The big problem with ‘off market’ sales
Sellers are potentially costing themselves hundred of thousands of dollars by choosing to sell their homes 'off-market'.
This method of selling has enjoyed a sharper focus this year due to the health restrictions imposed under the coronavirus pandemic.
Such considerations are valid and some vendors may have a reason for selling this way, such as privacy. But for the majority of sellers it's probably wisest to broaden your home's appeal to as many potential buyers as possible.
One example of this is Blackheath's glorious Balquhain, considered one of the best homes in the Blue Mountains, which sold last month to a casual buyer for $3.8 million who was perusing the Wentworth Courier. The buyer toured the home for just 20 minutes before he decided he wanted it.
MORE: 'How not to sell a home'
Real estate expert and Sky News commentator Tom Panos says the sales approach can be broken down into three market sections:
1) Off market - where the home is offered to a select list of buyers perhaps via a database.
2) Off portal - where the home is for sale, but is not advertised in print or online via portals such as realestate.com.au.
3) On market - the home is marketed extensively to reach as many potential buyers as possible.
"I have a saying: 'you're not in the market unless you're on the market'," Mr Panos said.
"You want to give yourself the best chance to get the best possible price. That's why I don't like selling 'off market'. Sometimes a vendor, perhaps someone who is high profile, might want to sell discreetly, without a sign board.
"But generally if you are selling 'off market', you're not showing the property to the total market. You end up excluding the concept of competition.
"And competition is what wins gold at the Olympics.
"Often when you go to a database, you're only going to one set of customers. My big belief is that great marketing attracts passive and out of areas buyers.
"When you're selling your home. You're looking for the best buyer, not the first buyer."
How to generate leads
According to a recent J.P. Morgan survey of 300 vendors who had sold or were planning to sell their home:
- 50 per cent of vendors said realestate.com.au generated the most leads for them, compared to only 9 per cent who said the agent's website had generated the most leads
- 60 per cent were influenced to spend on advertising to optimise the amount of money obtained from the sale (compared to 40 per cent who wanted to reduce time to sell)
- 86 per cent of vendors still prefer to use real estate agents to help them get the best price for their home.
Vendor Trevor Jones learned his lesson about selling off market with his former Luddenham home. In attempting to sell off market, Mr Jones had potential buyers suggesting his home was worth $1.8 - $1.9 million. After switching agents to Paul Merrick at Merrick Property Group and taking his property to market, CoreLogic records show it sold for $2.2 million in September.
"It was a tough road at first with a lot of stress but we made up for our mistakes and got a great price in the end," Mr Jones said.
Vendors the Jacobs family would likely have cost themselves more than a quarter of a million dollars, or 16 per cent of their sale price if they sold their Canterbury home 'off market'.
After researching a number of different agencies, with many recommending selling 'off-market', the Jacobs listed with sales agent Frank Mazzotta of PRD Nationwide.
The property had been valued at $1.4 million - a price they would have considered accepting if they didn't go to market. However after an extensive marketing campaign the home sold at auction for $1.67 million.
"For most people it's their biggest investment, so why wouldn't you want to get the best result possible?" Mr Mazzotta said.
"Why get a few people interested when you can get them all. It's like fishing, you don't throw the line in once or twice and hope for the best, you keep fishing. By going 'off market' the vendor might have saved $10,000 to $15,000 without marketing and styling but in the long run they would have cost themselves a lot more.
"At the end of the day you want to maximise your price. You don't know exactly who is out there looking so you want to create that sense of urgency and sense of competition."
Originally published as The big problem with 'off market' sales