Off Market Sales Are Off The Charts

Suzanne DranowOff Market Sales Are Off The Charts
When pulling up sales stats for different areas around town, I have to check two sources — the MLS and public records. The MLS gives me information of the properties that were listed and sold, and public records (after a lot of cross referencing) tells me what sold “off market.”
Off market sales consist of two main types of listings: A) listings that were listed on the MLS and were withdrawn just before the closing was recorded, and B) listings that were never even listed on the MLS (called “pocket listings”).  

Many of my clients want to know the advantages (and disadvantages) of either of these strategies, and why agents, sellers and sometimes buyers use them.
Withdrawn Listings:
Higher-end spec house listings are the ones you’ll find most often in the withdrawn column. When selling a $10, $15 or $20+ million home, many developers and investors like using this technique because listing it on the MLS casts the widest net for potential buyers (think websites that syndicate to wealthy foreign buyers) and, depending on the eventual contract price, makes it slightly more difficult for the casual incredibly wealthy home buyer to see for how much a home similar to the one he is thinking of buying actually sold. 
For example, a home listed for $25 million dollars is on the MLS. The developer likes the fact that he has developed a $25 million, the seller/investor likes that she has a built a $25 million home, and the buyer likes the fact that as far as anyone knows he paying $25 million for a home. But, in reality, the buyer is actually under contract to buy the home for only $19.5 million (what a steal). The thing is, in this ego-charged world of exclusive real estate, it’s in everyone’s best interest for the public to think the house closed for the listing price. 
So: 1) the listing is withdrawn from the MLS, just before closing. 2) The LA Times writes an article about how this incredible house developed by X, funded by his partner Y, and purchased by celebrity Z sold for $25 million. 3) By the time public records posts 45-60 days later, people have moved on, there’s no follow-up story, and as far as everyone is concerned, the house sold for the asking price. Egos are safe and sound.
Pocket Listings:
I’m going to write more about this in another post, but suffice it to say, Pocket Listings are listed properties that are excluded from the MLS. Why would a seller want to exclude the property from being exposed to the widest possible pool of potential buyers? There are a few reasons: A celebrity seller might want a modicum of privacy and keep the listing private; An agent wants to try and “self-sell” the listing to his/her own pool of buyers;  or the agent is playing on the incredibly effective “sorry, you can’t have it” psychology of the exclusive “invitation only” listing.
Are pocket listings effective? I’ll be covering that in another post.

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