Pre-market popularity surges

Pre-market popularity surges

7 January 2021

By HELEN HULL

Agents are rethinking the way they do business, with pre-market sales resulting in satisfied sellers and buyers, faster transactions and premium prices – all without large marketing spends.

While some agents use ‘off-market sales’ as a catch-all term, according to Lisa Novak, Sales Agent at Novak Properties, ‘pre-market sales’ are something quite different.

“An off-market sale occurs where the property is never formally on-market,” she said. “A common example is where you knock on someone’s door, tell them that you have a potential buyer and ask if they’re interested in selling. There’s no marketing campaign, no sign board, no communication with your database and certainly no posting to social media. There is no public advertising whatsoever.

“A pre-market sale, on the other hand, occurs in the gap between securing a listing and launching a fully-fledged marketing campaign. The strategy targets buyers when the property is officially for sale, but no one knows about it because marketing materials, portal listings, signboards, flyers etc are being produced. Social media is a particularly useful tool to market a property during this gap.”

Differing needs and expectations

Mark Kentwell, Director at PRD Newcastle, said pre-market sales are attractive to sellers who feel that their property isn’t ready to go to market or is in need of improvement.

“For some sellers, it may not be the right time to sell a property in their area,” he explained. “Others may be cautious about over-exposing a property, because they feel that the market may judge them.

“Putting a pre-market strategy in place means sellers can set a price and only have qualified buyers, who are ready to purchase, come through. It also helps the number of days on market.”

Mark also pointed to owners who are waiting for a catalytic moment.

“It may be the case that they can’t sell before they buy another property,” he said. “A pre-market strategy allows them to get buyers in and see who’s interested without going to the level of an on-market sale. It’s a good way to show if there are qualified buyers willing to purchase their property and give them confidence to transact on their own purchase for a simultaneous exchange and settlement process.

“Pre-market sales work because a large-scale ‘on-market’ campaign doesn’t suit every client.”

Mark added that COVID-19 has helped accelerate the use of a pre-market strategy.

“There’s been a lot of market uncertainty,” he said. “The banking royal commission and the changes with APRA in 2018-2019 had already seen buyers backing off. Then, along came COVID-19 and all the restrictions that were put in place regarding open homes and auctions.

“A pre-market strategy works well for sellers who are keen to see fast results, attracting buyers who are qualified and ready to transact.

“Disruption and innovation are a good thing in any industry. We must ensure that we’re keeping up with consumers’ demands and expectations, and working out ways to pioneer new sales techniques.” – Lisa Novak, Novak Properties

Pre-market sales here to stay

Lisa believes that pre-market sales are here to stay and play an important role in the current market.

“It’s not a trend,” she said, adding that around 70 per cent of the listings she sells at Novak Properties are now sold in the pre-market phase – and they’re not going cheaply.

“Pre-market sales are certainly attracting a premium,” she said. “Buyers are under pressure. They need to offer a premium price to entice a pre-market sale. If they don’t, the seller will then launch the property to a wider market via the real estate portals and they’ll then be left to compete with other buyers on the open market.”

When it comes to marketing, Lisa offers her clients both a Plan A and Plan B strategy, often as a staged marketing plan and completely dependent on the client’s needs.

“Plan A is a $0 pre-market strategy,” she explained. “We generate lots of raw video content and photos taken with a smartphone. We also generally include four or five professional photos, taken at our expense, and a signboard highlighting that it’s a ‘pre-market opportunity’, but otherwise marketing is exclusively via social media and, of course, to our database.

“Plan B is a more comprehensive marketing strategy, including advertising on the real estate portals and more, and there’s obviously a fee attached.

“Depending on the seller’s requirements, a strategy is devised as to how Plan A and Plan B are executed – but, most times, they choose to run with Plan A, which we normally run for two weeks. If we don’t secure a successful sale during this period, we then move to Plan B.”

Lisa said pre-market sales have emerged in response to the changing needs and expectations of consumers, and how we communicate and consume information, in particular, via social media.

“A social media revolution is sweeping through the real estate profession,” she said. “Consumers want to know about things now and social media listings serve this need, because they’re instant.

“Buyers are looking for exclusivity. They don’t want to go to another open home and mingle with the masses. They also don’t want to wait around for an agent who may take days to respond to an email or phone call. They want to see a property before it’s launched to the masses via the property portals and social media allows this to happen.

“Equally, a pre-market strategy that harnesses the reach of social media affords sellers the opportunity to test the market before a marketing campaign is launched.”

Processes are paramount

Mark urged agents to ensure that they go through the proper procedures when conducting a pre-market sale.

“Don’t even think about telling a buyer about a property without an Agency Agreement and a Contract for Sale in place,” he said. “That’s cowboy behaviour. It’s illegal, undervalues the services that agents provide and confuses the consumer. It’s also poor for our industry, which has embarked on the pathway to professionalism.”

Mark believes that agents need to take the pre-market sale process seriously.

“If a client has strongly indicated that they have no intention or desire to go onto the public market, then the agent needs to respect that and put all efforts towards securing a sale in the pre-market environment,” he said. “It’s not about securing a listing and then converting to an on-market strategy. Agents need to ensure that they’re not serving their own interests, but rather the interests of their client. Whicht strategy best meets the client’s needs and expectations?”

Mark warned that agents shouldn’t be implementing a pre-market strategy if they’re not willing to work hard for the sale.

“It isn’t for everyone and can involve more work than an on-market campaign,” he said. “You need to have a good database in place, with appropriate categorisations, and have agents within your team who are willing to share their buyers.

“It’s also incredibly important not to put the property out to people in the database who don’t match the criteria.”

“Putting a pre-market strategy in place means sellers can set a price and only have qualified buyers, who are ready to purchase, come through. It also helps the number of days on market.” – Mark Kentwell, PRD Newcastle

Any agent, anywhere

Lisa said a pre-market strategy can be used by agents regardless of their location.

“It’s not confined to the city areas, and we’re seeing regional agents who are having the biggest month in the history of their business because they’re using a pre-market strategy to attract city buyers who have had enough of city life,” she said.

“Disruption and innovation are a good thing in any industry. We must ensure that we’re keeping up with consumers’ demands and expectations, and working out ways to pioneer new sales techniques.

“There’s a place for everything and there isn’t a one-size-fits-all campaign strategy for every single seller.”

Want more?

Related articles