Selling property off-market is often seen as something carried out by estate agents and professional investors. In reality, anyone can sell their property off-market, although there are several issues to consider. Before we look at the pros and cons of selling property off-market, it is helpful to remind ourselves of the details and the process.
What is selling off market?
While the Internet has been a handy tool for those looking to advertise their property to the broader market, off-market sales are growing. Perhaps more commonly associated with high-profile/high-value sales, this method is often used to execute a quick sale. It may be that the individual does not want publicity. Perhaps they are a landlord looking to sell a property with a sitting tenant. Or they want to avoid property chains and potential delays. This prompts the question, how do you sell a property without advertising?
Historically, properties were sold off-market by approaching estate agents/financial third parties that maintain a list of active investors. However, the situation has changed dramatically in recent times, with the Internet allowing potential cash buyers to advertise their services on the Internet. Here at Cash House, we are approached regularly by people looking to sell their homes, with time often of the essence.
Is selling property off-market popular?
A recent article in the Evening Standard highlighted the number of London homes sold off the market. While nationally, one in 10 homes is sold without being widely marketed, the figure in London was 20% in 2021 and has since grown to 23% in the first five months of 2022. We also know that the average “discreetly sold” property went for £850,000 compared to £1.2 million just five years ago.
Surprisingly, the report by Hamptons confirmed that buyers were still willing to pay a premium for an off-market transaction. Whether those willing to pay premiums have reduced due to recent interest rate increases remains to be seen. However, in the first few months of 2022, off-market sales achieved a higher proportion of their asking price than those marketed more widely. In addition, the average off-market property transaction took just 42 days compared to 65 for those sold in the traditional way (in a best-case scenario). While encouraging for those who want a quick sale, it is crucial to be aware of the pros and cons of selling your property off market.
The pros and cons of selling your property off-market
When researching your options, it is essential to understand the process of selling property off the market. This ensures there are no unwelcome surprises further down the line. As a cash buyer of property, here at Cash Houses, we are fully aware of the pros and cons. We take an open and upfront approach, involving transparency from day one, ensuring that all sellers are comfortable with the process.
Pros of selling off-market
We will now look at the benefits of selling a property off-market and then balance this with the downside. Some of the main benefits include:-
Reduced selling costs
One of the main benefits of selling a property off-market is the significant reduction in marketing costs. Whether using an estate agent with a list of potential investors or approaching cash buyers, such as Cash House, the process tends to be much more straightforward. It involves fewer parties which can result in considerable cost savings. While there is no doubt that the Internet has changed the real estate industry, it can sometimes be challenging to make your property stand out amongst hundreds of thousands of homes for sale. Using the off-market strategy, taking a focused approach certainly has its benefits.
Clear selling price
When approaching various parties to sell your home off market, one of the other crucial benefits is the ability to define an exact selling price. Using traditional routes, you may have numerous offers with various possible success rates. When selling off-market, there is a clear price, effectively the minimum price, leaving potential buyers to consider their own position and take the appropriate action. There is always room for negotiation, but communication between buyers/sellers tends to be focused and to the point.
The sale of property off-market tends to be associated with cash buyers. Many will also have their legal representatives ready to move once a deal has been agreed. There’s also the fact that there are no chains with the majority of off-market property sales. This can significantly reduce the standard sale timescale. It is important not to associate a quick sale with a less in-depth legal process. The critical elements of the process are exactly the same, with potential delays removed; it is as simple as that. Even before the process begins in earnest, potential buyers must demonstrate that they have the funds available.
For some people, using the off-market strategy can be extremely useful in maintaining their privacy. This is an issue which has been relatively important for some landlords in the past. Its allows them to sell their property without alarming tenants. Tenants have an array of protections that are always respected, with those switching from one landlord to another often seeing minimal change. In addition, avoiding public advertising ensures tenants are not unduly distressed, and the buyer has a ready-made income stream. The rich and famous also like to use the off-market route to maintain their privacy. This often helps to avoid unwelcome speculation and baseless rumours.
Cons of selling off-market
In theory, there are far fewer cons of selling property off-market than positives. That said, it is still essential to be aware of these issues, including:-
Limiting potential market
There is no doubt that mass advertising via the Internet and physical means could put your home in front of literally hundreds of thousands of potential buyers. However, in reality, most of those who come across your home online will have little genuine interest. Therefore, when selling property off-market, the sale details can be circulated to parties with significant capital and genuine interest. Just because you are in front of hundreds of thousands of people doesn’t necessarily inject competition into the buying process. Sometimes, a lower number of focused buyers can actually achieve a better price than via traditional routes.
Lower sale price
Just because you are selling your property off-market does not mean you have limited control over the sale price. You are in control of the price and will have the final say, but due to the nature of cash buyers and relatively quick settlement, you may achieve a lower price than you might in the traditional market. That said, it could take just a few weeks to conclude an off-market transaction, while the conventional method could drag on for months. It is easy to focus on the headline sale price, but what about the additional costs, mortgage payments and other expenses? When considering your options, you should look at the net sale price instead of the gross figure.
Encouraging interest in an off-market property sale
You will find that most estate agents will have a list of investors potentially interested in properties as soon as they emerge. However, giving exclusivity to one agent should be avoided as this can limit the interest and eventual selling price. There may be the option to approach several estate agents/financial agents, asking them to confirm any interest from their list of off-market investors. These agents will likely have some kind of remuneration arrangement with their clients, encouraging them to work with you.
Potential investors in off-market property will be made aware of the fixed/minimum price, and the need for a quick sale will very often focus their mind. On the flip-side, a traditional open-ended sales process can allow potential buyers to put off what they could do today until tomorrow. Where there is a fixed price and a fixed period to bid, you would be surprised how much this can focus the mind!
Prompt and efficient off-market transactions
As we touched on above, there are many issues to consider when looking at selling property off market. However, we have a complete understanding of this process. This includes the aims and aspirations of sellers and the speed at which they require settlement. Simplifying the process has been the key to our success. First is the initial contact, then the indicative offer, which is quickly followed up by a formal offer. Our upfront and honest approach to valuations and offers mean prospective sellers know precisely where they stand from day one. Upon acceptance, we will pass the process to our legal team and cover all expenses. The majority of our transactions are completed within a month.
Many people misunderstand the term “off-market”, with the suggestion that your legal protection is somehow compromised. On the contrary, selling property off-market requires the same paperwork, checks and legal assistance as a traditional property sale. However, this strategy will eliminate advertising expenses and speed up the settlement process. While traditional property sales often experience chains, broken promises and delays, with off-market cash buyers, these issues are avoided. If you are looking for a quick off-market property sale, call us, and we will explain the process in detail.