30 Jul The difference between ‘off market’ and pre-market property – Cate Bakos
One agent says she is sick and tired of having to answer for agents who pitch ‘off market’ properties with a misleading ‘price quote’ and a set sale date. Cate Bakos says she has to spend a lot of time educating buyers about the difference between a genuine off market, and a pre-market property offering
Kevin: We’ve spoken in the past about off-market opportunities. It sounds really interesting, and it probably is in genuine cases where you can achieve getting to someone before an agent does, looking at securing a private sale, or even someone who doesn’t want to market a property.
So, what is an off-market opportunity? One buyer’s agent, Cate Bakos – who will be my guest – talks in this interview about the difference between a genuine off-market opportunity and a pre-market offering.
Hi, Cate. How are you doing?
Cate: Hi, Kevin. It’s great to be here.
Kevin: Yes, nice to be connected again. Cate, of course, is a buyer’s agent. Would it be fair to say that there are more opportunities like this in some of our cap cities, in Sydney and Melbourne, Cate, from your experience?
Cate: That’s a good question. I think that off-market opportunities exist in any market, and it really is a sign of an agent’s relationship with the dominant byers, but obviously in capital cities, there are more buyer’s agents and it’s certainly a common theme between agents and buyer’s agents because we often have a pool of buyers who are buy-ready – they know exactly what they’re after and are able to articulate it.
Kevin: What makes an off-market opportunity? This is something that I’m interested in. Is it driven by the seller not wanting to market a property, or is it driven by a buyer who wants to seek a property without any competition?
Cate: It’s actually driven by a seller who needs to sell the property and may not have the convenience of lots of time to have a traditional campaign. So, for any off-market property, I always find that the majority of vendors who are selling off-market are selling because they have a particular date they need to meet or they have a short timeframe and it isn’t long enough for a good auction campaign.
Sometimes, you’ll find that vendors want a quiet sale or a private sale, or they’re just wanting to avoid having people traipsing through their home. They might be a public personality or something like that.
Other times, you find that vendor motivation for going off-market is not ideal for the buyer, and that’s when we determine whether it’s actually good off-market or a waste of our time.
Kevin: Yes, let me deal with that in just a moment. Can I ask you another question about off-market sales? From a seller’s perspective, isn’t there a danger if they don’t expose it to an open market that they could actually undersell it, Cate?
Cate: There is a danger, and if they’re in a position where they haven’t enough time to really negotiate hard and maybe have a couple of buyers fighting it out, that is a danger. But on the flipside of that, if a buyer really wants property and this particular property matches their needs and they know that they’ve got a window of time to put in a bid for it that’s competitive enough to have the vendor agree to shut it down and sell it, the buyer knows that they might have to match the vendor’s asking price or even give them an offer that tempts them to take it and restrict marketing it to others.
But every now and then, a vendor can get a really impressive price on an off-market property, and that’s the skill of the agent and their ability to match the house to the buyer. And obviously, a buyer’s agent doesn’t want to pay a premium, but every now and then, a vendor will get lucky with an off-market property.
Kevin: It’s a fairly common occurrence where an agent will do a pre-marketing campaign, that is say to a seller “Look, I understand you want to sell it, let’s get it listed, but in the meantime, I’m going to expose this to some buyers or buyer’s agents who may be interested.” That’s a difference between a pre-market offering and an off-market sale.
Cate: Very much so, Kevin. These pre-markets that are bundled up under the guise of being called an off-market can be quite infuriating for us. There are usually a couple of reasons why agents will do this, and both of them aren’t good reasons for the buyer, so they have to be very careful about what they say in situations like this.
The first risk is that it’s actually just a pre-market and the agent is floating it out there to see if there’s anyone who is prepared to pay a premium or any under-bidders who are prepared to pay a price that’s over and above what the property is actually worth, and obviously, then they’ll secure a great sale result without having to put any effort into the campaign.
That’s a bad off-market, because it’s a pre-market where the opportunity to buy it prior is only if you give the vendor an offer that blows them off their chair, and that’s not what we want to do.
The other reason why some agents will have a pre-market is maybe they’re trying to secure an exclusive listing, and at this stage, they only have got a foot in the door. So, they might be saying to the vendor “Let’s get some buyer’s agents through and demonstrate to you that we have these fantastic networks.”
And that’s a waste of my time if I’m going along to a property under the guise of it being an off-market and it’s really just an agent trying to list it.
Kevin: The danger there for the agent of course is that’s a breach of the Act. They can’t represent a seller unless they have a signed agency agreement, Cate.
Cate: They will have a signed agency agreement, but it might be a short range one, or it might be the vendor giving them a [5:15 inaudible] opportunity to show them what they’ve got. It could be exclusive on just a three-day or seven-day…
Kevin: Yes, I understand.
Cate: That’s a waste of my time.
Kevin: Pre-market offerings are quite normal, provided they’re not pitched as off-market sales, is really what you’re saying.
Cate: I think so. Yes, if an agent is honest with a consumer and says “I can get you through this property, they’ve had the photos done, they really want to put it on the Internet, but if you’d like to buy it prior, you’ll need to give them a price that blows their socks off,” for some buyers, if they have the funds to do so and the house absolutely perfectly matches their requirements and they know that for them, it’s still a good value proposition, the consumer will be happy to go through with it.
But if it’s under the guise of being an off-market and it’s not really, it means that you’ve shown your cards, you got excited, and then you have a four-week auction campaign to sit through while every other person sees it.
Kevin: Interesting. It’s great to look at it from all sides, from the seller’s side, from the agent’s side, and certainly from the buyer’s agent side. And you’ve given us that perspective quite well today.
Cate Bakos is a buyer’s agent, and you’ll find her at CateBakos.com.au. Thanks, Cate, for your time.
Cate: Thanks, Kevin. Great to chat.