Today’s guest blog was written by Ryan Zomorodi, the Co-Founder and COO of RealEstateSkills.com, a real estate investing education platform that has trained thousands of students across the nation to start and grow real estate investing businesses. Ryan is the Managing Editor of the Real Estate Skills blog, which receives over 60,000 monthly visitors. He holds an active real estate license in the state of California (DRE #01998734).
Planning to sell your property? There are multiple ways to go about it.
You could take the old school route and have an agent list your home with the multiple listing service (MLS), or you could put it in an auction. Although, an increasingly popular property sale strategy is to sell it off market.
If you’ve only heard of the latter but never really got to understand what it entails, you’re in good company. We’ll tell you what it means to sell a property off-market and the pros and cons that come with it so you can informatively decide whether it’s the route you prefer.
What Does It Mean To Sell Your House Off Market?
Selling your house off market simply means you are selling it privately.
You will neither list it on the MLS, nor advertise it publicly.
You’ll instead work discreetly with a real estate agent who’ll market the property to a limited pool of property buyers exclusive to their network, a buyer’s agent network, or off-market listing platforms.
Note, however, an agent is not a prerequisite either. You may choose to single handedly market, and sell the property as for-sale-by-owner.
Another sought after option is seller directly to an investment company or professional home buying team, without the assistance of a real estate broker. This is a common way to sell your house off market.
Pros of Selling Your House Off Market
Here are some of the perks you’ll enjoy from selling your house off market:
Privacy or Seclusion
Since the property won’t be widely marketed to the general public, there isn’t the usual flurry of activity and pressure that comes from selling a house on the market. The reduced pressure to sell means you can take your time to find a good buyer instead of rushing to sell it because you don’t want the listing to go stale.
If you haven’t fully decided whether to sell, off-market promotion allows you to test just how sellable your property is in the current market. If you find that your property falls below the price point you anticipated, you have the chance to silently pull out of the market. And if your property is in demand and has a higher than expected value, you can sell it at a slightly lower price than the market value to close faster.
Don’t want people to know you are selling your home? Off-market is the route to take. It gives total privacy to sellers who want to keep the property sale lowkey due to life-changing events like divorce or foreclosure .
Selling off-market is also a good idea if you have a tenant-occupied property. This is because it lets you protect your tenants’ privacy by reducing the number of parties that will be walking through their home.
Plus it makes the transition to a new landlord smooth because you don’t need to notify the tenants that the property is for sale. You could just keep the transaction confidential and private between you and the new landlord, and they can keep their identity anonymous by handing over the tenant-occupied property to a property management company.
An off-market listing will also safeguard your safety and privacy if you are a high profile individual looking to keep the sale under wraps. Whatever your reasons for wanting privacy might be, going off-market is guaranteed to give you that.
Sell Your House As-Is
Selling a home the traditional way has its perks but it comes with tremendous work.
You have to prepare your home for selling by cleaning and decluttering to give the home a more broad appeal. You also may need to make repairs and move stuff around so that the property can pass a thorough inspection . This process isn’t just expensive, it’s also pretty time-consuming, and if you are a first time seller, pretty nerve-racking.
Selling your house off-market lets you skip these steps. Because your home isn’t publicly listed, and is marketed to a close-knit group of buyers you will attract motivated buyers ready to buy the property as-is.
For instance, pocket listings are always in demand among real estate investors such as wholesalers and house flippers. When you market your property as one, investors in these categories are usually willing to purchase it as it is because they are aware of its after repair value potential. This saves you time, money, and the headache of the traditional selling process and is convenient if you are looking to sell the property quickly, and move on to something else.
No Marketing Costs
Marketing is inevitable with a conventional listing.
Due to the stiff competition you need to go out of your way to make your listing stand out and increase its exposure. For instance, you will need to hire a professional photographer to take quality photos of your home, and create a virtual tour for prospective buyers. You also have to invest in signage and other forms of advertising.
