Why selling off-market could cost you tens of thousands of dollars
You could save thousands on advertising, not have the hassle of hosting an auction or open house events, but the temptation of an easy sale off-market could cost you more than you bargained for.
We’re talking about off-market selling. Where a property is sold without any advertising and bypasses the usual listing, inspections, auction and / or offers process. For many, the idea of having a firm purchase offer on the table, is better than nothing. As the saying goes: “A bird in the hand is worth two in the bush”.
What is off-market selling?
In a rising market, the off-market sale is attractive to the buyer, because they avoid the hassle of the competitive bidding game. For the seller, they’re thinking that market forces of excess demand still apply off-market, and they’ll ride the wave of the rising market with a healthy sales price, and the slightly lower sales price will be offset by savings on advertising and auctions.
In a falling market, temptation will be to grab the offer on the top at the cost of getting a better price on the open market. For some people, the attraction here is that open market selling might see limited demand force a less-than-desirable sale price. Some agents might even actively promote off-market selling, claiming they have a buyer in their database that will match the listing and get the property sold. Be careful when choosing an agent to list with.
There could also be a privacy aspect driving people to sell off-market. Maybe the sale is a deceased estate and the family wants to sell quickly. Or parents are selling to their children, siblings selling to each other, and so on. In these cases, the vendors might simply want privacy or they know their buyer already. But these cases are the exception. Generally speaking, in most market conditions, an agent who knows the market can fetch a price that will put a smile on your face.
A good sales figure might not be top dollar
So, here’s another phrase for you: a false positive. While you might get let’s say $750,000 in an off-market sale, you will never know the price you could have got in an open market. While the $750,000 is a positive result, it is in fact a false positive because you might have given up tens of thousands in a competitive sale process, even with the selling costs factored in.
All this should tell you that selling off-market could be a good way to dud yourself on getting the best possible price for you home. Why? Because this is where agents – good agents – earn their money. They know the trends, backed with data, they know the suburb profiles, and they know the buyer market. You’re not investing in advertising, by going to the open market, you’re investing in a savvy marketing strategy to maximize your sales price. Ultimately, you haven’t tested the market so you can never be sure that the price your home sold for is as good as you think it is.
I was born to be in sales. From a very early age, I was serving and helping clients in my father’s hardware business and giving them advice, which is scary. I love working with people, helping them get what they want, and pushing myself to excel. My friends and family that know me well laugh about all the jobs I have done over the years, but it was all to get me to this point in my life, a real estate agent.