Before we get started, there’s something I have to confess.  I enjoy a nice piece of pie. Quite a lot. Mostly fruit pies – apple’s my favorite – but I won’t turn down a piece of lemon meringue or pumpkin pie. And every once in a while I eat a piece of humble pie. I can’t say I enjoy it as much as a robust apple pie, but sometimes it’s a necessary part of life. Like now. Keep reading and you’ll find out why.

I’m a big believer in the MLS System. No other method of selling your home exposes it to as many buyers and Realtors, at least here in central Toronto.  And since exposure typically has a direct effect on results, the MLS System usually (but not always because there are no guarantees in life) helps you obtain the highest possible price for your home in the shortest period of time.

When Realtors talk about putting your home on the market, they’re referring to putting it on the MLS System. Let’s call this selling your home On Market. So what’s Off Market? It’s when you sell your home without putting it on the MLS System. How do you sell your home Off Market? Well, you could be approached by a friend or a friend of a friend who wants to buy your home directly. Or you might receive a letter, phone call or knock on your door from a Realtor who has a buyer for your home. Remember the Letter to Sellers we discussed in the last blog post? We’ll come back to the Letter to Sellers when it’s time for humble pie, which will be soon.

Another example of selling Off Market would be when you sign an Exclusive Listing Agreement with your Realtor instead of signing an MLS Listing Agreement. Under an Exclusive Listing Agreement, your home isn’t placed on the MLS System to be exposed to all 40,000+ Realtors who are members of the Toronto Real Estate Board and their buyer clients. You’re counting on your Realtor to find a buyer herself or to cooperate with certain other Realtors who may have buyers. Your potential market is limited.

Why would you go this route? There are many different reasons, but the main reason is usually that you don’t want to go through the hassle of preparing your home for market or having people traipse through your home and you’re only willing to sell if you get a certain price. These are valid reasons. But what if you’re like most of my clients and your primary goal is to maximize your sale price? Does an Exclusive Listing Agreement ever make sense?

Rarely. As I said before, I’m a big believer that the MLS System is the way to go if you want to obtain the best possible result. But on occasion, if there are special circumstances, I’ll explain the pros and cons of an Off Market sale to my clients and let them decide if they’d like to try it before we put their home on the MLS System. Let’s look at a real life example to see how this would work.

Jen and Jon decided to sell their home. There was a good chance a builder would buy it, but there was also a good chance a family would buy it. Since the land value was so high, it was likely that both a builder and a family would pay approximately the same price. Jen and Jon wouldn’t have needed to do anything to get their home ready for market for builders, but they wanted it to appeal to families, too. They decided to do the work needed to get it ready for market because more potential buyers usually produces a higher price and they figured it would take them about 2 months to do this work.

At this point, I suggested to Jen an Jon that we could sign an Exclusive Listing Agreement and I would call a few Realtors I knew who specialized in working with builders to see if any of the builders were interested in buying their home. Two important things had to happen to make this worthwhile for Jen and Jon: 1. The builder had to buy their home before they did the work to get it ready for market. Once the work was done, I would have advised them to take advantage of the MLS System and put their home on the market; and 2. The price had to be very attractive because they were giving up the opportunity of going to market, possibly getting a bidding war and receiving a bidding war price. I told them not to get their hopes up because these things often don’t work out, but after further discussion and after thinking things over, they decided to give it a go. Important: if you ever go this route, make sure you’re satisfied with the price you receive because you’re giving up the opportunity of finding out just how much you could possibly receive if you put your home on the market.

I called a few Realtors, they called their builders, numerous conversations ensued, but no acceptable offers were forthcoming. Just as Jen and Jon were about to start preparing their home for market, they received a Letter to Sellers and asked me if it was worth calling the Realtor who sent the letter. I explained to them that these letters usually lead to nothing, but agreed to call the Realtor just the same. Lo and behold, this Realtor had a buyer who bought their home. I was quite surprised. Once again, the world of real estate showed me how unpredictable it can be, which is why I never say never.

And since I wrote in Letter to Sellers “In my experience, most of these letters are a waste of time”, please excuse me for a moment while I go and eat my piece of humble pie.

If you’re considering selling Off Market, I’d suggest you keep the following in mind:

• The MLS System will usually help you achieve a better result.
• Make sure you understand the pros and cons of selling Off Market. Don’t consider going this route until you’ve had an in-depth conversation with a Realtor you trust because it’s usually only advisable under certain limited circumstances i.e. it’s not for everyone.
• Also speak to your own Realtor about the true value of your home, how much your new home will cost and how long it’ll take you to find it because it could take a long time in this market. You want to avoid the problems and regrets listed in Letter to Sellers.
• Make sure you’re happy with the price because you’re giving up the opportunity to test the market.
• Don’t get your hopes up too high.

As always, if you know anyone who’s interested in learning how the market works and who’d like to receive the kind of help that involves honest answers, straightforward advice, no pressure and being treated like family, please let me know the best way for me to connect with them because I’d like to offer them this kind of help. And as always, don’t be shy if you have any questions or comments about this post! Thanks for reading.