Vendors are at risk of underselling their properties due to the emerging “off-market” sales trend – and it’s by as much as 5 per cent, according to a real estate CEO.
Starr Partners CEO Douglas Driscoll has expressed the belief that “it’s not inconceivable that some people could be underselling their homes by as much as 5 per cent, which on a $1 million property – the median price of a property in Sydney – is a significant $50,000”.
Off-market sales usually describe properties that are put up for sale without being advertised on major property portals.
It’s a growing trend, according to Mr Driscoll, as real estate agents get savvier about leveraging their own buyer databases.
Not only is the term misleading to vendors, it’s causing some agents to adopt a “good price, minimum hassle” mentality, the CEO said.
“Technically speaking, there’s no such thing as an off-market property – in fact, it’s an oxymoron,” Mr Driscoll commented.
“Many agents use the term when describing a property that is being covertly marketed, and it’s time we stop that.”
He highlighted that the moment an agent promotes a property in any way that may be taken to indicate it’s for sale, “the property is very much on market”.
According to the CEO, a more appropriate term for the trend would be “marketed quietly”.
He highlights how “traditionally, a lot of high-end homes in affluent areas tend to sell ‘off-market’ as they target a niche buyer audience”.
“However, as of late, we’ve seen this extend to outer suburbs and moderately priced properties, which for me is a concern,” the realtor commented.
He noted that some property owners are being told by agents that if they sell “off-market”, they can save on vendor-paid advertising (VPA).
While this might be true, Mr Driscoll said they are at risk of not creating enough competition for their property.
While for all agents leveraging their databases, he highlighted that “they typically only represent a cross-section of the buying population”.
He is of the belief that the increasing popularity of such “off-market” sales – could potentially be “an early death knell for VPA”.
“The more these agents continue on the path of solely relying on their buyer databases, the more they’re at risk of forgetting about latent buyers.”
According to the CEO, “VPA is known to achieve the best price for vendors, regardless of market conditions”.
Potential sellers and vendors alike need to comprehend that VPA “is an investment, not a cost”, he concluded.
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