In this crazy market we live in right now, off market transactions have become more of the norm than ever before. We want to give you some perspective on what exactly they are, why they happen, and why in the world anyone would want to do them. Our team does a number of these transactions a year, so we think it’s important to shed some light on the subject.
The first thing we should explain is what in the world we mean by an “Off Market Deal.” It sounds exotic and a little mysterious, but in reality it is simply a house or commercial building that is sold outside of the MLS. It is typically not advertised nor listed for sale anywhere.
You might ask, in today’s market, why would anyone not list their house? With multiple offers and low inventory, wouldn’t you want to get top dollar by getting your property on the open market? The answer usually has nothing to do with price. Both buyers and sellers know this market, so getting a deal really isn’t on the table.
Let’s be real… it’s been a sellers market for awhile. Buyers are almost to the point of leveraging their first-borns to be competitive. But there is another way to go when well qualified buyers and specially situated sellers are connected with well networked real estate agents.
Realtors who have clients interested in specific areas know who the real estate experts are in any particular area experts. As Realtors, we create a rapport with other agents throughout our career. Your reputation precedes you in this industry and agents don’t easily forget a difficult transaction or agent. Being professional, respectful, and nice goes a long way in this industry, even when you are in a bare knuckle drag out negotiation with another agent. These connections play a key role in making sure an off market deal can still allow both buyer and the seller to reach their respective goals.
Usually an off market transaction happens for a few reasons:
Investment properties with tenants in place: Having tenants makes showings difficult for all involved. The seller doesn’t want to inconvenience the tenants, who for the most part are staying in place, and the new buyer/landlord wants to keep them happy.
Also, there is no guarantee that the tenant will keep the property as clean for showings as the seller would like. Finally, tenants must be notified at least 24 hours before each showing.
The seller works from home, has kids, or 4 dogs: Life makes keeping a house clean hard enough, now imagine having 2 kids, a lizard, 2 cats and a puppy. Oh, and you not only have to clean, but also get out of the house at a moments notice for showings. You might have to take off work for multiple hours a day just for a few showings. Now try doing that for a week straight… I think you see my point.
Time sensitive housing requirements: This could include wanting to do a 1031 exchange on an investment property or a very specific rent-back because you are building a new house and need the money to finish the new build.
“I usually find myself on the buy side of these transactions, so I’ll start by giving an example. Geoff and Mary are two wonderful friends that were in search of their very first home. We had gone through and done our normal buyer consultation, been pre-approved, and knew just what they were looking for.
Both Geoff and Mary were reasonable in their expectations on size of the house, price, size, and location. The only problem was a massive lack of inventory. After a few weeks of searching we found one house that was right up their alley. We came up with what we thought was a highly competitive offer, but keeping in mind that we would likely be up against multiple offers. After reviewing our offer, along with 13 other offers, we did not get it.
Even though we didn’t get it, we knew Bellevue was their neighborhood. I called a number of agents that I had a good relationship with and told them our situation. Our teammate Karen knew of a house coming that another agent was getting ready to list.
I called the seller’s agent up and explained our situation. Turns out her clients were willing to show us the house before they got it listed. Her clients were looking for a house in the West End and needed to sell their house to buy the next one. We were able to close early and rent the house to them while they looked for their next house.
We wrote an offer as if there were multiple offers already on the table. Everyone knew that we would have to put our best foot forward to get this one, and we did. The sellers knew that if they did not like our offer they could simply list the house and get everything they wanted. So understanding and meeting the needs of both parties in the transaction was key My clients were willing to pay top dollar for this house, because it was exactly what they wanted.”
“I recently represented client selling a home in Westover Hills. It was clear they wanted to be on the market in a month, but had a lot of cosmetic work to do beforehand, and it became obvious my client was eager for the process to just be done. Enjoying life was worth more than a bidding war at this point in their lives. Then another incredible Realtor posted about her buying client’s needs on one of our private boards. What we had seemed to match perfectly, so we arranged a viewing with drop cloths and paint cans still littering the place. The buyers were thrilled to have the opportunity to finish the house the way they wanted it, and my seller was relieved that he, a skilled contractor, was able to be done.
Off market selling can be a challenge, but we had two very qualified agents on each side. It’s truly a case-by-case basis. But when you communicate with your network, we can usually reach a solution that is simple, comfortable, and still exceeds your expectations. In this case, we had to chat about what was realistic, but we worked it out. My clients are happy and the buyers are happy. It was a “win-win” as they say. We work hard for our clients, no matter what the circumstances are.”