Off-market property sales come with risks

Off-market property sales come with risks
Off-market property sales come with risks

Off-market selling, where a property is sold without any public advertising, is an emerging trend in some suburbs across Sydney although it represents a very small proportion of the properties sold.

Given Sydney's auction market strength, there are fiscal risks for vendors selling off-market because there’s no way every possible buyer will have known the property was for sale.

Such an outcome will leave that lingering doubt as to what what your home was ultimately worth.

But for some vendors it is still worth the risk, estate agent John McGrath recently noted.  

He says there are some circumstances where the importance of getting a deal done quickly for a reasonable price outweighs the alternative of going to the open market and negotiating with buyers over several weeks for the best price.

Such circumstances include relationship breakdown and financial stress, he suggested.

Off-market selling often enables privacy too especially for prestige clients. 

They typically don’t need a quick deal and are happy to wait while avoiding the public advertising campaigns and especially the intrusion of open for inspections. 

Off-market offerings can possibly generate an electric air of exclusivity.

Australian estate agents have adopted the term "off-market", though they have been occasionally dubbed "pocket listings." That's a real estate term used in United States. The never advertised pocket listing data is hard to come by, but sits at around 8.5% in some US states.

The off-market Sydney offerings are the domain of savvy estate agents who dip into their extensive database for potential buyers. 

Sure some time-wasting clients list off-market simply to test the waters, with the ambition of achieving their amazing dream price.

But there are genuine reasons some vendors go off-market especially if their property is tenanted with preparation for the perfect property photo shoot quite difficult to achieve.

Others do it to avoid the cost of a marketing campaign, but ultimately, McGrath thinks sellers "pay" for this strategy with a reduced sale price due to reduced competition.

It is the big numbers of buyers who've handed over their phone and email contact details that has assisted the current surge in off-markets.

Well-organised estate agents have created this ability to sell directly through their database. 

The best agents are staying intouch with forlorn buyers - dedicating time to developing relationships with the purchasers they meet at opens, auctions and online.

Another reason for off-markets has been the buyers’ agent industry which seeks out time-poor families and executives especially in markets that are undersupplied. 

That's much of Sydney this spring.

I monitored 22 property sales from across Sydney last weekend which fetched a combined $37.5 million under the hammer. 

The $37.5 million was around $5.25 million above the top price guide indication. That's a 16 percent premium that buyers paid on top of estate agent estimates.

It represented $6 million more if the properties had only sold at the price guidance or at the lower end of the price guidance for the 22 properties.

The biggest premium sale was in Drummoyne when a four bedroom waterfront fetched just over $8 million, smashing its price guide of $6 million to $6.5 million.

Some 20 of the 22 sold for above expectations. Only one, a three bedroom $582,000 Blacktown home, sold at $8000 less than the guide given pre-auction.

It sold for $582,500, having quoted a price guide of $590,000 to $630,000.

This article was first published in the Saturday Daily Telegraph.

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

Tags: 
Off the plan Off Market

Comments

Be the first one to comment on this article
What would you like to say about this project?