Why do vendors sell off market?

If you are in the market to buy your first home you’ve likely heard the term “off-market” but what does it actually mean and how is it relevant to your property-buying journey? 

In this post, I’ll clear up any confusion you may have between a pre-market and off-market, and what difference it makes! I’ll also cover why a vendor may choose to sell their property in this way when at first glance it may seem counterintuitive to listing it publicly. After all, wouldn’t more eyes on the property and expanding their buyer pool be more beneficial to selling a property at the highest price? Not always, and there’s a myriad of reasons why a vendor would choose to sell off-market.

What is an off-market property? 
It is a property that won’t be publicly advertised for sale on the internet and is only accessible via local real estate agents who are selling off-market properties.

Are pre-market and off-market properties the same thing? 
The primary difference between off-market and pre-market properties is that a pre-market is going to go online at some point in the future. If you have gained access to viewing an off-market property, it is crucial to establish whether it’s a true off-market that won’t be going online as this can influence your negotiation tactics greatly. 

So why would people want to sell off-market? 
Logic says vendors who sell online will always get the best price by attracting as many potential buyers as possible and increasing the chances of selling at the highest price. So, under what circumstances might a vendor opt to sell privately? Firstly, it’s important to remember not all vendors are motivated by price. Often, reasons for selling off-market are circumstantial.

The following are several common scenarios in which the sale of a property occurs off-market:

1. Privacy reasons
   – The vendor may not want other people to know they’re selling, in the case of well-known individuals. By selling off-market they can limit the number of people who have access to information about the property and the sale.
2. Personal reasons
   – Some vendors really value the idea of a quiet, straightforward sale without the hassle and imposition of inspections. 
   – It may be a sensitive situation where the sale of the house is part of a relationship breakdown, and they may not have the emotional capacity to have people come through for inspections. 
   – Likewise, for families who have children and their lives are already very busy, presenting a tidy house and getting it ready and styled to advertise can be really overwhelming
3. Access issues 
   – Occasionally, tenants may not be receptive to open inspections for online campaigns which can restrict access to the property, in which case an off-market sale may be easier
4. The property isn’t well presented
   – Styling or “staging” a property can be a huge expense that not all vendors are willing to fork out for. If the property isn’t presented well (or if it’s tenanted), vendors might prefer to not list their property online to avoid having to do this. 
5. Stress!
   – The process of selling a house can be quite stressful and feel like a lot of pressure. Vendors who aren’t necessarily in a rush to sell or motivated by price might choose to sell off-market as it can be slower-paced and unfold organically, with no deadlines or time frames to adhere to. 
6. The market is soft at the time of the sale
   – When the market is soft (sometimes referred to as a buyer’s market or cooler market) or the sentiment is not as good and there may not be as many buyers around, a vendor might be a bit more hesitant to put it on the market publicly
7. The property is one of a few similar
   – Hypothetically speaking, an agent may sell a property on the internet and have a few similar ones for sale (eg. new townhouse developments). Once they’ve successfully sold one property, they’ll likely then have a number of pre-qualified potential buyers who are looking for that kind of property that they can sell to without needing to go through the process of a sales campaign.
8. They’re seeing what they can get
   – We tend to be a little less excited about these kinds of off-markets. Sometimes a vendor or agent is unsure about the value of the property and hesitant to put it online for whatever reason. 
   – By ‘testing the waters’ and shopping it around off-market and being a little more vague with pricing sometimes they can find someone who is perhaps a little more naive or inexperienced to pay a premium 
9. The agent is too busy
   – This is more common in a stronger market where there are lots of listings and buyers are hungry to buy 
   – An agent might have a full book with no capacity for more listings but is confident they can sell at a high price without a full sales campaign
   – In cases like these, sometimes an agent might convince the vendor to start off-market and convert to an online listing later 
10. The agent has a match in mind
    – Agents generally always have a network of potential buyers looking for particular properties so can be a “match-maker” of sorts
    – If the agent thinks they already have a buyer they can match to that property, vendors can sometimes be inclined to sell this way as it’s cheaper and less time-consuming. 
    – When a property is for sale online, the agent is advertising it and the buyers are coming to them
    – With an off-market, agents need to go out and find the buyers. If they’ve already got buyers in mind, they can send it out to their network and try to find a match meaning overall, it can actually be less work for the agent if they’ve already got a match in mind. 
11. Cost-saving
    – Putting a property online for sale can be relatively expensive when you add up styling and advertising costs, plus the time costs of bringing people through for inspections. 
    – Selling off-market can save money on styling and advertising costs. Can be relatively expensive to put your property on the internet
12. Agent tactics
    – If an agent is keen to win listings but isn’t 100% confident they can sell a certain property, an agent may convince vendors to dip a toe in the water by selling off-market with a promise of chasing a dream price 
    – Often these properties are selling at a premium and are more of an opportunity for agents to win a listing without necessarily having complete confidence they can sell but they’re going to give it a go! 
13. A general authority from the vendor
    – A general authority means the vendor has given permission for multiple agents to sell the property and whoever sells it first will get the commission. 
    – It’s vital to ask if a property is being sold in this way because you don’t want to be part-way through a negotiation and have the property sold out from under you without your agent being alerted to that. 

In summary, those are the most common reasons for selling a property off-market that I have come across in my time as Buyers Advocate. 

My general rule of thumb is not to ask why vendors are selling when a property is advertised publicly. However, if you’re interested in a property that is genuinely being sold off-market (and isn’t a pre-market) it’s definitely valid to understand the circumstances behind it. 

A few questions to keep in mind when inspecting off-market properties:

• Is it off-market due to restrictions of access? This is important to know for building inspections etc
• Is it being sold exclusively with that agent or being sold by multiple agents? You don’t want it to be suddenly sold to someone else without your agent knowing
• Are you the only person looking at the property? Exclusivity can change your negotiation tactic if you’re the only person or have competition

Lastly, it’s important to know in terms of time frames and urgency around that off-market – how motivated are those vendors, the reason why they’re selling off-market will generally allude to their motivation with selling that property and negotiating.