Pros & Cons Of Selling Your Home Off Market

Posted by Eric Peterson on Tuesday, December 8th, 2020 at 12:40pm.

 

If you are planning to sell your home you may be approached by a buyer or a Realtor to sell your home off market. An off market sale is where your home is not widely advertised in the Realtor database called the Multiple Listing Service or MLS. Some agents also call off market listings pocket listing or their silent market.

You might be wondering if you should sell your home off market is right for you. Here are some of the pros and cons of selling your home off market.

Pros Of Selling Your Home Off Market

Your Neighbors Don’t Have To Know Your Home Is For Sale

If you would like to sell your home more discretely an off market sale may be a good option for you. Your friends and neighbors don’t have to know you are selling your home or moving. You may be able to sell your home with only 1 or 2 showings.

You May Not Need To Do As Much Market Preparation

Perhaps you are planning to paint or replace the carpet. If you are interested in selling off market you can let a few buyers see your home and perhaps they will be willing to pay your price before you do any market preparation.

You May Get More Money…Maybe

When talking about selling your home off market there are 2 competing principles in effect. On the one hand an effective principle of influence is called scarcity. Because there is only 1 home to sell it is scarce and a buyer may be willing to pay more for your home because they are worried if you list it other buyers may be interested.

When talking about selling your home off market there are 2 competing principles in effect. On the one hand an effective principle of influence is called scarcity. Because there is only 1 home to sell it is scarce and a buyer may be willing to pay more for your home because they are worried if you list it other buyers may be interested.

The other principle in effect is supply and demand and I will talk more about that in the con section.

In my opinion the theory of scarcity can work to a seller’s benefit in the higher price ranges such as over $1 million where homes will be more unique and you may be able to test the market price with buyers prior to being listed in the MLS.

Cons Of Selling Your Home Off Market

You’re missing out on a huge part of the market

There may be 30-40 families interested in your home. It is impossible to contact all of them and let them know about your home being for sale without advertising it in the MLS. Despite what any Realtor tells you the most effective way to advertise your home to sell it for the most money is in the MLS.

You Only Get 1 Chance To Make A First Impression

It’s said that buyers make up their mind about your home in the first 7 seconds. Buyers will always tell us they can see past market preparation that needs to be done. In my experience and what I have learned from seeing thousands and thousands of buyers at our open houses is that isn’t true.

I should clarify that a little…the buyers who are looking for a deal and looking to buy a home at a low-ball price can look past a home’s major blemishes. The buyers who will pay top-dollar for your home will be turned off.

Showing a buyer your home off market before it’s ready and expecting them to come back for a 2nd time once it’s on the market isn’t realistic. What I know about buyers is once they are turned off it’s almost impossible to get them turned back on.

You Will Most Likely Sell For Less

In all my years in real estate I have never seen the reported price of a home sold off market and thought to myself “Wow…the seller got a great price!” More often than not I see a home sold off market and think we could have sold it for another $50,000.

In many cases what I am seeing are homes being sold off market by the big brokers whose listing agents are incentivized to sell your home to a buyer represented by an agent from the same brokerage. You really have to be careful about that and especially if the listing agent you hire doesn’t have experience working in your area.

You might be happy selling your home off market for $450,000 because your listing agent who doesn’t have experience says it is worth $450,000. Would you still be happy if you found out your home could have sold for an extra $30,000 or more? Probably not!

I talked about scarcity. The other side of that coin is supply and demand. In our market where the buyers outnumber the sellers, we have a better chance of getting your home in a bidding war where it can sell for significantly over the listing price. Only by advertising your home to all the buyers who are interested in a home like yours and not just the few who find out about it off market can you let basic economics drive up the price.

What Would I Do?

My clients often ask me what I would do in their shoes. When it comes to selling a home off market, I can tell you what I am doing right now. My aunt passed away and I am handling the sale of her home for my family. Her home is located in Arlington, Virginia, about a mile from Amazon’s HQ2. This is one of the few real estate markets hotter than the Austin area.

Because I have been named administrator for my aunt’s estate many potential buyers and Realtors have contacted me about selling the home off market. Buyers are saying they will buy the home as-is and Realtors are saying they have a buyer.

What am I going to do? I wouldn’t even consider selling her home off market. The home is in a desirable location and there are a few unique features that I know will be attractive to many of the buyers in that neighborhood. Selling off market would leave too much money on the table. Once a few minor cosmetic items are addressed I will be listing the home for sale in January.

Every situation is different and for some sellers the highest price is not the most important part of selling their home. That’s ok and for those sellers we have other ways to accomplish your goals. For sellers who want to maximize the price selling on the market will likely be your better option.

What’s better for you? Let’s talk about it. If you want to sell off market or on the market contact me directly at 512-791-7473  and we will come up with the best strategy for you.

 

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