One west Menlo Park home's lease agreement didn't allow for open houses or Realtor tours more than three times a week for limited times, not enough for a full-blown marketing campaign. Another home in Atherton hadn't been listed on the market since the 1970s and family members weren't sure they wanted to list the home to a broad buyers' market.
Both homes were put up for sale "off market," a type of sales strategy in which the home's availability is only narrowly advertised to certain real estate agents and potential clients. Often it's only listed in an individual Realtor's own database of preferred clients, or on the members-only "Top Agent Network," a listing that agents who sell in the top 10 percent of the local market choose to pay nearly $500 annually to belong to.
Over the past five years, Coldwell Banker agent Tim Kerns, who sells in the top 1 percent of agents internationally, said about 40 percent of his sales were "off market."
The idea, he said, is that experienced real estate agents can put buyers and sellers in contract with other reputable agents "fairly seamlessly at market value."
"Sellers don't have to go through the process of staging, open houses and being posted on hundreds of websites while getting to pick their pre-emptive 'make-me-move' price, and buyers willing to pay a small premium don't have to compete in blind auctions, multiple counters and bidding wars feeling squeezed and disadvantaged," Kerns said, summarizing the advantages he sees with such sales.
But agents warn, such sales are not as simple as they seem.
"Off-market pricing can be very tricky," said Xin Jiang, of Alain Pinel Realtors in Palo Alto. "When I price an off-market property, I do a very comprehensive comparable analysis to get a range of fair-market value of the target property based on recent closed transactions."
Generally, once a property is on the broader market, whether you price it low or high, it will settle at its supply-and-demand dynamics, she said.
Jiang researches each recently-sold home's positive and negative traits in detail so she can more finely tune the off-market price.
The main advantages to an off-market sale, said Realtor Tom LeMieux of Pacific Union in Menlo Park, is one of convenience and privacy. Such a sale's marketing has "limited reach," because you're not doing "some of the typical broad marketing" such as a full Realtor tour, or open houses.
The con to that: a more limited buyer pool.
He said a good well-priced home listed on the Multiple Listing Service won't stay on the open market for long right now. He said 2018 has a "fast sales cycle," with buyers ready to move quickly to snatch up a quality home.
From buyers' perspectives, they can take advantage of the existence of off-market sales, LeMieux said. A buyer can "align themselves with an agent who is aware of not only on-market homes but off-market homes," he said, so they are "not missing opportunities."
LeMieux said a big advantage for sellers is that the number of days the home is on the market isn't tracked unless a home is listed on the Multiple Listing Service, so there is no negativity associated with property if it doesn't sell quickly.
If there is limited or no activity on a home, that someone is trying to sell off market, he said, "at some point you need to go to Plan B ... an on-market strategy."