can be great—if the price reflects stabilized income and the terms protect your closing. If anything feels soft (price support, proof of funds, contingency lengths), run a short, controlled check against 2–3 qualified buyers before you sign.

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