Additionally, you have to consistently share the listing to your social media pages, and for a shot at quality buyers, hire a professional staging company to stage your house for showings. Simply put, the marketing process for a traditional listing is both time and money consuming, not forgetting strenuous because you’re constantly under pressure to create a positive impression on potential buyers.
Off-marketing selling is the complete opposite. You only need to market it to a close-knit group of buyers, and marketing is solely via word of mouth except when your agent decides to post it on off-market listings, or to share it with their network.
That means no home staging needed, no need to host time-consuming open houses, or even paying for a photographer. With these tasks out of the way, you save time, money, and skip the stress.
Also, if you decide to sell it directly to a home buying company, then there will be absolutely no marketing or advertising of your home for sale. Many of these professional real estate investment companies are able to buy your home after just a few conversations and a brief walkthrough of your home.
Pay No Real Estate Broker Commissions
As noted, a real estate broker is no prerequisite in an off-market property sale. This is because you don’t need to list your property on the MLS, get assistance with marketing your home, or host showings of your property to prospective buyers.
As a result, you may choose to handle the sale as for-sale-by-owner (FSBO) and market the property only to your network. This enables you to skip paying the real estate broker commissions, which typically range from 3% to 6% of the final sales price, and get the best value from your property since you get to keep all the proceeds from the sale.
Even better, selling the property yourself allows you to form a personal relationship with the buyer meaning they can better understand why you’re selling, and create an offer that’s a win-win for both of you.
No broker involved also means you get to handle the sale at your own pace instead of being constantly rushed by a realtor who only wants to sell fast because they want their sales commission.
Sell Your Home Faster
When you market your house as a pocket-listing or FSBO, you typically attract serious buyers such as real estate investors who are always on the lookout for exclusive listings. These buyers are often willing to close right away which speeds up the sale.
As a result, you won’t deal with, or waste time with curious house shoppers who might pop up in your open house with no intention of closing.
Additionally, you may sell the house as-is, and skip the time and money spent on the house prep process. The typical sales marketing campaign which often takes months, is essentially out of the picture. This translated to a speedy closing, often as fast as ten days.
Cons of Selling Your House Off-Market
Just like conventional selling, selling your house off-market has excellent perks, but it also has definite disadvantages. Here are some of these cons:
Limited Buyer Pool
Because off-market selling keeps your home away from the open market it automatically limits your buyer pool. This reduces your exposure and may lengthen the time your property stays unsold since most general public buyers often start their search for a home in public listings rather than off-market.
Pricing Of The Home
Selling your home on the open market brings more interested buyers to your listing. This may result in higher demand for your property which may lead to a bidding war pushing up the price you can get for the home.
However, selling off-market reduces exposure which as noted, reduces the number of potential buyers checking out your property. This significantly reduces the probability of bidding wars.
The majority of buyers scouting the market for off-market deals are usually looking for a good deal. As a result, you may not list your house for a price as high as you’d anticipated since most prospects are coming to you with offers below market value.
Final Thoughts on Selling Your House Off Market
Selling your house off-market has both pros and cons. When you sell off market you get to safeguard your privacy, and that of your tenants if you own a tenant-occupied property. You also attract serious buyers instead of curious house-shoppers still weighing their options.
Off-market property selling is also much cheaper and convenient as there are no house staging, open-house, or marketing costs. You also get to keep the whole share instead of splitting the sales proceeds with a broker via their commission. On the other hand however, off-market selling reduces your buyer’s pool meaning you may not sell for as high as you’d planned.
So, should you sell your house off-market? Well, it depends. If market conditions favor sellers, for instance, if there’s low inventory, selling your house off market might earn you good profits since the demand is high. But if you are selling off-market in a buyer’s market, you may be better off holding on to the property until market conditions balance out.
Also, if you are looking to sell fast and be done with that property, off-market is the way to go. But if you have the time and don’t mind waiting until you find a good deal, then on-market selling might be for you. In a nutshell, whether to sell your house off or on market is entirely a personal choice, but you should always take real estate market conditions into consideration.
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