Aussies who decide to sell off-market get up to $60,000 less for their property, with some states and areas taking the biggest hit to returns.
On average, houses sell for 4.3% less off-market nationally while units sell for 1.2% less, a recent PropTrack analysis revealed, which uses the average price difference between off-market property sales and those sold on realestate.com.au in 2022.
And over the period of slowing property price growth in 2022, off-market sales in locations with median prices above the $725,000 national median price performed the worst, the report shows.
In regions and suburbs where properties sell for above-average prices, houses sold off-market could lose more than 5%, and for properties over $1 million, that percentage is higher still at over 6%.
And while suburbs on the other end of the scale, with houses selling for below the median property price, saw smaller losses, off-market sales still brought in over 3.5-4% less.
Sellers of houses in regional NSW take the biggest hit to returns when selling off the market, losing up to 10.3% of what could have otherwise been achieved.
And for the cities, Perth sellers had the biggest loss, of up to 4.9% for their off-market house sales.
New South Wales missed out on more than 4% of the average selling price by going off-market, and in Queensland and Western Australia the difference was 3% or more.
The analysis shows that deciding to sell off-market can come at a significant cost.
“While some sellers might try to save money by not advertising online, this analysis shows the potential earnings lost in the final sale price far outweigh the initial cost of advertising,” the report said.
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The buyer's agents at Metropole Property Strategists come across two types of what I would call “off-market” transactions.
- True “off-market” opportunities where for various reasons the vendor doesn't want to make the sale of their property public knowledge.
- Pre-market or pre-sale opportunities where the agent’s database can inspect and make an offer on a property before it hits the internet or the general market.
The second usually occurs when the seller’s agent rings their “A grade” clients and offers them this great new property they have just listed for sale.
And then they call their “B” clients and then they ring anyone else they think may be interested.
A few days later they then tell the other selling agents in their office about the property and these agents do the same - they call their top clients.
And if it doesn’t sell, eventually the property gets listed on the Internet and everyone else finds out about it.
While it might sound like a great way to get a bargain price for the same property, most pre-market and off-market opportunities aren’t great deals.
You see…many agents list the properties they have for sale by "buying the listing".
In other words, they entice the seller with an inflated price to get the listing and then slowly condition them to the real market price.
Instead, as an investor, you should be focusing on looking for investment-grade property in an A-grade location.