Spring Real Estate 2009

Publication Date: Friday, April 24, 2009

To list or not to list?
A question of how to best market a home

The accepted wisdom in real estate is: the more eyeballs the faster the sale and the more competitive the bidding. Multiple Listings, the most comprehensive directory of currently available properties, is a marketing tool accessible to the realty community and the public that facilitates the sales process.

However, some clients choose to list their property "off market" (OML), or exclusively, thereby making it available to a limited clientele by appointment only.

Because sales of these exclusive properties are not included in the statistics and because many of the sales are confidential, it's difficult to get a handle on exactly how many of these transactions have occurred. However, agents who specialize in exclusive sales communicate with one another and anecdotal information suggests a local increase in OMLs.

Tom LeMieux, a real estate agent at Coldwell Banker in Menlo Park, reports that, to the best of his ability to track OMLs, in 2008, 30 percent of the 88 Atherton sales were exclusive listings as were 20 percent of 366 Menlo Park sales.

"Over the years the figure for both areas has been pretty consistent at 18 to 20 percent," he said.

Whether this increase is an anomaly or whether it will continue is difficult to project.
Some of the OMLs may be attributable to the current economic situation, which has resulted in slower sales cycle.

"The sale of luxury homes follows the stock market," Nancy Manning, an agent with Sereno Group in Los Altos, said. Manning feels that if a home is going to stay on the market longer, then OML "is the best way to maintain the integrity and market value of the home."
"The phenomenon of OML is more common in high-end listings, but is not exclusive to it," Bob Gerlach of Alain Pinel, Palo Alto, said. "The typical profile is an older or more private individual or a famous name."

He also points out that sometimes people opt for OML to sell rental property because it causes less disruption to tenants.

"I don't advise my clients to go this route because you're only reaching a limited population," LeMieux said, adding "If you truly want to maximize the value, this is not for you."

However, he does concede that OMLs can be useful for several situations, such as testing the price of a unique property that's difficult to comp.

Consider the case of a Peninsula couple, Baby Boomers who are now empty nesters, and who are trying to sell their 4,000-square-foot, "several-million-dollar" historic home built in 1895. "My husband and I are in a transitional phase and want to downsize," the wife said. She added that they are in no rush to sell and that they are enjoying living in the home that they lovingly restored over the past year.

They put the house on the market "very quietly" in October 2008, pulled back over the holidays and revved up again in February.

"Everybody loves their home, and I don't feel that ours is any more special to us than anyone else's is to them," the wife said. However, she is aware that this is a special property in that it will attract someone specifically looking for a historic home -- one that has the extra advantage of tax benefits (because it falls under the Mills Act, an ordinance that offsets higher maintenance costs and encourages preservation).

One of the keys to exclusive listing is to choose an agent who will market the home creatively -- such as organizing a tour of historic homes. Of course, since the strategy is to liaise with other agents who specialize in off-market listings, an agent with a substantial network is vital. LeMieux points out that the network can include past clients as well.

If/when the real estate market picks up the boomer couple will evaluate its off-market decision. The current doldrum is a major factor in their choice for the exclusive listing.

"When you're on multiple listing the clock starts ticking. There are certain expectations that markdowns will result from a stale listing," she said.

The "days on the market" and "cumulative days on the market" can be misleading, however. Sometimes people put their property on multiple listing, and, if it doesn't sell take it off and put it on again. If you wait more than 30 days to put it back on the market the number of days on the market resets to zero.

The fact that the property is an OML does not preclude Internet advertising. Nancy Manning is using the Net to market an $8.6 million historic home on University Avenue in Palo Alto. She says that 82 percent of all buyers first see the home they purchase on the Internet.

"I don't give out the address on the Net. I show the home by appointment only, and I make sure they're serious buyers," Manning said. The latter includes asking questions to determine financial wherewithal.

"The buyer does sometimes pay a premium for an exclusive listing," she said, but they do have the opportunity to buy a home not offered to the general public.

Scott Dancer is a real estate agent with Coldwell Banker in Woodside. He notes yet another consideration to exclusive listings: the weather.

"Big pieces of land get muddy in the winter and clients don't want lots of people tromping around and tearing up their property," he said.