THE DELEON INSIGHT
OFF-MARKET SALES ALMOST ALWAYS COST SELLERS MONEY, BUT SOME MAY THINK PRIVACY IS WORTH THE PRICE By Michael Repka, Esq.
Once a real estate agent starts to feel comfortable that they have the inside track on a listing, many start angling for an opportunity to show the property to their buyers, or their office’s buyers, before allowing other interested buyers to know about the home’s availability. Naturally, this period of exclusivity greatly enhances the chances of that agent, or that office, getting commission from both sides of the same transaction. This strategy is generally better for buyers because they are likely to pay a lower price due to less competition. However, these “pocket listings,” “periods of exclusivity,” or early access periods, are almost always bad for a seller seeking the highest possible price. It is just common sense that increased exposure and competition results in the highest possible price. Individual buyers are likely to pay more if they know that they are competing with other interested parties. Alternatively, one of those other parties may be willing to pay more than the particular buyer that has already been identified.
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So the question becomes: Why do so many sellers allow agents to show their home to a mere fraction of the potential buyer pool and give these preferred buyers early access? I believe the answer is simple: Some agents trick their clients into letting them do this despite the clear disadvantages to sellers. Clearly, agents have a tremendous amount of commission to be gained by “double-ending” the transaction, plus they are likely to save time, money, and effort in marketing the property. Similarly, real estate offices use their listings as bait to attract buyers by promising them they will be able to get homes at lower prices due to less competition if they work with one of their agents. In fact, one large real estate brokerage ran an extensive local ad campaign encouraging buyers to visit their website and work with their agents to get access to “hundreds of homes before anyone else.” Implicit in this campaign was the idea that the buyers would be able to pay less due to reduced competition. While I agree that this makes sense
