Why sell 'off market'?

Question

I've seen a number people describe how the best deals are not formally listed for sale. Some people also do DM to find good off market deals. Apart from sellers who need to sell in a hurry, what are good reasons for sellers to not actually list their property as for sale?

Mike Cumbie · Answer

We do a large number of off-market deals. Many times the seller gets full retail because we discussed what it was worth, ran comps and they picked a number they liked (And we felt it would appraise for). Then we called someone we know it fits for (Ranch, this district, this much land blah blah). "Hey I know of a house coming on the market in the next couple days that fits your needs". "They want $XYZ for it, since it is not on the market yet they are not going to take a low offer, if your interested I can get you in tonight".For the seller:It gets sold quickSold for the conditions they wantSold for the price they wantKnows it will appraise (What good is getting a million dollar offer on a 50K property if it won't appraise and the buyer isn't all cash?)Buyer:Gets the house they want without getting wrapped up into a bidding warIt really comes down to connections. While the off market wholesalers try and beat up the seller to get them to sell for pennies on the dollar, I want my seller to get it sold in the best manner for their needs. Which does not include firesale pricing most of the time unless the place is in real bad shape. If a relative passes away and is out of state often times the family just wants it gone. They have no interest in coming over and doing some light painting and replacing a carpet here and scrubbing a tub there. Their best interest isn't the most money, it is the most money they can get in this condition quickly.

Levi T. · Answer

No agent commissions or other listing fees, that can add a lot to the bottom line.

Eric James · Answer

@Mike_Cumbie a deal between professionals who know the market value of a property sounds like a great way to sell off market. As opposed to people looking to score an unrealistic bargain. Thanks.

@Joel_Owens I can certainly believe there are a lot of flaky 'buyers' out there that sellers want to avoid. That's why they hire a broker, right? ; )

Joel Owens · Answer

The main reason is owners do not want to be bothered by FLAKES that call themselves buyers.

I only work with about 20% of the buyers that contact me for commercial real estate. WHY? They do not listen to instructions. They have pie in the sky expectations for return without knowing the asset class. They want to try some super exotic structure that only works 1 in 10,000 times but read about it somewhere in a book............. : )

If buyers want to look at the good stuff off market they have to jump through qualifying hoops to get access.

For me that is setting up a quick phone call to see if they are realistic on returns for market conditions. Then I look at their financials for capability to purchase etc. I have a reputation for bringing buyers that close on deals. I will not put that reputation at risk for a flaky buyer.

A quality buyer needs to: Show financials, communicate in a timely manner, be a pleasure to work with, be decisive when a great opportunity is presented to them.

Russell Brazil · Answer

In luxury listings, sometimes the top price is found by selling off market because a buyer will pay more for something that seems exclusive

Rick M. · Answer

I’d love to get an inside track on some “off market” listings….I assume the realtor has to know the seller to get this kind of opportunity?

Eric James · Answer

Thanks for the suggestions. When people talk about looking for off market deals I think it can be assumed they mean properties they can buy under market value, so part of my question is why are these people willing to sell for under market value. Privacy and not wanting to go put in the effort to list a property could be reasons. FSBO sellers are not selling off market, they are selling the property on the open market themselves (though without the resources of an agent). I'm left thinking that the many off market sellers, especially the targets of direct marketing, are people who are too dumb to know they would get a better sale price if they listed their property for sale. As I've read on this forum, this seems to be a lot harder (i.e. it takes longer) with multi family owners than with SFH. Maybe I'm missing something.

Chase Keller · Answer

There's also a lot of time and effort that goes into getting everything ready for an actual listing sale.  And there's a lot of work and coordination that goes into doing tours and inspections.  When you're selling off market, you may limit the number of people looking at the property to a couple parties.  Tenants also get scared when they know the property is for sale.  If you sell it off-market, you keep that nervousness to a low.

I've personally never sold any multifamily, but my experience has come from the buying side.

Christopher Phillips · Answer

@Eric James

Sometimes it's done for privacy.

Why sell 'off market'?

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