Off-Market Sales May Cost Sellers Thousands in Lost Value, New Data Reveals
Research conducted by PropTrack, the analytics division of REA Group, indicates that opting for an off-market sale might not be as cost-effective as sellers anticipate. While off-market sales might save on advertising expenses, the study found that such transactions couldead to lower sale prices. PropTrack compared the sale prices of properties listed on REA's platform to comparable properties not listed on it, including those advertised exclusively on other websites.
According to PropTrack's findings, homes sold after being listed on REA's website fetched an average of 4.3 per cent more than those that were not listed. PropTrack senior economist Paul Ryan stressed that the potential earnings lost in the final sale price far outweigh the initial cost of advertising. At current property prices, this value loss can exceed $60,000 in Sydney and nearly $30,000 in Melbourne.
Ray White, one of Australia's leading real estate agencies, supports PropTrack's research. Ray White's chief economist Nerida Conisbee confirmed that advertising significantly impacts the sales price and recommended advertising properties to increase their market visibility. She noted that spending on marketing campaigns is especially essential in weaker market conditions.
Furthermore, the study explored the impact of auction versus private treaty sales. Ray White found that going to auction could result in a 10 per cent price lift compared to the highest prior offer. Professor Adrian Lee from Deakin University conducted earlier research supporting the notion that auction sales tend to achieve higher prices, especially when the property market is on the rise.
While some sellers might be attracted to off-market sales to save on expenses, the new data highlights the potential cost of undervaluing properties in the long run. Advertising and auction sales are proving to be more effective strategies to maximize sale prices, even beyond the two largest capitals of Sydney and Melbourne, where auctions are traditionally more common. The transparency and sense of urgency that auctions create seem to be increasingly appealing to sellers in other markets as well.
