The (agent’s) Holding Yard
Getting consensus on what constitutes an ‘off market’ listing is difficult. Almost every agent has a different definition compared to the previous. Defining the true benefit to the seller of an ‘off market listing’ is equally difficult.
Some agents will claim the seller can save on advertising costs, others will claim you can get a higher price – by essentially threatening an interested buyer that the property will be listed on the open market if the offer is not high enough.
Going off market is an ideal way to ‘test the market and get some buyer feedback’. All of the benefits agents claim about listing ‘off market’ are compelling, because they have an element of validity.
Privately, where agents most readily agree though, is that the ‘off market listing’ strategy is ideal for the ‘motivated yet overpriced’ vendor. The agent can secure the listing and use pre-market buyer activity to condition the off- priced owner’s price down. If a buyer happens to buy the property in the meantime, even better.
The off-market strategy becomes a self-conditioning process for the owner. The more they invest time and effort into the ‘off market’ process, the more they want an outcome, a sale – even if they have ‘tone down their price expectations’.
Agents essentially use the ‘off market’ strategy as a ‘holding yard for overpriced listings’, with the intention of bringing them to market once the vendor’s motivation increases and the price decreases.
The ‘off market – buyer preview’ pitch helps the agent secure the listing, without having to defend the price point to the open market.
Whilst the agent will suggest the ‘off market phase’ will take a few weeks, the agent will likely ask for a 90 day Exclusive Agency Agreement.
Even though the agent was initially ‘cautiously optimistic’ about the chances of getting ‘the price’, once the vendor has signed the 90 day agency agreement, the vibe changes. The agent becomes far more reticent and cautionary about the chances of success.
The buyer feedback is suggesting the initial price goal is optimistic based on recent sales, interest rates, the economy, the standard of finishes, the size of the property, the living room is too small – take your pick as to the reason.
Even though the vendor signed up for a 14-21 day market preview, they are now wedded to the agent for 90 days.
None of the above is to say that off market is the wrong strategy. The process has its place. As a vendor, if you are encouraged and advised to test the property ‘off market’ for a few weeks, you should retain the option of changing agents/agency at the end of the process.
If the agent acts dutifully toward you and your interests as promised, they have probably earned the right to take the property to open market with a full marketing campaign.
However, if the agent has a Dr Jekyll / Mr Hyde personality whose persona changes once you sign the Exclusive Agency Agreement, you may be well advised to escape the Holding Yard and source a new agent/agency.
By Peter O’Malley, author of Inside Real Estate
