Selling Off-Market – Pros & Cons

Selling Off-Market – Pros & Cons

20 September 2023

With the market going into overdrive over the past couple of years, real estate agents have been spoiled for choice when it comes to buyers – Most agents will have hundreds of potential buyers on their database due to the incredibly high demand for property seen since the Covid-19 pandemic. For this reason, it has become a temptation for owners (and agents) to leverage this buyer data which is normally stored in the real estate agency database system to sell properties “off-market” – Meaning they are sold without any meaningful advertising campaign.

 

This might seem like a great idea at first – After all, costs for on-line advertising on sites such as realestate.com.au and domain.com.au have skyrocketed in the past decade and with the onset of cost-of-living pressures brought about by inflation and successive interest rate rises, we all need to find savings where we can. But there is a hidden cost to selling off-market which most will not have considered – And this is what is known as the opportunity cost.

How much more is out there?

In a hot market, where buyers are plentiful, getting an offer on your property is not difficult. In many cases, your local real estate agent would be able to locate at least one willing buyer from their existing database by simply making a couple of phone calls. And it’s altogether possible, in a tight, competitive market, that they may just be able to generate on offer which not only meets, but exceeds your expectations – Which is a massive temptation if you are a motivated seller. After all, you just saved thousands of dollars in advertising costs, right?

Not necessarily.

While you may think you have obtained a great price for your property, the real question is this: Have you got the best price for your property? Competition is what drives property values, and if your property is being offered for sale “off-market”, you are missing out on that competition. The best or highest possible price possible could potentially be several tens of thousands of dollars higher than the offer you have received ‘off-market’. Unless you take your property to the open market, you can never really be sure that you got the best price for it. In fact, you can almost guarantee that you didn’t.

This is the opportunity cost – In saving on advertising expenses, how much have you cost yourself on your final sale price? In some cases this can equate to huge amounts of money.

When an “off-market” sale might be suitable

Despite this, there are instances where an off-market sale might be a viable solution. Price is not always the only motivating factor in a sale for a property seller – Time, privacy and sudden changes in personal circumstances can often be a major factor in the selling process, and having a qualified buyer who is willing to offer favourable terms with a quick turnaround can be attractive to a motivated seller if the situation demands it.

There is also the benefit of being able to keep the sale quiet – If you simply don’t want the fanfare or can’t stand the idea of having your neighbours know what you are up to, then off-market sales are a great way of getting things done with a minimum of fuss. But you will always be wondering – How much money did I leave behind?

As always, feel free to contact us any time for advice on anything real estate related.

Til next time, ciao 😊

 

Disclaimer: The information is this article is for general information only, it is not intended and should not be considered as either legal or financial advice. The information contained herein should not be relied upon solely and all parties are encouraged to obtain their own independent advice before making any financial decision.
Lee Knutsen

Article by Lee Knutsen

Co-founder & Managing Director of House, Lee Knutsen first entered the real estate industry in 2006 as a residential sales specialist. After more than a decade as a sales agent…

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