On-Market Deals vs. Off-Market Deals: What Buyers and Sellers Need to Know

 

The investment real estate market has cooled off in comparison to the frenzy seen during the low-interest- rate Covid era. Prices have stabilized, and the once-abundant offers flooding every decent deal are no longer the norm. With interest rates having more than doubled since 2020, many deals that would have been considered slam dunks a few years ago are now struggling to meet expectations. As a result, buyers are getting creative in how they approach finding deals that make sense in today’s climate. There are advantages and disadvantages to sourcing deals both on and off the market, so let’s break it down.

 

An "on-market" deal is a property listed publicly for sale, visible through various MLS platforms like Zillow, LoopNet, Realtor.com, and others. The main advantage of listing on the market is the exposure—public listings attract a broad range of buyers, increasing the likelihood of multiple offers, especially if priced right. In a competitive market, the presence of other qualified buyers can push offers higher, leading to a better price and favorable terms for sellers.

 

However, listing a property comes with its challenges. One of the most difficult aspects is managing tenant access for showings. Tenants may not be thrilled with the idea of strangers touring their space, which can strain relationships, especially if there’s a personal connection. Additionally, the listing process can be time- consuming. Even with multiple strong offers, sellers must vet each buyer, and the risk of a deal falling through after due diligence is always present, which can set the process back.

 

While listing on the market often leads to the highest price, the added complexities may prompt sellers to reconsider an on-market approach in favor of off-market deals.

 

For buyers, listed deals offer transparency—sellers have clear intentions and an asking price, and listings typically include concise, current data. This clarity makes it easier for buyers to assess whether a deal aligns with their goals.

 

Off-market deals have become highly sought after. Without competition, buyers can often secure properties at more favorable prices. For many, the appeal of securing a deal without the bidding wars associated with on-market listings is undeniable. But, while off-market deals are attractive to buyers, they offer several key advantages for sellers as well.

At Ellsbury Group, most of our transactions are completed off-market, and we’ve identified three major reasons sellers choose this route: time, hassle, and certainty.

1.  Time: Traditional listings often take 3-4 months to complete, including marketing, tours, offer periods, due diligence, and closing. Off-market deals, on the other hand, typically take 45-60 days, allowing sellers to close much faster and avoid the long process of public listings. 
2. Hassle: Selling on the market can be cumbersome. Sellers need to manage a lot of documentation, tenant cooperation, and numerous showings. Off-market deals simplify the process by limiting interactions to one buyer, reducing disruptions for tenants and sellers alike. 
3. Certainty: In the world of real estate, certainty has value. 

Sellers prefer deals where they can trust the buyer to follow through. By demonstrating a clear understanding of the property, offering solid references from past transactions, and showing confidence in your ability to close, buyers can increase their chances of sealing the deal. Sellers often seek certainty and discretion when selling, and an off-market transaction provides both. These deals avoid the wide exposure of a public listing and allow for more direct negotiations, which can make sellers feel more comfortable and secure in their decisions.

 

In today’s market, both on-market and off-market deals have their advantages and challenges. On-market deals offer greater visibility and the potential for competitive offers, but they also bring complexity and longer timelines. Off-market deals, meanwhile, provide speed, less hassle, and more certainty, making them an attractive option for many sellers and buyers alike. Ultimately, the choice between on-market and off-market comes down to the specific goals and preferences of the buyer and seller.