Question: Should I consider selling my home off-market?
Answer: The correct question is not whether you can buy/sell a home yourself (yes, you definitely can), but rather what are the chances that you get a better result doing so. Last year, Bright MLS released a significant study comparing the results of on and off-market sales and found homes sold “on-market” through the Bright MLS platform (link to article explaining what Bright MLS is) sold for 16.98% more than those sold off-market. It was an excellent first attempt at objectively comparing sales data between the two approaches, but there were some flaws in the methodology that received pushback.
2022 Study is Much Improved
In August, Bright MLS released a new, much-improved study on the same topic with significantly more data and better methodology. They expanded the data set from 443,000 sales from 2019 to 2020 to 840,000 sales from 2019-Q1 to 2022, which means we added data from the peak real estate market of 2021-early 2022. They improved the methodology in several ways such as controlling for flips, new construction, sales between family members, and distressed sales, and also significantly improved how they compared prices by analyzing property and neighborhood characteristics, not just by median prices.
On-Market Sales Sold for 13% More, Even more in DC Area
The study found that from 2019-Q1 to 2022, homes sold through the Bright MLS platform in the Mid-Atlantic sold for 13% more than those sold off-market and the returns were even greater when the market peaked in 2021 (14.8%) and Q1 2022 (19.7%). The DC area market saw even higher returns for on-market sales than the Mid-Atlantic (see chart below).
I think that one of the most important takeaways from this study is how significant the increase in returns was for on-market vs off-market sales when the market was at its peak from 2021-Q1 to 2022. There’s a clear trend that as the market became more favorable for sellers, and it became easier to sell a home than ever before, the difference in returns between on-market sales and do-it-yourself sales became significantly greater.
Office-Exclusives Also Struggle vs On-Market
The study also looked at office-exclusive sales whereby a property is marketed by the listing brokerage, exclusively to agents within the brokerage. As one might expect, the limited access to buyers through this approach also results in weaker performance.
In some cases, a seller may prefer the privacy of an office exclusive to the returns of an on-market sale, but that trade-off must be fully understood.
Of the properties that are first marketed as office-exclusives, nearly 2/3 end up shifting to an on-market sale and of those properties with an apples-to-apples comparison of what they were offered for internally as an office-exclusive vs what they sold for on-market, taking a property to market allows it to sell for an average of 22.2% more than it was offered for (and not sold) as an office-exclusive.
Exposure Matters
It should not come as any surprise that greater exposure to the market results in higher sale prices and faster sales; that is what the Bright MLS platform offers. The cooperation between brokerages to share listings through their local/regional MLS platforms (ours is Bright MLS) makes a much more efficient market for buyers and sellers. It is also why Bright MLS and the National Association of Realtors took significant action in 2019 to limit off/pre-market marketing (link) that was creating a fragmented market and jeopardizing the benefits of cooperation.
If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at [email protected].
If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.
Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist.
Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with RLAH Real Estate, 4040 N Fairfax Dr #10C Arlington VA 22203. (703) 390-9460.
