The real estate world is at battle over the concept of off market sales. Things didn’t used to be this way, but like most things in 2022, things that didn’t used to bother people really bother people now. In 2014 if a seller sold his house to his neighbor via a handshake, no one cared. Today if you sell your house to someone and the home wasn’t on the antiquated MLS everyone loses their minds. How dare you sell your home to someone for the price you wanted! This is what the other people say. Today, I closed an off market lakefront deal north of $6M. I closed another off market deal earlier this year for a price that was much higher than that. Last December I closed two one-party transactions for around $8M. The question for the market is, why?
The question is best answered by finding out what you know about Open Door. Or about the entire concept of iBuyers. I’ve written about this often, as I think the models fail entirely once the market pauses. I also think iBuyers only work in very uniform markets, the sort of which are common in the American Southwest. You have a small pool with a rock yard and a 1732 square foot ranch made out of cinderblock? No Way, So Do I! This is the sort of market mass iBuying works in. The concept behind iBuying is that a seller will sell at a perceived discount to the market for the certainty of a clean deal that works on their timing. This concept is devouring mundane markets, and yet the real estate powers that be don’t seem to mind. They really worry about direct broker sales, which, as far as I can tell, are nearly identical to the iBuyer sales with the exception that the prices often reflect values that either match or exceed open market pricing. Oh, and there’s a broker involved, not an automated process fueled by share holder cash.
At Lake Geneva, we have an incredibly tight supply of lakefront inventory. We all know this. I pointed out last week that the tight market still has eight available lakefront properties for sale today and none of those show pending contracts (per MLS), even though I was later chastised for pointing out this fact. With those active properties aging on the open market you’d have to be a novice to fail to understand what stacking up days on market does to the value of your property. If a house hits the market and sells in one day, the seller usually gets their price, or exceeds it. If the property sits on the market for a month or two or five, do you suppose a buyer comes in and gives the seller what they want? Sure, they can, sometimes. But real estate data isn’t supposed to play the Sometimes Game. It’s supposed to play the odds, and the odds are that aged inventory produces lower offers, price reductions, and ultimately lower prints. This is just common sense.
This is why direct deal making is often beneficial to a seller. Yes, there’s a chance an open market sale yields a higher price. This is true of any transaction, on or off market. If you sell something, there is always a chance someone will pay you more for it. This is how markets work. There’s also a chance that the market rebuffs the price and you are then forced to make up for your over-confident number by languishing on the market, subjecting your house to the rumor mill (why isn’t this house selling? whisper, gasp, whisper), subjecting your house to summer weekend showings to buyers who may or may not be interested, motivated, or otherwise compelled to action, and the general price deterioration that accompanies elevated market exposure. This is why many sellers are opting for direct deals.
Since the start of 2021 there have been eleven lakefront sales on Geneva over $5,750,000 (per MLS and sales known to me). Of those, I’ve been fortunate to bring the buyer or seller or both to the transaction on nine of the eleven sales. Some of these sales are open market, and some are direct, off market transaction, but all of these are made possibly by my wonderful clients and customers who have allowed me to help with their real estate decisions. Whatever your preferred style of transaction, I’ll work with you to get you where you’re going. With this absolute strangle hold on the upper bracket at the lake, your choice for representation at the lake couldn’t be more clear.