I’ve written favorably about off-market sales in the past (most recently, here). And I still believe such sales can be beneficial for all the reasons I mentioned in that blog post from a year ago. But the market has changed a lot since then, and I firmly believe that limiting exposure to one’s home in the 2014 market creates a high likelihood that you’ll leave money on the table.
A recap: An “off-market” sale is one that occurs without an agent having listed the property in the Multiple Listing Service (MLS) database. All agents who pay a membership fee to the San Francisco Realtor Association have access to the MLS. By restricting access to your home to agents in various smaller networks or within one agent’s company, you’ll never know what price you can truly attain.
That’s because of the phenomenon that’s taken hold of the current market. In the past, you could pretty much look at comparable sales, and price your home accordingly. And because of consistently low inventory, there would likely be a buyer ready to make an offer. But buyers in the 2014 market—similar to those who purchased property in the last half of 2013—are proving to be willing to offer prices above the comp level.
For example, that Noe Valley 3BR house listed for $1.3M? The listing agent and sellers most likely thought that listing at $1.3M would land them in the $1.5M range. However, even they didn’t anticipate receiving 15 offers and accepting an offer from all-cash buyer who offered $1.8M. Had those sellers decided to go off market, they could’ve been out a few hundred thousand dollars (or more). There are plenty of examples of this sort of dramatic outcome happening right now.
So before your listing agent suggests bypassing the MLS in favor of marketing to a specific group of agents, keep in mind that you’ll never know how much you could’ve attained by fully marketing your home.