Anyone who’s sold a home can tell you that it involves a lot of decision-making. One of the first decisions is whether to sell your home off-market or on-market. Let’s take a closer look at the pros and cons for both options.
SELLING YOUR HOME ON-MARKET
Selling a home on-market refers to the traditional method of selling a home. The seller works with a real estate agent who places a for sale sign in the yard, lists the home on the Multiple Listing Service (MLS), and markets the home publicly to a wide audience of potential buyers. Sellers can also expect showings and open houses and should be prepared for buyers to view the home in person.
By the way, according to the 2022 National Association of REALTORS® (NAR) Profile of Home Buyers and Sellers, the majority of home sellers (86%) opted to work with a real estate agent to sell their home, while 10% went for the FSBO (For Sale By Owner) approach, and less then 1% chose to sell through iBuyers.
PROS OF SELLING ON-MARKET
- Exposure To More Buyers: Most buyers today start their search online. Homes listed on the MLS (Multiple Listing Service) are marketed on hundreds of public websites. This gives the seller access to a much larger pool of potential buyers than if they were to sell the home privately.
- Professional Assistance: Working with a real estate agent who has experience selling homes can be a huge advantage. They can assist with pricing, marketing, negotiating, and closing the sale. They also have access to industry contacts and resources.
- Potentially Higher Sale Price: A home listed on the open market may sell for a higher price than a privately sold (off-market) property. More exposure to buyers means more competition. In a hot market where demand is high and inventory is low, sellers may receive multiple offers which can drive up market value.
CONS OF SELLING ON-MARKET
- Inconvenience: One of the biggest drawbacks of selling a home on-market is the need to keep it in show-ready condition. This means tidying up and making the home presentable for potential buyers to view at any time. This can be stressful and disruptive to the seller’s daily routine.
- Longer Time on Market: Homes listed on the MLS can take longer to sell, especially if the market is slow or there is a lot of competition. This can result in stress and uncertainty for the seller. The longer a home sits on the market, the less desirable it can appear to potential buyers.
- Higher Fees: Selling a home on-market can be more expensive. Sellers need to consider typical costs including commission fees for the real estate agent, potential repairs, staging the property, as well as closing costs and other potential expenses. These costs can add up quickly and decrease the seller’s profit from the home.
SELLING YOUR HOME OFF-MARKET
The best way of defining a home sold off-market is that the home is sold without being listed on the Multiple Listing Service (MLS) or any other public real estate website. Instead, the seller chooses to market their home privately. The seller may reach out to potential buyers directly, work with a real estate agent to find a buyer or sell to a real estate investor. This type of sale eliminates the need for open houses, multiple showings, and public advertising.
PROS OF SELLING OFF-MARKET
- Privacy: This is an important advantage for sellers who want to maintain their privacy and avoid the inconvenience of open houses, nosy neighbors, and strangers walking through their homes. Some sellers also worry about privacy and security concerns associated with posting photos of their home online.
- Faster Sales: Off-market transactions can be faster than traditional sales as the home can be sold directly to interested buyers without the need for a formal listing or marketing campaign. These transactions often involve cash buyers or investors who can close more quickly without the complexities of financing approvals and appraisals.
- Convenience: Selling off-market can be less of a hassle since there is no need to stage the home, get it show-ready, or make repairs to appeal to a broad range of potential buyers. In fact, many real estate investors who purchase off-market properties do so without requesting any repairs. This advantage can save sellers time and money.
CONS OF SELLING OFF-MARKET
- Limited Exposure: One of the biggest downsides of selling off-market is that you won’t have as many potential buyers seeing your property. Sellers may miss out on buyers who are actively searching for a home online or with real estate agents.
- Lower Sale Price: There are two sides to this disadvantage. Less exposure means fewer buyers, which means less competition. This can result in a lower sale price. The other side is that many off-market buyers are investors who offer lower than the traditional market. Investors don’t plan on living in the home. Their goal is to renovate the home and resell it or rent it out. However, if the right investor makes an offer with no repairs, no closing costs, and no commissions, the seller may find that the convenience of an off-market offer is not much lower than the traditional market.
- Fewer Offers: Finding the right buyer can also be a challenge. The seller will need to rely on their own network or enlist the assistance of a real estate agent who specializes in off-market sales. Once again, the disadvantage of the smaller pool of buyers may result in fewer offers.
The choice between an on-market or off-market sale ultimately depends on the specific needs and goals of the seller. For those seeking to maximize profits, on-market sales may be the ideal choice. However, for those seeking a quicker sale or convenience, off-market sales may be preferable. It is crucial to weigh all the advantages and disadvantages carefully before making any decisions.