At its simplest, an off-market listing is a real estate term which defines a property for sale (or sold) without a public campaign or advertising. Off-market means a property can be purchased if the seller is presented with an acceptable offer but has decided not to promote the fact.
I’m an advocate of off-market listings, and find it a useful sales method where it suits the seller’s goals. An off-market listing may fit sellers who are more focused on achieving a sale than a sale price. This is particularly a good sales method in a buyer’s market, identified when there’s plenty of good quality stock of similar properties by type and price.
Even if your circumstances or goals fit an off-market listing, not every agent can offer an off-market listing with the kind of effectiveness or efficiency that defines this sales method. An agent needs a buyer’s database, and more importantly, one that’s relevant and up-to-date. In real estate, agents collect hundreds, if not thousands of ‘bits’ of buyer information, but most agents only focus on buyers who are likely to represent an immediate opportunity. So any database, whatever its size, becomes irrelevant and losses currency and value – fast. However, where an agent has maintained their database, because of the relationships the agent has fostered with buyers, then an off-market listing may produce an immediate sale at a fair price, instead of a maximum price.
I’ve touched on the key advantage (immediacy) and disadvantage (price), but there’s others to consider before deciding that an off-market as the best-fit sales strategy for any seller.
From the get-go, it’s sellers who see greater value in an off-market (read: silent) listing that will opt for this sale strategy.
It may be awkward for families or neighbours, or high-profile buyers and buyers who want to keep a low profile may like off-market listings for anonymity. Most commonly, I’ll offer an off-market listing as a sales alternative, where my seller presents a case for keeping the property from the public eye, such as a relationship or marriage breakdown, financial hardship or duress, or unemployment.
Regardless of a seller’s motivation, it’s the immediacy of a sale that outweighs the final sale price, which allows sellers to get on with their lives.
In my experience, where a seller has asked for an off-market listing, it’s to avoid paying marketing costs. Off-market listings are only part of a dialogue based on a seller’s circumstances or motivation – not a cost saving exercise. Ultimately, the final sale price will be impacted by an off-market listing, more so than any potential savings.
In any city or suburb, there are buyers who actively seek off-market listings. And people who seek and buy off-market properties are often financially secure or possess the financial capacity to make an offer without the more commonplace protracted negotiations or conditions of purchase.
Timing is everything once an off-market listing is identified. Buyers are aware that sellers of off-market properties are more likely to consider and accept a fair offer with fewer complications (conditions). An off-market listing may present with shorter settlement or building defects. That said, it’s important that for whatever the opportunity and however good the opportunity to purchase, a buyer still has the responsibility of due diligence.
The key to success in buying off-market is to create and maintain a good working relationship with an agent in the area you’re most interested. An agent will search and keep you regularly and frequently up to date with the local market.
Property investors seeking to snap up a bargain would do well to learn about off-market listings in their area. By its very nature, off-market listings are generally only available for a short period of time and a buyer’s success is often a result of being in the right place at the right time.
There’s also less, if any, competition in an off-market listing. An agent will call a pre-qualified buyer to present the property and ask for an offer. Where there’s no interest, an agent will move to the next buyer on their list. An off-market listing is ‘silent’ and brings about a kind of exclusivity that buyers relish. Because it’s silent, a buyer will not get the usual marketing collateral, so the reliance on research and due diligence becomes more relevant.
While a seller is an agent’s primary client, it’s the buyer who holds an advantage. A buyer may capitalise on a seller’s distressed position, so there’s greater potential for a sale with more favourable terms and price.
Selling a property off-market will not suit most sellers, few actually, but it does offer an alternative where there’s a genuine business case for this kind of sales strategy.