Do you want to sell your home, but you’re not really sure what it’s worth, and so therefore you want to sell it first without moving out? You’re not the only one. I’m going to break down off-market sales for you today.
There’s a two-part move that happens for sellers typically in San Francisco. First, they move out of their home, the home is staged, prepped, and brought to market. Then they live in a rental, while they look to buy something else. This can be painful for some sellers, so some sellers will choose to sell their homes off-market.
One reason is they want ease. Sometimes they want privacy. They don’t want their neighbors coming into their homes, and sometimes, they just want to save money on costs.
There are certain instances where it can make a lot of sense to sell a home off-market. One of those instances would be if you had a home that was somewhat hard to get. For example, there’s very, very low inventory in Noe Valley right now in the $3 million to $6 million range. If you have a home in Noe in this range or in a neighborhood where the inventory that you’re holding is somewhat sparse, and the home is lived in very nicely, meaning that you have nice furniture, you have nice things, and it’s not very cluttered, then it may look ok to show it off-market. The problem is that it’s not going to photograph well unless it’s really staged well. You want to have a Realtor who has connections in the community that can possibly sell this home for you off-market.
When you sell a home off-market typically you’re picking a different pricing strategy. You might choose something like a buy-me-now pricing strategy. If your home is worth, let’s call it $4 million, typically the Realtor you’re hiring would recommend listing it at $3.495 million in order to generate a lot of buzz to bring in a lot of offers.
Some of those offers aren’t going to go up to $4 million, but they’re going to push those who can up into that $4 million point. So if it were on-market it would be listed at that lower pricing strategy. But when you’re doing an off-market you have less people viewing the home and so often you’re picking that higher price.
The downside is that the buyers who are out there who will come to your home are also looking at everything else that’s on the market – those homes that are on the market are at those teaser prices. They’re used to looking at a home in the $3.5 million range that’s actually going to sell for $4 million and they get a little bit tricked.
So when they walk into your home, that’s listed at $4 million in their mind, they think that’s a $4.5 million home. And they’re comparing it to homes that are in the $3.5 million range. They think it’s expensive and sometimes they won’t move for that reason. Versus with a teaser price, they would have kind of gotten excited about it, realized they were competing, and then later realized that they needed to push that price.
If your home is hard to find, and if it is in limited supply, then many times those buyers are educated, do understand the price and they’re happy to buy it for that buy-me-now price off-market. The downside is when you have a buy-me-now price typically they’re not bid up past that price.
There is a chance that you could be leaving money on the table. I tell my sellers to pick a number that allows them to sleep well at night. If they get that number they’re going to feel really great and not feel that they left money on the table.
I will tell you in many instances when we’ve done off-markets or even attempted an off-market with a buy-me-now price and it has not sold, we’ve taken it off the market, prepped it for sale, did the full thing, and in many, many cases sold for higher than the price the seller chose as a buy-me-now price. They ended up feeling very happy that they did not sell it off-market.
There are definitely some downsides to an off-market sale, but at the end of the day, I think weighing the pros and cons and deciding what’s best for you is what’s important. If you’d like to chat through the pros and cons of off-market versus on-market sales or get an update on the real estate market please reach out to us anytime.