Lately, there has been a lot of conversation about off-market properties, private listings, and exclusive listings. What are they, where can you find them, why do they exist, and who benefits from this setup?
Let me start with this: Many colleagues turn to us for off-market listings in Hyde Park because of our strong ties to the community. Having lived in or owned property here for over 24 years, I’ve built a deep connection to the area. When colleagues are searching for off-market properties in Central Austin, we’re often top of mind and recognized as a trusted resource among Austin’s leading real estate agents.
As a Hyde Park Neighborhood Association member and an active volunteer, I’m deeply involved in the community. At this stage in my career, my business pipeline is substantial. Currently, my team and I are preparing over 20 properties to be listed in early 2025. This reflects both the strength of our network and the seasonal slowdown—there’s little benefit to listing properties during the holiday season, so many colleagues reach out to us for access to off-market inventory during this time.
We handle a significant amount of off-market transactions as part of the strategy our sellers often choose to employ during slow times of the year or slow real estate markets. Our off-market private listings can always be found here. However, this has its limits and drawbacks, and it is important to be transparent about the downside when discussing this with clients.
I will always give my sellers my sincere opinion on what selling off-market can cost them, and I will always want each party in the transaction to have representation. This makes transactions less volatile and, in the long term, best protects both buyers and sellers.
If an agent tells you, “List off-market with me, and you have three chances to look like a new listing,” they aren’t being transparent about their motivations or their brokers' motivations.
In the long run, off-market inventory will degrade the consumer experience in real estate. It goes against the consumer on most points. I am a proponent of market transparency based on a long-standing belief from the financial markets that markets should be transparent for all parties to have access to the data and for markets to function well.
Can you imagine a secret stock exchange? No? Sounds crazy? Right.
The Don’t I Look Fancy Brokerage would like consumers to think they have to go through them to get access to off-market inventory and the Don’t I Look Fancy agents around town would like you to think you need to go through them for the off-market inventory. (I will explain why they want you to think this later.)
This is valuable only if it is helpful for the consumer and leads to a better consumer experience. The brokers' and agents' businesses will thrive only if the consumer wins.
Let’s break this down with a simple pros and cons list from the consumer perspective—because that’s what matters! Then, we will look at why the different industry participants may want you to think it is more important than it is.
Off-Market Wins for the Consumer
Buyers
Tax Savings
Off-market purchases in a non-disclosure state (Texas) may cause the county to be slow in raising your values to the price you paid, saving you money over time. Once you have a homestead on your property, the county is limited to a 10% increase annually, so this privacy in the first year can save you money every year over the longer term.
Getting visibility to homes no one else is seeing.
You may get a sneak peek into inventory that other buyers aren’t seeing in areas where inventory is low. In the Austin real estate market of 2020 and 2021, off-market listings allowed buyers to pay a premium if they wanted to before a home went to market, and now, they have to compete. This was a viable strategy for buyers stressed by the competitive low inventory market at that time.
Sellers
Market information without days on market
Allows sellers to get some market information with a soft launch without incurring days on the market, a currency of sorts to sellers. Some sellers want to test a high price, and off-market feedback from other agents can be valuable in finding a correct price.
Privacy
For the few people who have legitimate privacy concerns, celebrities or law enforcement professionals may have legitimate privacy concerns that would lead them to limit access to their property. Other options to cut down on unnecessary visitors can also accomplish this by requiring pre-qualification or proof of funds before allowing a buyer to view a property.
Three different times to look like a new listing.
Brokerages position this strategy as a reason to list privately with them. The message goes something like this… “First, launch on our off-market site, second launch on other off-market sites, and then third launch to the public (MLS). You get to look like a new listing three times.” Maybe. ;-) read on.
The downside of off-market transactions for the consumer
Sellers
Diluting the excitement surrounding your property
While being listed as a new listing three times, “once on our website, once on other off-market sites, and then publicly on MLS” sounds good at first glance, launching three times dilutes the excitement and pressure a potential buyer may feel and ultimately works against a seller.
If the first two off-market steps expose a property to many buyers and they don’t purchase it, then the most probable buyers were able to casually consider a purchase without the pressure of having the property on the open market. When the property finally comes to the public market (MLS), the most probable buyers are not already in play. It is a known psychological truism that buyers want something more when they know someone else wants it too. (This is the psychology of why a backup offer makes the first buyer want their property more.) So either those first two steps in the soft launch don’t expose the property to very many buyers (pointless), or it does expose the property to a large pool of buyers and dilutes the buyer pool once it is in the open market. Either way, this strategy that sounds great on its surface doesn’t help the consumer. It does, however, help the brokerage perpetuate the fake mystique of “we have off-market inventory.”
Leaving money on the table
Fewer buyers means less accurate pricing. This is why stock exchanges in the US were started with the open outcry system of price discovery, not the super secret method of price discovery. There is a reason the stocks in your portfolio are traded in an open market exchange.
Who will represent your interests?
Your buyer is not likely to be at your realtor's brokerage, but if they are, who is representing your interests? Who represents the buyer if your listing agent “has a buyer” for your home? If the buyer goes without guidance at all and doesn’t do the proper due diligence, this, in the long term, creates a potentially litigious and fraught outcome for a seller.
Buyers
Lack of equal access for all market participants
Just like you may get a sneak peek into inventory that other buyers aren’t seeing, you may also not get a peek into this private inventory. Sellers who want people “just like them” to be able to purchase their house can use off-market sales to exclude groups of protected classes from a neighborhood. This was common before federal fair housing laws made this practice illegal in the early 70s.
Lack of publicly available data and market transparency
The openness of the data available to consumers through their trusted advisors who have access to the MLS (agents) allows buyers to have confidence in their property investment choices. They may utilize their agent's or an appraiser's analysis to confirm the price they want to pay for a property. Without readily available data to these professionals, the consumer can lose confidence in pricing accuracy.
Who will represent you?
Working with an agent with off-market listings can give you an early look into their inventory, but now what? Buyers need an advocate for them in a real estate transaction. Is there special due diligence I should do in this neighborhood since all the homes are from the 1960s? Do I need a stucco inspection? What issues should I be thinking about with lakefront property? Should I be asking the sellers to close out their open permits from their kitchen remodel? These are all great questions, but if your agent represents the seller, they can not advise you as you navigate the purchasing process. You have carefully researched and selected an advocate you trust to guide you through the sales process. Do you really want them working for the other team when you finally find the house of your dreams? If they refer you to an agent on their team? Won’t you always feel the listing agent knows too much about you, so you can’t negotiate on a level playing field with the seller?
With all the new technology coming to market, realtors must face that the the bar is being raised on how they add value to their clients. Access to data is not a value add; access to listings is a ridiculous thing to compete on, and it raises multiple ethical concerns about agency and fair housing.
Yes, I live down the street from Shipe Neighborhood Park, and I’m there every day. I know most of the off-market homes for sale in Hyde Park, but that isn’t the value we add. Our value is data-driven analysis and a due diligence process second to none.
Austin’s top real estate agents should create value based on a higher level of service, creating the type of professional consultation the best CPAs or attorneys provide. It is a higher calling and far more honest than hiding the inventory from consumers and telling them they should work with you for your secret inventory. There is no value in denying the consumer the benefits the technological advances afford them.
We are delighted to be your guides to Austin and Austin real estate!
Cheers,
Jen & the team
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