Over the past 12 months, we’ve seen a big surge in the number of people looking to both buy and sell properties off-market.
In effect, an off-market property transaction is one where the vendor doesn’t list the property on a real estate portal. However, in the true sense of an off-market transaction, it could be said that this is really just a pre-listing.
The main difference between a normal real estate sale and an off-market transaction comes down to how much marketing the vendor (or agent) undertakes.
There are both advantages and disadvantage to both buyers and sellers when looking to conduct property transactions off-market.
Buyers
The main advantage for a buyer when choosing to purchase a property off-market is price. Typically, a property that is sold without being wildly advertised should see less competition and therefore would potentially sell at a lower price. This isn’t always the case, though.
When a sales agent lists a property, their goal is to generate as much interest as they can, so when the time comes to accept offers or take the property to market, there is competition between the buyers. This is how properties can sell for well over their asking price.
This competition is removed if a vendor looks to sell off-market, simply because the property is not getting the same level of exposure that it could get if it was listed on a real estate portal.
That said, although a property isn’t wildly advertised, most agents will in fact advertise it to their list of active buyers. This might be via an email list that the sales agent maintains, and they keep buyers updated regarding their upcoming listings.
If a property is appealing, and there are a number of active buyers, even though the property isn’t on a real estate portal, it will still likely attract strong interest and multiple bids. For a vendor to achieve a good price, they need to see only two active buyers to run up the price of a property.
Sellers
With the likelihood of less competition and a potentially lower price, it might seem counterintuitive for a vendor to choose to sell off-market. However, there are a number of reasons why they might look to go down that path.
The first clear advantage is time and costs. If a vendor is looking to make a quick sale, a good agent will likely be able to broker a deal with their current active buyers. This means the vendor won’t be required to pay the high advertising costs that come with advertising through a real estate portal and the potentially long process of taking a property to auction.
The other element to consider from the vendor’s perspective, is who the end buyer might actually be. As a general rule, owner-occupiers who are prepared to fight for a property are the types of buyers that will drive the price of a property higher. If the end buyer of a certain property isn’t in that section of the market, then the upside might be limited.
The best examples of this would be a development block or a home that needs a significant renovation. In these cases, the price is somewhat set by the ultimate end value of the renovated property or new development.
Both renovators and developers should not be looking to overpay for these types of properties, and a good agent will be able to market the property to them directly.
If you have a question or would like more information, please contact…
Steve
Mobile 0423 894 864
steve@bettermoneylenders.com.au
Brett
Mobile 0428 156 680
brett@bettermoneylenders.com.au
