If you have never been a part of an off-market property deal, then this can be a mystery.
But off-market property sale is not a fancy term. It is just a type of sales method in which a property is sold without any public advertising, with no auction, no internet listings, no ads in the local paper.
This method of sale is used when a property requires an immediate sale where the sale itself is more important to the seller than the sales price.
Off-market property is not generally recommended in many situations as it hardly achieves the maximum price. However, exceptions are always there. Despite the above, this form of sales is quite popular across Australia.
Reasons a House Be Sold Off-Market
When most people choose to sell off-market property, it is generally because they need to sell urgently. The reasons can be many, like financial difficulty, broken relationship, loss of job or any other.
The off-market property sales mean there is no marketing campaign to fund.
Sometimes, even the top-tier properties are sold off-market because such properties are owned by wealthy individuals who value their privacy and also prefer discretion around the sales.
In other cases, the seller might prefer fewer people entering the house and might not want the pressure of having to stage the house for sale.
The off-market buyers expect the home to be in a ‘lived-in’ state and such buyers are mostly serious about buying. They probably would not waste time in thinking of buying. They would just make a purchase.
Whatever approach you use to sell properties in the real estate industry, there will be some pros and cons. So, let us see the advantages and disadvantages of off-market property sales.
Advantages of Off-Market Property Sales
Many people think that an off-market property arrangement is a win for the buyers because of less competition. But the experts say that a non-traditional approach offers potential advantages both for the buyers and the sellers. First, let us see how the buyers benefit from off-market property sales.
Opportunity to Bargain
Purchasing off-market property can help buyers in avoiding competition-driven price inflation that is often seen in the open market. It means that they can get a better deal.
Without any pressure of losing the deal, the buyer can make a sensible and well-thought-out decision, the best in line with their needs and the budget.
Another advantage for buyers is intangible. The off-market property selling makes the entire process of buying less anxiety-ridden because you are not competing with anyone, which makes the process less stressful. If you are a buyer and have attended an auction, then you would know what it means to have a home selling anxiety. The feeling is no less than appearing for an exam.
Now, let us see the benefits of off-market property selling for the vendors i.e., the sellers.
The pros are almost the same. If a buyer feels stressed out, the seller also sails in the same boat.
Selling a property off-market is a stress-less option
From the vendor’s perspective, the off-market avenue removes the stress factor.
You also get to save time, hassle and money. How? There are no open houses, minimal inspections and you avoid exposing yourself to the risks inherent with open house inspections. You will also a great deal on advertising, signage and other marketing costs involved in the process of selling a house.
More Chances to Get a Good, Fair Price
Through off-market property sales, sellers have the potential to sell faster than at a great price.
Through this sales method, you can avoid the length of a normal sales campaign and can also move forward with confidence about the next purchase.
Disadvantages of Off-Market Property Sales
Just as is customary, with pros comes cons. So, let us see some negatives of selling a property off-market.
You do not have the choice to make because there are not enough properties. Because of a limited pool to choose from, buyers have to settle early with what they get. This is the primary reason this method is less preferred.
It Requires Patience
With such an approach to selling property, you would need patience because when there is a high clearance rate, vendors are less keen to adopt an off-market strategy.
Tracking the right agent to find the right off-market property also requires persistence, so we can say that the off-market property sales are not for those who are looking for a quick purchase.
Risk of Losing a Top-Dollar
The most obvious and one of the costly disadvantages of selling the property off-market is that the sellers might not get the maximum price. This is primarily because of the fact that they do not test the property on the open market but create competition among buyers.
The general rule of thumb in sales is that the more people see your property, that will equate to a higher sales price.
Difficulty in Judging the Buyer’s Seriousness
In this method, it gets hard to gauge the sincerity of potential buyers because of off-market property deals.
Is it Cheap to Sell Off-Market?
Selling your land, acreage or house off-market is generally a cheaper option, as you do not have to worry about the costs of marketing.
If you would like to sell your property without having to incur extra expenses, selling off-market will prove to be right. If your real estate agent has a strong buyer network, selling a property off-market can be perfect for quick sale.
Other Types of Sales
Every home is different, so the process of selling also differs and has to be unique. There are a few ways to sell your home – the method you use will depend on a lot of factors like the need for a vendor, how quickly you want your property to sell, location, the market and a host of other things.
Now, we will take you through other methods of selling a house. Apart from the off-property market sales or private treaty, there are two other important methods such as auction and expression of interest (EOI)
Let us know how each of them works and how these methods will help you in deciding the best option for you.
How Does an Auction Work?
Vendors who want to attract more buyers and want to get the best possible sales price often choose to put their house up for auction. For this method, vendors often reach out to the seller’s agent. In this method of selling a house, face-to-face competition between potential buyers is held.
An auction is a publicly or privately held event which is organized by your real estate agent.
Conducting an auction means it is the final step after weeks of marketing and advertising with potential buyers who gather to bid on your property until the highest offer is made.
Before the auction starts, your real estate agent will set a reserve price – the minimum amount you are willing to accept for a home.
In this way, you are guaranteed a selling price that is equal to or greater than the amount you desire. Auctions also have the benefit of creating a sense of urgency – not because there are other bidders, but also because of the deadline of having a fixed date.
There are also some downsides to auctions such as:
- Some buyers are put off by the competitive nature of auctions and might steer clear.
- If your property is passed in, the price will be known to the public, which can lead to a drop in the perceived actual value of the property.
- There is also an additional cost of hiring an auctioneer involved.
What Does ‘EOI’ Mean in Real Estate?
The goal of a sale by expression of interest i.e., EOI or sale by tender means to gather buyers’ best offers by a specific date and time without disclosing the final price that the vendor is willing to sell for.
Benefits of EOI
- The buyers submit their best offers in written from the start.
- There are no negotiations involved which help the process to move faster.
Once you are ready to sell, your property will go on the market for a few weeks. Potential buyers will have the opportunity to take a look at your house, make sure their finances are in place to make an offer, and everything else is also sorted out before the offer is put forward.
Another benefit of this method is that it provides the sense of urgency with the stress of public bidding.
If you have any query regarding buying or selling properties, contact Raine and Horne Land Victoria, experts in Melbourne.