Inside Real Estate – Episode 21
Off-Market Sales Pros & Cons
What is an off-market sale? An off-market sale is simply a property that sells before or without going on the multiple listing service (MLS). Therefore, it is not freely available to the entire marketplace.
What is the benefit to a seller for an off-market sale? The big benefit is convenience. They do not have to hassle with getting their house ready. You are not putting in new carpet or paint or doing any work. It is simple: buyer walks in, buyer makes an offer, seller accepts it, and you have an off-market sale.
What’s the benefit to a buyer? In extreme competitive market, buyers often like off-market sales because there is no competition. They have a better chance of getting the home that they want without the fear of competing against multiple offers.
The interesting thing is there is risk associated with off-market sales. The risk spreads both ways. There is risk to the seller and there is risk to the buyer.
The seller might be leaving money on the table. It is possible that had they listed their property on the MLS and done a couple of the things that would enhance its value, they could have sold for more money. So that is always the risk for a seller. They do not know if they are leaving money on the table or not.
The risk of the buyer in an off-market sale is they may be overpaying. The house has not had a chance to get market tested, so the buyer really has no frame of reference as to how the property is doing in the marketplace.
It is possible the buyer is going to pay a premium on an off-market sale. It is possible the seller may be leaving money on the table.
Let me give you an example of some of the pitfalls of an off-market sale. Recently here in Pleasanton, there was a home that was on the market and an off-market sale came out. The off-market sale was published after the newly listed home was on the market. The off-market sale was $100,000 higher than the current home on the market.
Theoretically, the off-market buyer paid $100,000 more than what they could have if the house had been listed on the market. The house on the market, by the way, was a nicer house. It had a pool, more upgrades. In this case, you can make a strong argument, the buyer overpaid for the off-market property. Because they bought it off-market, they did not have a chance for the market to test and respond to this property. Putting your home on the market allows you to get a gauge on its relative value to buyers today.
If you are a buyer you need to be cautious and understand you may not have a good read on the value of that property. If you are a seller, it is possible you might be selling it too cheap. That might be worth the convenience factor, it might not. That is a decision you will have to make. Those are the ins and outs of off-market sales.
If you know someone who would benefit from this information, please do share it with them. And if we can help you with any of your real estate needs, please call us at 925-621-0680 or see us at 680homes.com
This is Doug Buenz with 680homes.com and the latest episode of Inside Real Estate. Our topic is “c”
What is an off-market sale? An off-market sale is simply a property that sells before or without going on the multiple listing service (MLS). Therefore, it is not freely available to the entire marketplace.
What is the benefit to a seller for an off-market sale? The big benefit is convenience. They do not have to hassle with getting their house ready. You are not putting in new carpet or paint or doing any work. It is simple: buyer walks in, buyer makes an offer, seller accepts it, and you have an off-market sale.
What’s the benefit to a buyer? In extreme competitive market, buyers often like off-market sales because there is no competition. They have a better chance of getting the home that they want without the fear of competing against multiple offers.
The interesting thing is there is risk associated with off-market sales. The risk spreads both ways. There is risk to the seller and there is risk to the buyer.
The seller might be leaving money on the table. It is possible that had they listed their property on the MLS and done a couple of the things that would enhance its value, they could have sold for more money. So that is always the risk for a seller. They do not know if they are leaving money on the table or not.
The risk of the buyer in an off-market sale is they may be overpaying. The house has not had a chance to get market tested, so the buyer really has no frame of reference as to how the property is doing in the marketplace.
It is possible the buyer is going to pay a premium on an off-market sale. It is possible the seller may be leaving money on the table.
Let me give you an example of some of the pitfalls of an off-market sale. Recently here in Pleasanton, there was a home that was on the market and an off-market sale came out. The off-market sale was published after the newly listed home was on the market. The off-market sale was $100,000 higher than the current home on the market.
Theoretically, the off-market buyer paid $100,000 more than what they could have if the house had been listed on the market. The house on the market, by the way, was a nicer house. It had a pool, more upgrades. In this case, you can make a strong argument, the buyer overpaid for the off-market property. Because they bought it off-market, they did not have a chance for the market to test and respond to this property. Putting your home on the market allows you to get a gauge on its relative value to buyers today.
If you are a buyer you need to be cautious and understand you may not have a good read on the value of that property. If you are a seller, it is possible you might be selling it too cheap. That might be worth the convenience factor, it might not. That is a decision you will have to make. Those are the ins and outs of off-market sales.
If you know someone who would benefit from this information, please do share it with them. And if we can help you with any of your real estate needs, please call us at 925-785-7777 or see us at
680homes.com
