The buzz surrounding the success of ‘off-market’ property sales has been making headlines across the Australian property market. Off-market sales typically are prestigious properties with sizable price tags. These are made all the more intriguing and mysterious by the nature of choosing to sell (and buy) without the orthodox public marketing campaign. I’ll share my perspective with you on this sales methodology.
The limitation of stock on the market has amplified the concept of passive vendors. Passive vendors may not be motivated to sell today, dipping their toes in the water with an off-market strategy, potentially as a pre-market litmus test, which involves the property being listed but not advertised. By this initial foray into the market, vendors are seeing what their property is worth.
While there has certainly been a rise in off-market sales in the COVID-19 property market, particularly in Sydney’s Eastern Suburbs, across our market in Mosman for example, 93% of properties that have sold above $5 million have been on-market purchases. Why? Simple – competition. Bigger marketing campaigns attract a bigger pool of purchasers whose independent desire for the property incrementally results in increasing price offers (whether at auction or prior) delivering the sellers the ultimate sale price, buoyed by underbidders.
But off-market is still enormously popular for vendors of prestige property, even if it isn’t as effective as an on-market sale at attracting premium price outcomes. More often than not, when vendors elect an off-market strategy, what we are really seeing is those vendors merely testing the interest in their property. Consequently, with demand at an all-time high and a myriad of buyers ready, vendors commonly then move their properties on-market.
Every potential buyer should be accounted for when selling your property. Particularly now, as the spring selling season has been delayed due to lockdowns. There are plenty of buyers across the board, whether it’s for one bedroom apartments or sprawling $20 million plus estates.
Much has been made of the international appeal of our pocket of Sydney. It’s no surprise to any of us that globally the Lower North Shore is perceived as an enviable destination to live. Once you‘ve experienced life here it is hard to leave.
Indeed, the headlines about international buyers had been accurate this year, to a point. Expats had flocked to the Lower North Shore during the early phases of the year’s lockdown, and whilst they’re still out in force, 90% of buyers in our market in the last quarter are locals.
Recognising how buoyant property prices are, locals have been extremely proactive in cashing in on family homes to move to properties with fewer rooms or a single storey in surrounding suburbs. Local buyers zone in on specific streets and neighbourhoods, they know precisely the places, properties they want to live in and the people they want to live near.
Evidence of this is the sale of a trophy home, the grand Federation manor ‘Stonehenge’, which borders two of Mosman’s most prestigious streets – Prince Albert St and Ruby St. Within hours of launching the property on market, we were swarmed with local enquiries, conducted numerous inspections and issued a number of contracts. With the same owner for 30 years, an opportunity to purchase prestigious properties like Stonehenge are rare.
It’s important to reach every potential buyer in on-market marketing activities, including the elusive and hard-to-identify passive local buyer, as they could be the competitive difference for a highly profitable sale.
Passive buyers aren’t proactively scouring the market. It’s only when a property comes onto the market and is proactively advertised, featured online, advertised on social media or in the Mosman Daily, that they will be compelled to seek out more information. On market listings create competitiveness between proactive and passive buyers.
An agent can’t identify a passive buyer because even the passive buyer doesn’t know they’re “in the market” for a particular property. Therein lies the risk of selecting an off-market strategy because the average buyer – let alone the passive buyer – won’t be privy to hearing about or seeing off-market properties unless they are constantly reaching out to that specific agent for new opportunities or represented by the right buyer’s agent who has an existing relationship with that specific selling agent.
Many people assume that off-market purchases are executed predominantly to protect the vendor’s privacy, this is generally only for 1 in 100 vendors.
More often than not, vendors are fearful that an on-market strategy that doesn’t work will negatively impact the perception of their property. If they were to put their property on the market, and it was not to sell, that information would be readily accessible on the property’s profile for all potential future buyers to see.
That’s the attraction of an off-market strategy. If their property receives significant interest during the off-market phase, the vendor can then confidently shift their strategy to fuel both demand and competition. According to the latest PropTrack Market Indicators Report by realestate.com.au, demand, as measured by views per listing, rose by 9.4 per cent in October. Astoundingly this is 46.4 percent higher than October 2020.
My final observation in this market is that buyers agents have been big players throughout 2021. Buyers’ agents, and their network of contacts and reliable relationships, can elicit exclusive opportunities for buyers and, simultaneously, sellers.
In the Lower North Shore, we are inevitably doing more deals than usual with buyers’ agents particularly with vendors who elect an off-market strategy. Buyers’ agents provide pre-qualified, serious buyers on demand which is crucial for those vendors testing the market.
If you would like to discuss your real estate needs and the current market, please get in touch with Geoff for a confidential discussion.