Is an Off-Market Listing Right for Me?
A trend we are seeing more often in Mid-peninsula real estate sales is the off-market, or private listing. These are homes that are listed for sale with a real estate agent, but not publicly advertised or registered on the Multiple Listing Service (MLS). The MLS is the primary medium for communicating information about houses for sale among professional real estate agents.
In the case of off-market listings (also sometimes called “pocket listings”), there are no splashy newspaper ads and no open houses. Instead, the seller’s agent quietly informs her network of agents and potential buyers about the availability of the property. The means of getting the word out can be very sophisticated, including marketing to private lists of potential buyers who have recently had liquidity events and password-protected websites displaying the home. The emphasis is on quality dissemination of information, not quantity.
This type of sale may seem counterintuitive. Wouldn’t you want to get the information about your home out to the largest number of agents and potential buyers? Although an off-market listing limits the pool of buyers, there are several benefits that are attractive to certain types of sellers.
Why you might want to list your house for sale privately
When you list your home on the MLS, every detail about it is available publicly for the world to see. Your address, your floorplan, photographs of the interior and exterior, and, most important to many sellers, the price of the home can be seen by strangers, relatives, co-workers and nosy neighbors. Open houses provide opportunities for these same people to wander through your house and inspect every aspect of it—from your decorating style to the contents of your closets. The lack of privacy inherent in the public sale of a home is so distasteful that some sellers, especially those who are living in their home while it’s on the market, prefer to sell their homes privately.
#2 Showings to Buyers Who are More Qualified
By eliminating open houses and public information about the house for sale, it is available to see “by appointment only.” The seller’s agent only contacts buyers for whom the house is a good fit financially and otherwise. Real estate agents who are contacted are encouraged to only bring qualified buyers who are a good match for the property to view the home—no looky-loos.
#3 Less Preparation and Associated Costs
Many sellers who list their homes privately choose to do little in the way of preparation or staging of their homes before putting them on the market. This can be an advantage when selling to buyers with very specific tastes who may prefer to do their own renovations after their purchase.
#4 A Way to Test the Market on Price Before Publicly Listing
Some sellers put their house on the market privately to test the market, thinking that they can always list it on the MLS later if it doesn’t sell. This enables them to set a higher than market price and see if a buyer bites. If the house doesn’t sell at that price, they can then adjust the price downward without the stigma of having the home lingering on the public market.
Why you might not want to list your house for sale privately
Despite the many benefits of an off-market sale, there is one big potential downside. Due to decreased competition among buyers, you may receive a lower sales price than you would have if you had listed it publicly. Recently two real estate agents in San Francisco compared prices of off-market to MLS-listed homes that were sold in 2013. They discovered that single-family homes that were publicly listed sold for an average of 17% more than homes that were privately marketed. The difference for condos was 9%.
In summary, there are many factors that go into the decision of whether to list a home publicly or privately. An experienced, knowledgeable real estate agent will be able to help you analyze your options and make the best decision for you.