Why do people sell Off Market?

Question

Justin Fox · Answer

Because they don't pay their taxes and/or the property is seriously distressed and has tons of work needed to be done.

Any other home listed FSBO is simply testing the waters and eventually lists with a realtor.

Jason Chen · Answer

I'd say ignorance is #1 reason in my opinion

Brian Pulaski · Answer

@Justin Fox I have never used a realtor to sell a house. With flat fee MLS access now, lots of FSBO can get them on the MLS and sell without the need for a realtor.

Frank Chin · Answer

Around here, I find the reasons to be:

1.) Savings of the sales commission, which can range anywhere from 6% on down, generally around 4% to 5%.

2.) They believe their property is worth more than the market as relayed to them by the agents, and should sell for a higher price.

There's one property up the block from my mother in law. It went up FSBO every year around spring, and the signs came down in the fall. Then the FSBO signs went up again in the spring. This went on for 3 or 4 years. I'm told the guy wants too much money, is retired, and in no hurry.

I found most of these sellers to be quite arrogant. I managed to buy a $200K property for $150K. I bought it through a broker, but the owner tried FSBO for  a whole year before the broker with no luck. The broker tried telling him it's worth more, but the seller claims he knows more than the broker. Prices were going up $50K/year and his info is a year out of date. So the broker decided if you want $150K, I'll get you $150K.

I was the first one that answered the ad. After I closed on the property, I asked the broker to satisfy my curiosity, why it's so cheap, and got the details, He was the only guy to take me to small claims after the closing. He got yelled at by the judge who said "if you didn't make enough on the sale, don't waste my time in small claims".

The guy sued me for $160.00 that was omitted at the closing. I counter sued and he was awarded nothing after the judge yelled at him.

BTW, you generally don't make money by saving on commission. Buyers generally offer less when its FSBO.

Based on my experience in NY, doing things FSBO turned out to be the slowest way. The property I purchased mentioned above, the seller was horsing around with it for almost 2 years, and he lost track of the value.

Jeff Schwarz · Answer

Just a thought since someone ask why sell off market?  What is market in any given area? People were selling in so called off market long before MLM was created.  FSBO works or it would not be used. Granted many who try to sell as FSBO don't get it done or are lost when they get a potential buyer.  Hey same applies when selling cars, pickups, farm equipment, horses, etc etc etc.  My opinion about selling is simple, accept that some do and some don't and as and investor buy and sell according to your own needs and abilities.  Don't spend your time trying to figure out something you have no control over.  Buy FSBO sell FSBO or buy listed sell listed, it's up to each individual.  If you know how why pay a Realtor and if you don't maybe you need a Realtor.  As and investor I find the best deals when dealing with a FSBO thus I am not paying some Realtor to do what my real estate attorney can do (over and over).  As and investor my job is to find a good deal, fix it if necessary, and sell it for a profit (or keep it of course), by using every legal method available to me.  Hey just my opinion.

Jeff Schwarz · Answer

We recently sold our home though a listing company.  Paid them 1% and paid selling agent 2%.  That is what we had on listing agreement and no showing Realtor ever ask why or would be raise it etc.  Listing company is just that.  they listed on MLS and put a very professional sign in front.  Also very professionally handled all Realtor calls and set up appointments.  Had about 8 showings and a fast sale.  Love it, also sold it above going market price for cash.  This was in the mid-DFW area of Texas.

Jonathan Minerick · Answer

Yes, you will always get as much or more money by placing your home on the MLS. More market exposure = higher price.

The MLS is the best tool to get your home in front of the entire market for two reasons: 1) it incentivizes agents (through offering a commission) to show the home to their buyers, and, 2) the MLS pushes the information to major real estate websites (realtor.com, redfin, zillow, broker sites, etc) so buyers can see it.

Reasons why sellers use an off-market vehicle:

1. Privacy: Some sellers are willing sacrifice money for the privacy using an off-market vehicle.

2. Ignorance: Many sellers are misinformed about real estate commissions and how they work in relation to the MLS. Many sellers think they have to pay a 5 or 6% commission to sell their home.

In most states, including California, you can pay a flat-fee (e.g. $100 - $400) to have your home listed on the MLS and then decide how much commission to offer buyer agents (minimum $1).

So if you had an offer from an off-market vehicle, in my opinion it is wisest to at least list the property on the MLS for a week so the entire market can see it is available for sale. So for ~$100 you can list on the MLS to get a sanity check on the offer you received, to make sure it is close to what the rest of the market thinks its worth.

We've done hundreds of these flat-fee listings in California, and it still amazes me how much misinformation is out there regarding how commissions and the MLS work. It is costing home sellers a lot of money.

Brian Pulaski · Answer

Only house I bought "off market" was through my attorney. He had a family member who inherited a house. The house was a mess and was only going to sell to an investor. They ended up selling to me in lieu of listing, as it was smoother, easier, and even though maybe they would have made an extra $10,000 on the market, they actually cared more about the house being redone, and being able to see the house during and after it was renovated.

The houses I list myself, and not with a realtor, I use a flat fee MLS service. Not off market, but I have not had a need for a selling realtor in any of my transactions. One day I'm sure I will need one, but for now it has worked well for me.

Irina Belkofer · Answer

I agree, @Frank Chin. BTW, commissions are negotiable but the seller get much better exposure if they list the house on MLS vs FSBO.

Besides, having professional on your side is very beneficial, especially if you have no clue about the market, even when they think they do. Oh, well...

Why do people sell Off Market?

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