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Tracy King's Blog

What Does it Mean to Sell Your Home "Off-Market"?

What Does it Mean to Sell Your Home "Off-Market"?

Some people are very excited about selling their homes "off-market" these days. They say it can save time and hassle and not invade one's privacy as much a regular marketing plan.

Some Realtors would even have you believe that you can make more money this way, that people will be so excited about buying a house without all the competition that they will pay you top dollar.

My question to these people is, How do you know what top dollar is without exposing it to the market? We recently had an Echo Park home for sale that ended up going just over 20% above the asking price of $799,000.

 

On the first day that we were on the market, we had 75 people through the broker's open house (in pouring rain) and received a great offer for $880,000. Were we wildly underpriced? No. The house was lovely, about 1750 square feet and beautifully redone over the 15 years the owners had lived there. But it was on a 3600 square foot lot. There were no comparables to easily show a value of over $900,000. It was a stretch to justify $850,000, which was why we priced it at $799,000. We wanted people to overlook the few imperfections and the lot size and focus instead on all the great features of the house which included a number of tasteful improvements, a view of downtown, and a sought-after location.

Needless to say, an immediate offer over 10% above asking is very tempting. We presented it to the sellers and gave them our opinion that although this was great, we would never know if it was the best price for the house if we didn't continue to market it and respond after the open house the following Sunday.

They saw the wisdom of our plan and we waited. We ended up with 12 offers and closed escrow last week for $959,000--20% over asking.

There are all kinds of reasons why a homeowner would prefer selling their home off-market. Most of them have to do with convenience. Also, if a family member is very ill and can't be moved, if it's a seriously distressed family situation that can't be resolved before going on the market--of course, we would need to strategize how best to accommodate these needs. But most sellers who like the idea of selling off-market don't want to be bothered with doing what is generally considered getting ready for the market--cleaning, decluttering, landscaping, making arrangements for pets and people to be out for open houses and showings.

Often, we have the other end of the spectrum--a house that needs a huge amount of work and is a real mess. My expertise at "event" pricing--where we set the price of a house so that everyone sees it as a deal and can imagine how easily they can fix it up--all began with a couple of really serious fixers. In one case, the owner had been living in the house for many years with a growing family of cats who pretty much took over the house. The plumbing didn't work, the house looked and smelled like a litter box, it was a mess. This was in 2004 when the market was pretty good. We priced the house at $299,000, had 47 offers, and sold it for $475,000.

In 2009, at the bottom of the Great Recession, another house had been occupied by a tenant who basically went insane and took his frustrations out on the house. The out-of-area owner had to have the tenant evicted (a several months-long drama) and was left with a filthy mess covered in graffiti, with doors, windows, walls damaged by hammers and an ax. She was so demoralized that she seriously considered taking the next-door neighbors offer of $250,000 cash. She called me because I had given her a valuation of about $500,000 when she had inherited the house a year before in normal condition. We priced it at $299,000, did inspections up front so people could see the true condition of the property, and within a week of putting it on the market ended up with 80 offers and sold it for $475,000 cash.

If it's worth it to you to lose potentially 10%, 20% or more, then you have every right to make that choice, it's your house. I'm just here to make sure you fully understand your decision.

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