Sellers, of course, choose to sell their properties without ever officially listing them for a variety of reasons. Sometimes they are in financial distress, other times they are celebrities or public figures hoping to keep news (and photos) of their properties off the Internet and away for voyeuristic eyes.
But new market conditions in Manhattan mean that off-market deals are becoming more common among the masses and are no longer limited to the top-end of the market, brokers say.
Douglas Elliman broker Jacky Teplitzky and other industry insiders said that these days, off-market deals are happening for homes priced as low as $1 million.
While brokers saw a rise in “whisper listings” in 2009, many of those properties were being sold by wealthy owners who had been hit by the financial crisis and needed to sell to recoup their cash.
Today’s sellers are going off market for a different reason: To take advantage of strong demand in a hot market, while avoiding dealing with the hassle of advertising their property to the public and also sometimes cutting out listing brokers.
In short, New York’s ongoing residential inventory shortage is empowering sellers to take more control by selling their apartments, whatever the price point, without ever bringing on a listing broker or putting them on the open market.
In these scenarios, the doormen and superintendent often (literally) hold the key to connecting a buyer to a seller, by spreading the word about an owner’s plan to move.
“Doormen know everything happening in the building,” Teplitzky said.
Teplitzky said in some scenarios a broker will meet with a seller to pitch them on getting a listing, but then never hear back only to discover that the seller already found a buyer and made a deal without an agent. To be sure, many of these deals do involve buyers’ brokers.
Teplitzky said she was in talks last month to list an Upper East Side two-bedroom co-op with an option to convert a dining area into a third bedroom. It “was supposed to go for about $1.5 million,” she noted. Teplitzky said it went into contract for $1.4 million two weeks later without a listing agent.
“We know the quiet deals are happening more and more,” Teplitzky added. “It’s a huge problem.… A way of solicitation was once just getting a listing.”
But some owners believe that they can sell at a good price, while also avoiding paying a broker or dealing with the hassle of daily showings. They feel it’s “not worth the headache,” Teplitzky said.
Brokers argue that listing the property will mean selling it at a higher price, a fact that is especially important to owners of lower-priced homes.
“The only way to maximize your selling price is by exposing the apartment to the maximum number of buyers,” Teplitzky said.
Sellers may also not want to list because they are fearful of signing an exclusive agreement with a broker or are concerned that a six-month commitment to a broker is too long, said Ryan Fitzpatrick, director of sales at CORE. They may also be afraid that, even in this market, their property could languish on the market for 60 to 90 days without selling, he added.
“It’s another manifestation of this very tight inventory,” Fitzpatrick said. “Sellers realize they have a lot of sway, where there is such strong demand.”
Fitzpatrick recalled a CORE broker who was contacted by two sellers at the same Upper East Side co-op building. One seller wanted to downsize from a two-bedroom, and the other wanted to upgrade from a one-bedroom. They sought pricing advice from the broker, but then met with potential buyers through the doorman, cutting out the broker. Both ultimately went into contract with buyers outside of the building they found without listing their properties.
Buyers, of course, have only upside when it comes to finding a whisper listing. It allows them to dodge the competition and to avoid a bidding war.
“On the buyers’ side, there is a perception they are getting a special opportunity: a one-shot deal in which they can get in and get out, and lock it up. And they’re willing to pay a premium for it,” Fitzpatrick said.
Tamir Shemesh, a broker at the Corcoran Group, said he recalls two examples in the past month in which sellers opted not to list their units: unrelated Greenwich Village condominiums worth roughly $3 million, and $5 million, respectively.
Shemesh said that while sellers believe they can be successful doing their own deals because of the market’s lack of inventory, brokers often still provide pricing guidelines.
“Sellers are getting high offers,” Shemesh said. “But when they price the apartment way too high, they get resistance. If they overprice an apartment, it will not sell.”
Monique Silberman, a Town Residential broker, estimated she receives about five phone calls a week from prospective buyers that she is representing who are looking for off-market listings. She said the majority of off-market deals continue to occur on those ultra-luxury properties.
“It’s sort of serendipitous the way it all works out,” Fitzpatrick said.