An off-market sale refers to a real estate transaction that avoids the traditional marketing processes. The climbing cost of marketing has contributed to a noticeable increase in off-market sales.
These sales typically start when a property owner indicates to an agent their potential interest in selling, either now or in the future. The agent keeps their details on file and reconnects when a suitable buyer emerges. Alternatively, an agent or buyer might approach a property owner directly, inquiring about their interest in selling.
Off-market sales offer several advantages. They eliminate upfront marketing costs, avoid leaving a digital footprint, and alleviate the stress associated with a typical property sale. Property owners often hold the upper hand in negotiations since they were the ones initially approached. They are also more likely to walk away if the offered price or terms don't suit them.
However, a significant drawback is the lack of market testing, especially in a rising market. When buyer demand is strong and listings are scarce, the price from an off-market sale may fall short of what could be achieved in the market at large.
An owner might tell an agent, "I will sell if you can get me $1.2 million." This might sound like a reasonable move but in a competitive market, the owner might miss out on a better price by not going to market with the right agent, using the right method of sale, and adopting the right negotiation strategy.
Buyer's Agents like off-market transactions. Unlike traditional agents paid by the seller, buyer's agents are paid directly by the buyer and have no loyalty to the seller. They tout their access to off-market properties as a way for buyers to purchase without competition, potentially leading to a better price for the buyer and a lower one for the seller.
If you find yourself approached with an off-market offer or are considering such a sale, carefully weigh the pros and cons before deciding. What might seem like a straightforward and cost-effective sale could end up costing you tens of thousands of dollars due to a lower sale price.
