The frenetic pace of our current real estate market opens the door for homebuyers to use creative tactics when searching for their dream home. It’s important to weigh the pros and cons of such methods as well as the additional time it takes to initiate unconventional search campaigns.
One approach is for a broker to send a letter of inquiry to the owner of a home not currently listed for sale which may be of particular interest to the buyer-client. The goal is to peak the curiosity of the homeowner to begin a conversation that could result in an off-market sale.
If a homeowner chooses to engage in serious negotiations to sell their home without placing it on the open market, s/he should seek the advice of a licensed real estate broker or a real estate attorney. The advantages for a seller entering into an off-market transaction may include:
- savings in preparation time and disruption that comes with opening a home to the public repeatedly until sold
- potential for a purchase price offer “too good to refuse” and/or one that outlines completely favorable terms such as a 60-day closing period or a rent-back clause
- potential for financial savings in lower commissions or other costs typically associated with the sale of a home
Equally, the disadvantages of such a sale should be considered carefully. The lure of reaping more money by paying less or no commission at all can overshadow the strong possibility that the purchase price offered for the home is below market value especially in a competitive bid environment. The Northwest Multiple Listing Service states “exposure of the property to the open market will increase the likelihood that Seller will receive fair market value.” If sold as an unlisted property, the full equity gain, realized with time or high-demand market conditions, could never see the lining of the seller’s pocket.
Homebuyers, on the other hand, may be able to secure a home in a desired neighborhood, close to schools, public transportation or other amenities. A particular buyer may be willing or able to pay a premium to live in a historical, turn-of-the-century, Craftsman home or a condo nestled in an Anhalt building. Reaching out to owners of unique residences may be a good option if market inventory is otherwise scarce. Buyers who want to wage an off-market campaign through their broker should think long and hard about what they can and cannot accommodate financially and practically should their efforts hook onto an interested seller.
Ultimately, all parties will need to consider money, terms, time and housing needs when negotiating any real estate transaction, but these considerations become even more crucial in off-market sales.