Open And Closed Markets

There is a real estate broker who did an analysis of all the income properties sold in Quebec in 2013. His analysis showed that 60 % of these sales were made off-market, ie. without the property being marketed by a real estate broker. Information flows within tight circles, like family, work or business relationships and sales are often concluded directly without any intermediary.

The study also demonstrated that properties sold in this way are selling on average 11% cheaper per unit than those marketed by brokers. 11% of a million dollars amounts to $110,000. If one subtracts the average real estate commission and additional capital gains taxes, it's a net loss for the seller of about $37,000 for every part of one million dollars on the sale price.

There are obviously a few sellers who make their money at any cost and prefer to avoid publicity. But more often there are buyers who seek out and get their hands on properties priced well below market value. This is unfortunate, especially for long-time homeowners, quite often older people, who see the fruits of their long term work reduced because they have been taken advantage of.

A lack of marketing almost always plays against the seller since there is less competition for the buyer. The seller may have the impression they are getting a good deal, but it is just an impression. Statistics clearly demonstrate this.