New York’s hottest home market is the off market

When a double-wide townhouse at 138-140 West 11th Street fetched nearly $73 million early this year, few even knew it was for sale.

High-end deals have long taken place outside the typical framework of listing, showing and bidding. Instead, trophy properties trade for huge sums out of sight of the general public.

But off-market negotiations are now also helping sellers in lower price tiers score higher offers than they otherwise would, agents and analysts say.

“It’s counterintuitive,” said UrbanDigs founder John Walkup. “Usually, it’s the other way around: When buyers compete, the price goes up.”

Although there’s no good data on buyers’ psychology or how much of a premium sellers are getting, the feeling in the industry is nearly universal that the “off-market market” is fetching top dollar. 

“I wish I had actual data to back this up,” said Walkup. “I don’t think anybody does.”

“Buy it now” button

New York City’s real estate market has been so tight since the initial shock of the pandemic that buyers are paying a premium to get the home they want.

For them, going off market is the real estate equivalent of eBay’s “buy it now” button, especially at lower price points, where buyers can see a listed property soar beyond their budget if a bidding war erupts.

“The great killer of value is days on market”
Ryan Kaplan, Corcoran

“When you’re talking about the sub-$3 million market, or maybe $5 million and under, you’re talking about buyers for turnkey product in prime neighborhoods and they just can’t find anything,” said Serhant’s Ravi Kantha. “They’re clamoring for that product because it’s rarely ever available and they know they’re going to be competing with others.”

At the upper end of the market, buyers’ pursuit of off-market deals is more about status than about saving money. Buying a home that was not listed carries the allure of getting a prized possession that their peers couldn’t.

No-hassle sales

Besides the possibility of getting a higher price, sellers have other reasons to market their homes privately.

For some, not having to stage a space or clear out for open houses is the impetus, even if the convenience means they might leave some money on the table.

For others, an off-market offer can motivate a potential seller to pull the trigger, The Agency’s Mike Biryla said.

After he sold a listed one-bedroom where the buyers beat out several others, he approached other owners in the building. Some said they were interested in selling, but only if it were lucrative and easy. Off-market offers was the answer.

“It’s always the path of least resistance for a seller,” he said.

Kantha pointed to a near-record contract for a Brooklyn Heights townhouse as a similar catalyst for other nearby townhouse owners. 

“It’s not a bad time for someone who owns a really beautiful, mint-condition house to say, ‘Hey, if you have anyone, maybe push the numbers,’” he said. 

Though Biryla personally thinks listing a unit often yields better results, sometimes clients insist on staying off-market. It is also protection against a listing getting stale, said Corcoran’s Ryan Kaplan.

“The great killer of value is days on market,” said Kaplan. “If you want to hedge your risk of trying to sell something in a more challenging market, you may choose to do it in a less public route.”

Ear to the ground

Recent rule changes in the industry stemming from a class-action lawsuit are changing who pays commissions. Buyers could end up paying buy-side agents, or sellers will offer lower commissions to those agents than they have in the past. Either way, commission rates will likely drop.

To keep getting the commissions they are accustomed to, agents will need to enhance their value to clients — including knowing how to find and market off-market deals.

“If you’re dialed into the market … it’s just an increased value-add,” said Biryla. 

“It’s what I classify as providing clients with ‘edge,’” said Clayton Orrigo, a top Compass agent, of helping buyers find the apartments they seek, even if the homes are not listed.

“We tell clients we don’t get paid to open doors — my income is correlated to my edge,” he said. “All of our finance clients use that word.”

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