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November 14, 2014

“Off-Market” in a Hot Market Can Shortchange Sellers


The San Francisco real estate market is booming, and sellers are greatly benefitting from buyer demand. There are five or more buyers for every listing, particularly in popular neighborhoods. Interest rates are low, our local job market is strong and there’s no shortage of foreign investors.

If you’re thinking of selling your home in the near future, here’s how you can capitalize on this hot market: Make sure your agent enters your property in the San Francisco Multiple Listing Service (SFARMLS) database.

This is the database agents use to search for available listings. Sites like Redfin and Trulia also get their listings from the MLS. A well-priced property promoted to the fullest extent can typically attract multiple offers, which is what leads to the maximum selling price possible. My most recent listings sold for more than I or my sellers expected, and I truly believe that would not have been the case had we sold off market.

When sellers choose to go “off-market” (e.g., bypassing the MLS), agents instead quietly market the property among their agent and buyer networks. The home may show up exclusively on the listing agent’s site, as well as on his or her brokerage’s Web site. This (unfortunately) guarantees that a limited number of prospective buyers will be aware of the property. (It also increases the chance that your listing agent may pick up an interested buyer and earn twice the commission by representing both sides of the transaction.)

Buyers and their agents love to hear about off-market opportunities, because it can mean slipping in an offer and not having to deal with being countered or rejected. When I get emails with “Not in MLS” in the subject line, am invited to off-market preview showings or see various non-MLS properties being promoted, I’m all over it. These kinds of situations could mean good deals for my buyers.

I’ve seen some pretty insane sale prices over the past year—homes that sold well above the prices achieved by comparable, nearby properties. Let’s face it, when you’re listing your home for, say, $1.8M, you’re probably not thinking a buyer will pay more than a million dollars more than asking. (Yep, the photo above is from the very home in Noe Valley where this happened). Sky-high selling prices hit because one or two buyers get caught up in the competition and pay extreme prices. That won’t happen in an off-market sale, because there’s typically not the same level of competition.

There are certainly reasons you might want to sell your home off market. Maybe you’re a high-profile person who doesn’t want the public coming through your home, along with nosy neighbors. Maybe you want to avoid or can’t afford to handle all the pre-listing work and costs such as painting, staging, cleaning and the like. Or you have small children and can’t imagine trying to manage things during an official marketing period. You have an idea about price based on recent sales, and you’ll be happy getting a price in that range.

But if you’re a prospective seller with a nice home and the will to net more than you may have ever dreamed, make sure you take advantage of all the marketing opportunities out there to reach as wide a pool of buyers as possible. Number one on the to-do list for your agent should be to use the MLS, show your home as much as possible and make sure the property is well represented on Redfin and Trulia. Do all that at a minimum, and you won’t shortchange yourself in the end.

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