An off-market sale is a transaction without the property being listed on one of the major real estate portals. In the truest sense, an off-market deal could be one where there is no sales agent involved at all and where a buyer approaches a vendor directly or vice versa. However, in recent times, an off-market sale is more of a ‘pre-listing, whereby a sales agent will contact their list of active buyers and try to broker a deal before the property lists on a real estate portal.
This was popular in the early stages of COVID when vendors were unsure whether it was worth paying the hefty listing fees when many were not confident in the property market, and buyers were few and far between. Since then, we’ve continued to see several off-market sales, but it has increasingly been because of the state of the property market. With low-interest record rates and government incentives over the past six months, buyers have needed to act quickly and decisively to secure a property, thanks to a lack of listings. Many deals are being struck before they see the light of day to the broader public.
When Should You Consider Selling Off-Market
When we look at off-market sales, the most obvious question is why the vendor would want to sell their property without listing it. The reason comes down to why the individual wants to sell and also the type of property. Generally speaking, selling a property off-market in the current environment usually involves having a sales agent directly contact several interested buyers. The advantage of this to the vendor is speed, but it might come at a price. If the vendor knows the price he wants and a buyer is ready to go, both parties win, and the transaction can happen quickly. If a vendor needs to sell a property quickly for personal or financial reasons, an off-market sale might be a quick option to make that happen.
However, it should be noted that this is probably not the way to sell your property if you are looking for top dollar. For the most part, if you have a property appealing to owner-occupiers and in an area seeing strong demand, a process like an auction will usually give you the best result. This is why auctions are common for in-demand regions like the Eastern Suburbs of Sydney. The property is advertised widely at the auction, aiming to attract as many potential bidders as possible. When you get several interested parties, particularly owner-occupiers, you stand the best chance of increasing the sales price either at auction or by private treaty.
Conversely, a vendor might sell their property off-market and still get top dollar. An excellent example of this might be a block with development potential. For the most part, a developer will know the exact price a property is worth, and they can’t pay more than that simply because that would prevent them from getting finance. Development finance is often based on the profit margin of the deal itself. In the example of a development block, contacting developers directly and brokering a deal off-market makes sense. Similarly, a property in a deplorable condition that needs significant renovation might only appeal to investors and be a candidate for an off-market sale. Most owner-occupiers want a move move-in-ready party and don’t want to spend tens of thousands of dollars on top of the purchase price.
