Risky tactic costing homeowners up to $60k when selling off market
Aussie vendors could be selling themselves short by more than $60,000, according to a new industry report analysing sales.
Vendors in some capital cities could be selling themselves short by more than $60,000 according to a new industry report analysing sales.
The PropTrack Off-Market Sales Performance Report, has compared prices for homes sold off-market with those listed on realestate.com.au.
On average, houses which sold off-market between July 2021 and March 2022 achieved sale prices 3.8 per cent lower than those listed on the property portal.
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In greater Sydney, there was the largest margin — a 4.2 per cent price difference — equating to an average loss of more than $60,000.
Units in the Harbour City sold for 2.9 per cent less, which represents an average loss of more than $25,000.
Dib Chidiac, director of agency DibChidiac, said he has experienced the difference between on and off market demand.
An unrenovated three-bedroom family home on 543sq m in Cabarita was tested off-market with some interest, but sold for $125,000 more after appearing online for 25 days.
“I tested the waters off-market first, and it did get some nibbles with an offer of $2.8 million. But then when I went to the market, I was able to get that same buyer to pay $2.925 million.
“Occasionally a buyer will pay you a price that’s an aggressive one just to get the property off the market before it goes online,” he said, adding that sometimes a buyer just wants to keep their home out of the spotlight due to privacy reasons.
The PropTrack study revealed that sellers in NSW achieved 4 per cent less from off-market house sales on average, or 5.4 per cent less regionally.
PropTrack senior economist and report author Paul Ryan said sellers trying to cut costs would be creating a false economy.
“Deciding to sell off-market may come at a significant cost to sellers,” he said.
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“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 outweighs the initial cost of advertising – particularly in a market with falling prices,” he said.
He said Sydney’s average gap between on-market and off-market results “jumped out” as significant.
“That $60,000 difference for Sydney houses is quite striking. I think most people would guess off-market sales don’t usually get as high a price as on-market and this report is about qualifying that so you as a seller can make an informed decision,” he said.
“You can say, ‘Okay, maybe an off-market transaction might give me a bit more privacy, or more flexibility with how and when I want to sell.’ But at least now people can use this data and say, ‘Okay, well if I am going do that in Sydney, it’s going to cost me 4.2 per cent on average’. That’s the trade off”
Mr Ryan added that the timeframe of this most recent report was an insightful snapshot of buyer behaviour in a correcting market.
“These results are based on sales from July 2021 to March 2022, when home price growth slowed rapidly, and reflect the losses for selling off-market in current slowing market conditions — a key consideration for sellers — as home prices decline further over the next year,” he said.
“What we tried to do with the research is to give a feel for how off-market sales are likely to perform in this slower market compared with the really strong conditions we had over the past couple of years,” he said.
In 2021, the same report found that off-market houses in Sydney sold for 2.7 per cent less than those on realestate.com.au. Nationally that figure was similar at 2.6 per cent.
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“When we ran this report last year, we found a smaller market differential and I think that’s because people’s expectations in a very hot market are that it’s relatively easy to get sellers and buyers to meet.
“Whereas, in a slow market, with this small decrease in buyer numbers it becomes more valuable to get as many people viewing properties as possible.”
According to the research, off-market sales results proved to be the worst for median price houses asking between $500,000 and $750,000.
More than a third of house sales in the study period sat within this price bracket.
While higher-priced regions, those with median prices above $1 million, saw the smallest price differences between on and off market transactions in percentage terms, it was a still significant 3.5 per cent difference.
Originally published as Risky tactic costing homeowners up to $60k when selling off market
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