Is an owner wise to accept an off-market offer from a buyer? Is a buyer smart to pursue off-market properties? Is a private sale preferable to one shared on Multiple Listing Service?
These are oft-asked questions, and here are some off-market scenarios that explain why the answer is always NO (in my humble opinion):
Agent writes an unsolicited letter to an owner: “Dear So and So. I have a buyer who wants your house and I am writing to see if you are interested in selling it.” In 30+ years I’ve never seen an unsolicited inquiry by an agent result in the successful sale of a property. No kidding. That’s because these are usually fishing expeditions aimed at drumming up a new listing or – at least – establishing a relationship with a future seller. Care goes into stroking the owner’s ego. (“They’ve always admired your fantabulous home.” “They’ve seen everything else and they just keep coming back to your amazing house.” “Never in the history of houses has such a stunningly beautiful house existed.”) Vague promises of outrageous prices are made. The actual buyer never materializes.
Would-be buyer says to the first agent he/she encounters: “If that old decrepit house at the corner of X and X streets was for sale I would buy it and give it the TLC it deserves.” The home in question is famously dilapidated and the regular object of beguilement from passersby. The dreaming buyer believes he or she is the first person to recognize its potential. They hope they can get a “deal” and bring the house back to life. They don’t grok that even “contractor specials” command high prices in San Francisco. And there’s usually a very good reason that the house is just sitting there, moldering. There’s an internal dispute in a family that’s holding it up in court. Or there’s mental illness. Or there’s an elderly owner who refuses to move. Or there are protected tenants in place. If the house could offer itself up for sale, it would. But it can’t.
Buyer says to his/her agent: “I’ve seen everything else for sale and nothing has suited me, but that (off-market) house looks perfect and I’m pretty sure I would buy it if it was for sale.” This buyer has scoured the market for months or years and found a reason to reject everything. An off-market house won’t solve the dilemma. The buyer will reject it once he/she sees the interior. Or they’ll reject it once they hear the off-market owner’s fantasy idea of price. (See #4).
Seller says to the 7th Realtor he/she has interviewed as a potential listing agent: “There must be a buyer who wants to overpay for my home because it is SO unique. I don’t want to actually list my house for sale, but if you can find a buyer who will pay market value plus 50% then I’m ready to move!” The seller’s fantasy buyer doesn’t actually exist, despite tall tales about foreigners roaming the streets of San Francisco with duffel bags filled with cold hard cash and no budget limit. (See #3.)
Seller or buyer says to himself or herself: “I’ll save money if I buy/sell off market and without having to pay an agent.” There’s a lot that can be said about this viewpoint, but – succinctly put – real estate sales in San Francisco aren’t a DIY activity. See the old lawyer adage, “He who represents himself has a fool for a client.”
The essential problem with off-market sales is that, when all is said and done, somebody feels like something was unfair. Sellers believe they didn’t get full market value. Buyers are sure they paid too much. Everybody – principals and agents – wonders if someone (including themselves) took advantage of the situation.
That’s because full market exposure is the only way to attain an objective validation of fairness.
As Jerome K. Jerome said, “What I am looking for is a blessing not in disguise.”
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Cynthia Cummins is a Top Producer and Partner at McGuire. For info on SF real estate visit http://CynthiaCummins.com