Normally, properties for sale are listed in the Multiple Listing Service, which means that they are included in a central database maintained by the Association of Realtors that shows all available properties and properties that have sold. Over the last couple of years, there has been an increase in people selling their properties off-market. Selling off-market is when agents for the sellers offer the properties to their network of agents but don’t advertise them to the public through the MLS or other online sites like Zillow, Trulia or Redfin.
People sell off-market for a variety of reasons but in the end, you will likely “leave money on the table” if you sell off-market. In an earlier study done comparing condos sold through the MLS in 2013 with those sold off-MLS, the authors found that those condos sold without MLS-marketing sold for an average of 9% less than the average MLS-marketed sales price. For a single family home, the authors found that a home that was sold off-market sold for about 17% less than the average MLS-marketed sales price. [M. Fuller and B Jackson, “Off-MLS Sales in 2013: Home Run or Foul Play?” 2014.]
Recently, over cocktails with a colleague, he mentioned a condo which sold off-market last year in Presidio Heights. It was an updated top floor three bedroom, two bath condo with views, nice light and parking. It sold for $2,250,000 off-market. Less than two months later, a first floor unit in the same 6-unit building went on the market. It was a 3 bedroom, two bath condo with no views and no parking. It was marketed through the MLS (and not even staged) and sold for $2,300,000, $50,000 more than the top floor unit but probably worth about $200,000 less since it was on the first floor, had no views and had no parking. The sellers of the top floor unit likely lost $250,000+ by selling their condo off-market! Rumor has it they weren’t too happy when the condo on the first floor sold for more.
I strongly recommend my clients sell through the MLS since I think it will get them their best price as they are marketing their property to a much wider audience. In the end, it is the client’s decision but so far, they have all taken my advice. However, for my buyers, I love off-market sales because they usually get great deals and buy the properties for less than they would have paid if they had been sold on the market.
If you are thinking of selling your property off-market, come talk to me. If you are thinking of buying, I’ll be glad to let you know about all of the off-market opportunities!