Brooklyn Secret Agent: Off-Market Sales

Today we bring you the 15th anonymous weekly column about real estate by one of the most experienced agents in Brooklyn:
Well, it has come to this. Inventory is so tight that we brokers are scrounging for listings by going to people who hadn’t considered being sellers at this time and begging them to consider a deal. Is this a good thing? Maybe, maybe not.

The best place to start is with a buyer who has very specific needs and a clear budget. Without this in mind it can be very difficult to entice a seller. This buyer must also be able to make decisions fast without having to visit many, many properties. Let’s say we have a family relocating from London who lived in Brooklyn before. They’ve got the cash to avoid a mortgage and they want a prime neighborhood. This is an ideal situation to lure a seller into action.

Perhaps we have been in conversation with the owner of a prime townhouse for some time. They have been complaining about rattling around the big old place and feeling oppressed by the maintenance an old house needs. It is a good time to approach them with a specific sales price in mind for this one customer. Of course, it has to be a price that is supported by recent sales and that reflects the condition of the house. If it is appealing, we propose bringing London family, and only London family, in for a look.

Ideally, before this showing, both parties need to sign an agreement stating that this listing is only available to this buyer and the required New York State disclosure forms laying out who is representing whom. When I’ve done this I always explain to the sellers that we won’t be sure we got the best price if we don’t give all buyers a chance. Their response is usually that they can’t bear the thought of the whole world in their home. Conversely, the buyer will not be sure of the best pricing either but at least they get bragging rights for having bought a house “privately.”

These off-market deals usually are more beneficial to the seller — they have the upper hand since they really were not looking to sell just then. But in a highly competitive market like today’s, it can be to the buyer’s benefit not to have to compete against other buyers. In either case, it is critical that both buyer and seller are informed of the possible risks and rewards of an off-market deal.

In the next few months you are going to see a lot of recorded sales for properties that were never listed. Now you know why.

10 Comment

  • “Now you know why.”

    But who in the world doesn’t know this is how it works? Anyone know has, say, sold a car to the neighbor’s kid knows how this works.

    When it comes to real estate agents, instead of there being more than meets the eye, there seems to be less. I’m not trying to slam this guy here (cough cough .. donald brennan .. cough cough), but so far this column has only confirmed my thoughts about the real estate brokerage business.

  • speaking of off market sales (kind of) does anyone know these guys – http://www.primehomesny.com/ny/ ? They don’t have listings on the MLS and they wouldn’t send me listings via email. It seems like they own the homes they sell. shady? i posted on the forum but got no responses. sorry. oh- they are obviously more than happy to take me around to see the homes. just seems a bit unorthodox…

  • Oh, please. The whole world doesn’t have to come through a home that is listed. Don’t hold open houses. Make it by appointment only, at specific times, so you get only those who are really serious about buying and who will thus arrange their schedules to see it. Make sure the potential buyers have cash or a preapproval for a large mortgage before granting an appointment.

    Can’t see why a buyer would even want to have bragging rights saying they bought a home privately – its like stamping your forehead “gullible.” Ok, so they don’t have to compete – but it isn’t that hard to compete if you can afford a brownstone, is it? I would think not having to compete would be accompanied by paying a high price anyway, no?

  • Most of the houses sold off-market (that I have read about, seen on ACRIS, &c.) are purchased by LLC’s at low prices, so I am not sure that most of these purchase are “accompanied by paying a high price” – esp. if the seller is in a situation where he wants/needs to get rid of it quick and understands that the buyers in that “off-market” market are all trying to buy only at very low prices, in order to reno cheaply and make beaucoup on the flip. (Maybe we are talking about two different types of houses, I dunno.)

  • In our coop, the non-listed sales have been about 20% below market — all inside to friends/family. Poses a bit of a dilemma for Boards re fiduciary duty to maintain values.

  • I wish I had the last five minutes back.

  • Why does this column suck so much? Maybe it’s just a misnomer. “Brooklyn Real Estate Common Sense” seems appropriate.

  • Yeah, seward, I was thinking of the sort of sellers mentioned in the article, rich people with townhouses who don’t want the riff-raff coming through. Not distressed sellers looking to sell in a hurry in not highly sought after neighborhoods.

  • So I guess there are “classy” brokers who do this, as well as the predatory kind that knock on everyone’s doors in Bed Stuy and offer them $300K for their houses?

    I think this column is pretty interesting, actually–even if the point given here is a pretty obvious one: throw enough cash at a problem and you get something for it.

  • Someone I know, who is quite proud of her small owner-occupied house in a city neighborhood that is coming up (not in Brooklyn) was insulted to receive a letter from one of those outfits, telling her they were up for purchasing “blighted” properties. (Hers is not blighted, nor are other houses in the neighborhood.) Even if she was interested in selling (she isn’t), she would have absolutely no incentive to sell that way rather than put her home on the open market and sell to the highest bidder.