What does off-market or a private sale actually mean?
It means different things to different people, particularly buyers and sellers.
To either buyer or seller a generally accepted definition is a property that is sold without a digital footprint (or sometimes any marketing collateral). It might indicate that the seller is discretionary, or as often as not it is part of a two-stage strategy and precursor to an open market campaign. Legitimately it might be to test the market to a pricing strategy or to understand how buyers may react to a house that has some sort of compromise.
It might also be to protect the privacy of the seller and there are some pretty obvious reasons why an owner might want to keep their business away from prying eyes and ears.
As a seller you will have better control over who comes through the door as the names of buyers are often discussed before even an approach is made. But don’t be too prescriptive or indeed appear too discretionary, buyers want to believe the house really is for sale and not just about giving a house owner an unofficial valuation.
One thing to bear in mind is that an off-market viewing should be done with the same care and attention as if the house was on the open market and we will explore the preparation before a sale later in the series.
Private Sale Strategy
It is important that you are very clear in your messaging to the market. From the outset articulate clearly the terms of any sale. Agree a Guide Price, even in the private market buyers want transparency and I believe this to be a reasonable expectation.
Be clear about a timeframe. Often an initial private offering is about testing the market and understanding the appetite for a house, but in the event of strong interest from a potential buyer, they will want to know when they can move in. Being hazy about this, won’t encourage them to push themselves.
So what is the right price?
This is perhaps the crux of the issue and exposes the opportunities, but potential downfalls. In the open market, you can be pretty sure that your agent will have covered the market well and a full exposure with the right strategy will lead to the market endorsing the price or otherwise.
In a private campaign, there should be an advantage to the seller, whereby a premium might be sought; a sort of privilege granted to the buyer for not seeking a wider competition. This is particularly true at the top end of the market? It is likely that at best, there will only ever be a handful of serious buyers, and so if the seller’s agent approaches those known to them, all that is missing are the one or two unknown buyers who have yet to declare their hand in the open market. In which case is this just a market campaign without some of the fanfare.
If a house is of an exceptional quality, it is conceivable to place a property with a single buyer who is ready, willing and able to recognise that a significant premium must be paid to secure the property. This ‘one-off’ should achieve a price that would otherwise be unlikely if offered about more generally. This is selling that opportunity to the buyer, arguably there is a degree of flattery, but commercially they need to buy into the exclusivity that this gives them. At which point, it shouldn’t be about how much more they are paying, but about understanding the value of stopping somebody else, snatching it from them.
Buyers, and more importantly, their advisors (who at the top end of the market represent more than 50% of all buyers) will be wary of a vendor, trying it on. This is more so in a less well functioning market. Before the pandemic, one often heard buying agents advising their clients to hold back from making bids while the house was being offered privately, often as not, the vendor or indeed their agent was flying a kite, probably too high!
Clearly, since then, and indeed, looking forward over the course of 2023, the supply of quality houses remains sufficiently constrained that buyers and their agents should be willing to look with less circumspection than pre pandemic and embrace the opportunity that a private campaign can offer.
Have I sold well?
This inevitably is the single, most likely conundrum facing the seller and their agent. On the basis that a pricing strategy was discussed in detail and the offer on the table is at or exceeds that price, hoping for more may just be a wish too far.
Instinct will play a significant part. A trusted advisor isn’t in it just to do the deal, if one is privileged enough to be in trusted by an owner (with arguably their most valuable asset) it would be in our DNA to only ever offer the best advice. If that advice is to take the offer, in my experience, it is usually the right advice.