James Turner, director at offshore company formation specialists Turner Little, explores why off-market sales are no longer just the domain of the billionaires.
Selling a home off-market was once a privilege reserved for rich and famous clients, for whom discretion was key. Whilst buying and selling this way isn’t new, the practice is moving further down the market, with those who simply wish to be private, and others who are thinking tactically in a stalling market.
Instead of utilising estate agents and online listings, homeowners are putting their trust in a world of independent brokers who have incredible networking skills and contacts. These properties never have a ‘For Sale’ sign outside, nor have they been listed with any agents. There are never any details or photographs online, nor do buyers tend to visit the property until the sale has been completed.
Private buyers of this calibre often tend to be high net worth individuals who purchase properties through a company structure, which can make it almost impossible to ascertain their identities. If a buyer wants to purchase through a company, there are a few options. The first is to buy through an offshore company structure and the second is to utilise a revocable or living trust. The end goal is often about both a degree of anonymity and asset protection.
Whilst buyers want to keep their identities private, so it doesn’t impact price negotiations, others want to ensure that the purchase doesn’t negatively impact their larger business presence. The reality is, there are many personal reasons people look to go off-market.
For most, the prime motivation is privacy, safety and security. Selling your home is a lot more public than it once was. Any buyer can see how long your home has been on the market, how much you bought it for, and the value of similar homes in the area with the simple click of a mouse.
People don’t want to interact with big agencies anymore, because they fear it would be more difficult for them to keep information confidential. Remember, these are the famous people going through very real divorces who don’t want their personal details leaked to the tabloids, or the people who simply want to avoid the publication of their floorplans and photos of the inside of their homes online that could potentially draw the attention of thieves.
They’re the business owners who don’t want to prompt speculation about the state of their company amongst employees, shareholders or competitors – they’re all very real people.
Then, there are those who are just looking to test the waters. The private market is often a precursor to going on to the open market, as buyers are encouraged to make blind bids on unadvertised properties.
But there is no guarantee these strategies are going to secure the seller a higher price. While there are some buyers who are prepared to pay extra for the exclusivity and knowledge that they are the only ones looking at it, others want something specific and know there won’t be another opportunity like this, so they will be more willing to pay.
The benefits of off-market selling used to be limited to the super-rich, but the reality is, it can now be leveraged by anyone.
*James Turner is a director at York-based formation specialists Turner Little