1 June 2013, Estates Gazette
Off-market property sales are on the rise, but is the chase for privacy, exclusivity and mystique costing buyers thousands of pounds? Graham Norwood reports…
Top-end locations like prime central London there is a phenomenon spoken about in hushed terms and seen rarely in the rest of the country: it is the ‘off-market’ property. Such a property is not advertised on Rightmove nor in the press, may not even have a printed brochure and will 6 never find its way into an estate agent’s window. Yet it is for sale. Instead, its identity is revealed to only a few – typically buying agents and a handful of estate agents known to possess lists of high net-worth clients wanting to buy.
This is house selling with a hint of mystery, a dash of privacy and a lot of noughts on the asking price. There is no official data on off-market deals but analysis by Henry Pryor, a buying agent and housing market commentator, shows that one in five homes sold for more than Elm have never appeared on sales portals so they are regarded in the industry as off-market.
While in theory this sales tactic could be used for any sector of the market, in reality the higher the price of a property the more likely the off-market approach is deployed. “I would estimate that more than half of the properties for sale in prime central London priced at more than El Om were sold off-market over the past 12 months,” says Ed Tryon of Lichfields, another buying agency.
Unsurprisingly, high-end agents in the South of France, Paris, New York and Geneva have also reported an upsurge in off-market activity in recent years. So does this status really denote a special property too exceptional for the usual comparables and more conventional sales methods? Or does it add a spurious veneer of mystique (and tens of thousands of pounds) to an otherwise humdrum home?
Property professionals are divided. Sellers of the best houses are now actively choosing to sell off-market because of the perceived benefits,” says Ed Heaton, managing director of buying agency Heaton & Partners. “Off-market deals are generally a positive experience for seller and buyer. Both parties feel that they’ve achieved something they wouldn’t ordinarily have been able to.” In weak markets like that for high-end country houses outside south-east England, for example the technique is used “to test the market in order to find a buyer without running the risk of blighting a property if it remains unsold through an open market campaign”, admits Ian Hepburn of Private Property Search, the buying arm of Strutt & Parker. But often the off-market tactic is used merely to flatter buyers and sellers.
Discerning vendors don’t want a barrage of people traipsing through their home,” says Robert Bailey, a London buying agent acting for clients seeking El Om-plus properties. “Many wealthy buyers specifically ask about off-market properties,” says Tim Swannie of Home Hunts, an agency which sells and buys Luxury homes.
“They love the fact that they have access to estates not on the open market.” Yet other industry experts are much less keen on off-market sales, saying that naive purchasers risk paying above-value prices for homes because of their -special” status. “Off-market properties do tend to be sold at higher prices because they haven’t been market-tested,” cautions Camilla Dell of Black Brick, a London buying agency. A lot of clients get obsessed with off-market, thinking that this makes the property better. Often, properties that are off-market have quite unrealistic vendors. If they were motivated they would be instructing an estate agent to market the property for them, Lieu warns. Sellers, too, may inadvertently lose out, claims Richard Barber of London sales agency WA Ellis. If the market is strong and an estate agent is involved, the agent is more likely to encourage competitive bidding and achieve a better result for the client: he insists. It is perhaps inevitable that off-market sales lend themselves mostly to the top end of the market where exclusivity and anonymity often go hand-in-hand. The most high-profile attempt to extend the technique further down the price chain has had a troubled history. Last year, the Fine & Country estate agency at Berkhamsted, Hertfordshire, launched a service called Hidden Homes, requiring would-be buyers to pay £95 to gain access to off-market homes. Buyers were to be carefully vetted to ensure a good match for vendors, who would be saved embarrassment if a sale failed or took longer than expected.
Estate agents overvalue to get instructions so there’s a risk for sellers that they won’t get offers they expect,” a Hidden Homes spokeswoman explained at the time. Then they may have to cut the price or face not selling at all. That’s a nightmare for people worried about what neighbours think.” However, the Hidden Homes contact number now no longer takes messages and, although a Fine & Country spokesman says the idea is still a good one in principle”, he admits the firm is currently concentrating on conventional public marketing of properties. Discretion, it seems, is not always the better part of selling a home.