ARE YOU CONFUSED BY ALL THE OFF MARKET ACTIVITY?
You may have noticed a lot more Off Market activity recently in Balgowlah Heights. Agents might have invited you to view homes pre-market, or even had agents contact you to sell this way. It’s a recent phenomenon which has created a weird sort of paradigm for buyers and sellers.
Ultimately as Aussies we generally conservative by nature and some vendors right now are hedging their bets by willingly offering their homes to buyers but without necessarily running a traditional public campaign. Part of the logic is that if the campaign does not yield the right price, then they can retain the home and haven’t tainted their home in the marketplace, or had to publicly announce themselves as sellers. Privacy being key right now with decision-making.
From a buyer’s perspective, off market is an exciting place to be. By being on an elite agent’s database buyers are given a first look at listings and have the opportunity to secure a home ahead of the general public. This process can pose a dilemma however, in that the process of engaging and visiting each home privately is potentially a more time-consuming approach to buying.
It will be interesting to see how Off Market plays out, but while it is a thing I thought it may benefit the community if I share a little of what I’ve learnt from our off market activity during Covid-19. Here is a brief set of insights that might help you navigate:
Pros for vendors:
- Often no marketing costs associated
- No public open homes, often means less extensive preparation to show your home
- Privacy is increased as buyers are vetted and only shown the home once pre-qualified
- Often a price premium can be obtained this way – especially if vendors are less inclined to negotiate.
Cons for vendors:
- Often the best sales results come from competitive tension between buyers. Off market can generally be a slower way to generate that tension.
- Public campaigns generally attract buyers at the start of their search, and therefore potentially not on active databases yet. Off market can fail to attract these new buyers – which can sometimes be the most motivated.
- Some agents use off market hopes as a way to open vendor’s doors, but may only have a very small pool of qualified buyers to actually show through the home.
Pros for buyers:
- Early access to homes
- Can secure a home which may otherwise not be marketed in the public domain
Cons to buyers:
- Potentially time-consuming process
- May need to engage with more agents, and more proactively with agents, to find homes this way
- Sometimes vendors are not as motivated when marketing their home off market and sometimes this can come at a cost, i.e. paying a price premium, or even worse, negotiating with no eventual sale
SELECTING AN AGENT TO WORK WITH OF MARKET:
As a vendor, selling off market can be an exciting prospect, but be mindful the role of the agent is actually more critical than a publicly launched listing. With a public listing, the home generally goes on Domain and REA, therefore attracting buyers to the home. With off market, the role of the agent is the complete opposite, i.e. the agent plays the role of attracting the buyers to the home. This means that their database, and skill in being proactive and motivated to generate interest for your home (often discretely) is entirely on their shoulders. Not all agents are up to the task or interested in working this way as a start.
When selecting an agent to work this way, consider the following:
- Have the agents you interview show you database reports of buyers that are active in their database that are qualified to buy your home. Domain and REA offer such activity summaries, but elite agents will also have extensive reporting mechanisms which they can showcase to you and highlight database strength ahead of your engagement with them.
- Choose a local agent only, not out of area. Local agents will have a stronger likelihood of engaging a off market buyer with their local knowledge and are more likely to have met buyers looking in the local area.
- If privacy when selling your home is a priority, ensure that you have only engaged an agent you trust. This is sometimes different from an agent that has been recommended. Trust is something you need to decide for yourself and only comes by interviewing the agent and vetting them for yourself.
- Have a sales agreement in place with defined conditions such as: no marketing costs, no social media advertising, no Domain and REA, etc. Defining what can be done is important but don’t forget to highlight what shouldn’t be done by the agent. A sales agreement is not only mandatory for an agent to have in place with the vendor, but it is also a way for you to highlight the terms and conditions of the engagement.
Now is a great time to sell off market. We’ve had great success this way and happy to chat to anyone that may want additional knowledge on how it works and where it can go wrong. While sentiment is strong, and demand greater than supply, it may just be the silver bullet you’re looking for. Not all homes are suited to off market so contact me to find out if yours may suits.