Following are some frequently asked questions about selling and buying off-market listings.
Q: I see some houses listed as “off-market.” What does this mean?
A: “Off-market” usually means a house has not been listed on the local real estate listing service, MLSListings.com. MLSListings normally distributes the house’s information and photos to all local real estate agents and also syndicates it out to sites such as Redfin, Trulia, Zillow and HotPads.
Essentially, the listing company makes all of the house’s information public on the internet. This would be considered an on-market listing.
Q: What are the advantages of selling a house as an off-market listing?
A: Some sellers are private and don’t want photos of their homes widely available on the internet. Photos typically show every room, the decorating or staging and the landscaping. Some sellers may not want to have open houses or have interested buyers driving by. Some sellers feel that an off-market listing is somehow more exclusive and that buyers might actually pay more for the house. Some buyers in recent markets fear escalating prices created in multiple-offer situations and may be willing to pay a premium to avoid competing with other potential buyers.
Q: What are the disadvantages of selling an off-market house?
A: Fewer potential buyers will know about your house. Competition creates interest and allows the market to set the highest possible price that any buyer is willing to pay. If you are a seller with a number in mind and some buyer is willing to give you that number, then an off-market sale might be right for you.
Just remember that you will never know if someone else would have offered you more for your house. Experience tells me that if one person is willing to meet your price for your house, there is probably someone else out there willing to pay more than that.
Q: What are the advantages of buying an off-market house?
A: A major advantage is the potential for less competition. Typically, there will be a list price for an off-market house. If you are comfortable with that price and feel that your price is supportable by other similar sales in the area, then it might be right for you.
Q: What are the disadvantages of buying an off-market house?
A: You’ll never know if you paid too much or too little. Some buyers are fine with this. A couple of things to remember:
• Usually, off-market houses are not listed at a low price but a “let’s test how high the market will go” price.
• Remember, if you are getting a loan, the house will need to appraise. Banks will typically lend 80 percent of the lower of purchase price or appraisal value.
Q: I am selling a house in a trust, and a buyer has offered what sounds like a very good price for the house. I wouldn’t need to fix it up or do anything at all, and the buyer is willing to close quickly. What should I do?
A: I get this question frequently. With six-plus years of escalating prices, sometimes that offer of a good price may actually be well below current market value for the house. Most trustees have a fiduciary duty to get the highest possible net price for the sale of the house, and the way to do that is to take it to the market and let the market determine what the price should be. Beneficiaries will then have the confidence that everything possible was done to maximize the value.
I strongly discourage trustees from selling their homes off-market.
Q: Is it better to sell a house on MLSListings or as an off-market listing?
A: Unless there is some compelling reason not to put a house on the MLS, I advise my clients to put it on the market and let it be exposed to as many potential buyers as possible. That’s how you know you found the highest possible price.