INDUSTRY experts have warned of the risks of selling “off-market”, with one leading agent claiming it could leave a homeowner hundreds of thousands of dollars worse off.
With continuing low levels of stock for sale and a rise in opportunistic vendors, some agents are reporting an increase in the incidence of “off-market” property transactions.
“Off-market” sales are those which occur without public advertising, with real estate agents contacting interested buyers privately.
Potential purchasers who’ve missed out at auction are registering with sales agents to ask to be notified if anything similar looks likely to come up, while many are also going to buyers’ agents who have databases of those thinking of selling.
But some agents have warned sellers risk exchanging for less than their properties could be worth on the open market.
Place Estate Agents Kangaroo Point director Simon Caulfield claims vendors selling their houses “off-market” could be missing out on up to 10 per cent of their property’s true value.
Mr Caulfield said that by agreeing to sell quickly and quietly without a public campaign, sellers could be significantly short-changing themselves.
“My advice always is that clients should expose their property to the market because I think you always risk underselling it if you take it off-market,” Mr Caulfield said.
“If you’ve only taken a handful of people through the property, are you really giving it the best chance?
“You could end up potentially five to 10 per cent short.”
Mr Caulfield said only about 10 per cent of the transactions his office handled were off-market.
“There’s a lot of positivity at the moment in investing money into a campaign and getting a great result,” he said.
Ray White New Farm principal and auctioneer Haesley Cush cautioned that while sellers could save money on advertising costs by selling off-market, a lack of competition meant they might not get the best price for their property.
Mr Cush recently auctioned two similar properties in comparable locations in the inner-city Brisbane suburb of Spring Hill.
One vendor decided to spend $3000 solely on digital advertising, while the other spent about $15,000 on a full marketing campaign across print and online.
The former generated 16 groups of people during the four week campaign and a sale price just after auction in the early $700,000s, while the latter attracted 50 groups and a sale price in the high $800,000s.
“To receive three times the number of inspections in such a small little suburb certainly adds weight to the benefit of a full marketing campaign,” Mr Cush said.
“The reality is a strong campaign will likely generate more buyers.
“Real estate is a contact sport; the more buyers your agent is in contact with, the more competition your property will likely receive.”
CoreLogic senior research analyst Cameron Kusher believes there are more benefits associated with taking a property to market than selling in secret.
“You’d only want to do that in the case you’re very confident of getting a buyer and your real estate agent has a good database of potential purchasers — and it’s hard to judge that,” Mr Kusher said.
“I personally think you’re better off getting the message out to everyone and trying to find a buyer that way.”