When should sellers consider selling off-market?

To get the best price on the MLS, sellers need to do a lot of work; repair, renovate, paint, increase curb appeal through landscaping and updating the exterior of the home and staging. The process can cost many thousands and take a lot of coordination, time and stress dealing with contractors, point-of-sale requirements, realtors and more. For some people, that process is overwhelming, undesirable and far too expensive. Some sellers would prefer to simply receive a cash offer quickly, without needing to deal with all of those mentioned items plus coordination of multiple showings all while potentially having their property sit on the MLS for months waiting for a good offer. Even if an offer is accepted, a seller can then wait through a thirty-day escrow hoping, but not knowing, whether the buyer’s lender will ultimately approve the financing and allow the sale to close. For sellers with that mentality, an off-market sale is worth considering. Typical situations that may warrant selling off-market:

1. Inheriting a property: property ownership is challenging in the best of circumstances. Inheriting a property with problem tenants, a property that requires a lot of repairs, or property in another state may create a unique set of challenges for an heir.

2. Distressed property owners: someone who has a property and has not maintained it very well, it won’t pass a home inspection, and the owner does not want the headache of fixing it up.

3. Pre-foreclosure: having a property in pre-foreclosure means that a lender has filed a foreclosure lawsuit against the property owner that is currently pending in court. After the lender initiates the foreclosure lawsuit, the property owner has a limited amount of time to pay off the outstanding loan, agree on a payment plan with the lender, declare bankruptcy and stall foreclosure, or lose the property. Having a foreclosure judgment can ruin a person’s credit. Sellers with equity in a property that is in pre-foreclosure may be limit the impact on their credit score by selling the property before the foreclosure judgment is issued by the court. For those sellers, a quick, off-market sale may be a better option that listing on the MLS and risking the deal falling apart during inspections.

4. Delinquent taxes: tax policies can vary from county to county. Here in Cuyahoga, the county can foreclose on tax-delinquent properties. The county can also sell tax lien certificates to private buyers, giving the private tax lien certificate holders the right to seek payment from property owners, plus 14 percent interest per annum. Holders of tax lien certificates have the right to foreclose on tax liens that the owner fails to pay off within 12 months. In other words, they can take your property away from you. Tax lien certificate holders also have the right to purchase the lien on all subsequent delinquent taxes on any property for which they already holds a tax lien certificate. The interest rate on a tax certificate for subsequent delinquent taxes is 18 percent per annum. Tax delinquent property owners seeking to pay off their tax delinquencies quickly will benefit from a quick sale and selling off-market can be a good solution.

Please be advised that nothing in this blog constitutes legal advice. If you have particular concerns that you wish to have addressed, please contact a lawyer directly so that your specific circumstances can be evaluated.