What are secret sales?

We’ve traditionally referred to secret sales as off-market sales. Our business has consistently tracked at around 25% for off-market acquisitions over the past years, but COVID-19 changed the real estate selling environment considerably.

Our secret sales are now sitting at 50% since COVID-19 struck our shores.

The interesting change relates to how agents are now treating their listings. Last week’s Sunday Blog focused on Early Market Indicators and shed light on the sheer reduction in volumes of stock ‘on market’.

The charts all consistently show that listing volumes are significantly lower than this time last year, but what they aren’t capturing are the sales that are not on search engine platforms.

And this number is considerable.

Since the COVID-19 restrictions were enforced, (specifically in relation to buyer inspection number limitations) agents and vendors alike quickly realised that the art of property sales hinged carefully on the ability of the agent to understand the target buyers, pre-qualify each buyer, and manage the inspection and due diligence phase in a deliberate and decisive manner.

The objective for the agent was to find the right buyer, and to aid the sale process swiftly.

No longer was the reliance on a search engine platform the same. Agents turned to their buyer lists, their buyer’s advocate relationships and their office colleague’s buyer lists in an effort to identify a tight shortlist of motivated, finance-ready buyers. The scattergun approach, (i.e. gathering a substantial number of potential, but non-targeted buyers) that a search engine can facilitate was no longer the mode of choice when it came to finding suitable buyers.

During the peak of our rising numbers of COVID-19 cases, selling agents worked had and creatively in an effort to support their vendors with their sales campaigns. They worked their phones, stayed in close contact with buyer’s agents and managed one of our toughest periods we’ve had to all navigate for those horrible few weeks.

The growing buyer numbers indicate that confidence is returning to our market but the COVID-19 restrictions are still in place, (albeit lightened). The necessity for careful pre-qualification is still important, hence selling agent’s approaches have changed since pre-COVID-19.

Agents are still listing properties for sale, but many listings aren’t hitting the internet.

These properties aren’t all off-markets, however. Many are pre-markets and there is a difference. Off-markets are sometimes listed on general authorities, and others are sometimes intermittently listed for a short period of time. There are urgent, motivated vendors out there who opt for off-market campaigns because time is pressing. This category of vendor is often one that could accept a lower-than-market-value price for their property because the sale date is more pressing than the price tag itself.

But the vendors who sell pre-market aren’t necessarily desperate or prepared to sell for a lower-than-market price.

They are motivated, however.

These are the vendors who, prior to COVID-19 would have likely agreed to market their property online with a typical advertising campaign. Their property is a genuine sale, they have the time for a campaign, but their agent has suggested a targeted approach in an effort to see if they can find the right buyer at the commencement of the campaign, as opposed to paying for advertising on the search engine.

Agents have really honed their craft and COVID-19 has taught us all a lot.

We are now seeing much larger numbers of properties that haven’t hit the internet yet. It’s not that they aren’t advertised. It’s just that many agents are using their own valuable channels to advertise selectively to specific buyers first.

These two property acquisitions are recent examples of secret sales that we’ve been able to secure for our clients. Both were highly attractive to their respective markets and we were able to bring our clients through each relatively quickly, before other buyers had much of a chance to challenge us.

The critical requirement for buyers to understand about secret sales relates to that of familiarity with pricing and value. Some secret sales are overpriced and buyers can often fall prey to overpaying when they get overly excited about the perceived ‘secret’ opportunity. Being prepared to conduct recent comparable sales analysis is vital, and for those who aren’t sure if the property price tag represents good value or not, seeking some help from an independent professional is a good avenue to consider.