Roughly one in 10 Britons sold their home off-market in the final three months of last year – the highest level recorded since 2015, according to Hamptons International.
Homes outside the capital are now accounting for 56 per cent off-market sales, up from 45 per cent in 2015.
Selling off-market typically means avoiding advertising property on the main property portals such as Rightmove and Zoopla.
It also means no ‘for sale’ signs – either outside the home or inside the estate agent’s shop window.
London is the hotbed for off-market sales: Almost a quarter of London homes sold off-market in the final three months of 2022
The data also revealed that while homes outside the capital have been accounting for a greater share of off-market sales, London remains very much the hotbed for the discreet seller.
A whopping 22.3 per cent of homes sold off-market in London during the final three months of 2022.
To put that in context, off-market sales accounted for 11 per cent during the same period in 2019 and only 8.4 per cent in 2018.
Off-market sales have traditionally been reserved for the most expensive properties, where privacy and discretion are important considerations.
In London, the share of homes costing more than £1million that are selling off-market increased to 29 per cent last year, up from 18 per cent three years earlier.
And the trend seems to be accelerating. In the final three months of last year, a staggering 32 per cent of London homes worth £1 million or more were sold off-market, according to Hamptons.
Matthew Thompson, head of sales at London estate agent, Chestertons, said: ‘Off-market sales have been particularly popular with high-end properties but we have recently seen more sellers of homes priced under £1 million who decide to secure a sale off-market.
‘Contrary to an on-market listing, sellers are solely dependent on the estate agent’s network and skills to find a relevant buyer.
‘It’s therefore important to choose an established estate agency that is well-connected.’
Growing phenomenon? The proportion of off-market homes being sold outside the capital also rose to 56% last year, the highest on record
Nigel Bishop, founder of buying agency Recoco Property Search, adds: ‘The majority of properties we find for our clients are off-market.
‘Sellers favour this approach as off-market negotiations tend to only attract serious buyers who are ready to make an offer which often translates into faster sales transactions.
‘Some vendors might not see the same buyer interest that they witnessed over the past two years which makes an off-market sale more attractive.’
How do you sell a home off-market?
There are several ways to sell a house off-market, according to the House Buyer Bureau.
Sellers can try to find a buyer privately, but usually they employ an estate agent to sell their home without advertising on the open market.
Less common off-market selling styles include selling at auction, or selling to a cash house buying company.
The most common method is to use an estate agent to discreetly market the property to buyers they already have on their books.
Catherine Merrett, sales manager at Richmond estate agency Antony Roberts, says: ‘We are definitely seeing an increase in sellers choosing a discreet marketing strategy for various reasons across our offices.
‘They understand that a good local agent will have a great database of potential buyers to speak to.
‘For example, one vendor was selling a four-bedroom family house last autumn. They did not have the house quite ready for marketing and were concerned about it sitting on the portals as the market was uncertain following the mini-Budget.
‘So we devised a plan whereby we would offer it discreetly during the autumn months and if we didn’t sell it, we would implement a full marketing campaign in the Spring.
‘Even without the aid of photographs or floor plans, we were able to find a great buyer, agreed a fantastic price for the house and exchanged contracts just before Christmas.
‘We are currently discreetly marketing another property – a beautiful, recently-refurbished conversion apartment that is not quite finished or photo-ready.
‘We are showing it to those applicants on our database who we know are in the market for such a property.’
What’s behind the off-market trend?
The uptick in off-market sales is likely to have been caused by the slower property market.
Sellers have been more likely to use off-market sales as a way of testing the market and their asking prices, without having to publicise any reductions or reveal how long the property has been for sale.
The housing market has come to somewhat of a standstill in recent months.
Sellers are being accused of setting unrealistic asking prices, while prospective buyers are said to be standing by and waiting for property prices to fall.
The number of prospective homebuyers registering with agents fell from 2.5 per available property in December 2021, to 1.4 per property in December 2022, according to Propertymark, an estate agent membership body, representing a 45 per cent fall in buyer demand year-on-year.
Falling demand: The number of prospective homebuyers registering with agents fell from 2.5 per available property in December 2021, to 1.4 per property in December 2022
Perhaps an even clearer indication of collapsing demand is that mortgage lending fell by over a fifth in December, the fourth consecutive month that the number of individuals borrowing for a house purchase declined.
In total 35,600 mortgages were approved in December, according to data from the Bank of England, the lowest level since May 2020.
If you ignore May 2020 – when the UK property market was effectively in shutdown during the first lockdown – it’s actually the worst figure recorded since January 2009.
In what has clearly become a difficult market for sellers, there is a danger when advertising on Rightmove and Zoopla that a home that’s failing to sell can actually start to put potential buyers off.
Whatever the reason, it is usually the case that the longer a property remains listed online, the less interest it seems to attract.
Buyers deem the months of marketing as a clear sign there must be something wrong, and interest in the property can tail off.
Mark Wells, founder and chief executive of off-market property platform, Invisible Homes, says: ‘The reason that off-market selling works is because there’s uncertainty at the moment about where house prices are heading.
‘There are fewer buyers in the marketplace, which means that there’s less chance of selling and an increased chance of clocking up time on Rightmove and Zoopla.
‘The problem with the typical open market is that it puts a date stamp on your property and gives evidence of any price falls. This can begin to work against the seller.
‘Evidence suggests that buyers are put off by property that isn’t selling. Even after a month they will begin thinking – if nobody else is interested, why would I want this?
‘Going on the open market is a risk at the moment because if you don’t sell on the open market, you’re essentially devaluing your property by not selling.
‘Selling off-market means you can approach buyers who are serious and are in the market and want to buy without that time stamp gathering around a property.
‘This hides any indicators that a seller may be desperate or that nobody is interested in buying a property.’
Suspicious minds: Buyers can deem the months of marketing on Rightmove and Zoopla as a clear sign there must be something wrong, and interest in the property can tail off
Wells says his off-market platform, Invisible Homes, which is currently available to sellers and buyers in central London locations, is seeing a surge in activity thanks to the current market conditions.
Invisible Homes signed up 70 new agents in its first year of launching the platform. This year, in January alone it says it added 30 new estate agents.
‘This is a clear indication of how people are now viewing off-market selling,’ says Wells.
‘As long as your estate agent is doing a good job, they have access to your home when they need and they have enough buyers on their books, then selling off market should work well.
‘If selling off-market fails, you can always launch it on the open market later without having damaged your chances of selling.’
What to do if you need a mortgage
Borrowers who need to find a mortgage because their current fixed rate deal is coming to an end, or because they have agreed a house purchase, should explore their options as soon as possible.
This is Money’s best mortgage rates calculator powered by L&C can show you deals that match your mortgage and property value
What if I need to remortgage?
Borrowers should compare rates and speak to a mortgage broker and be prepared to act to secure a rate.
Anyone with a fixed rate deal ending within the next six to nine months, should look into how much it would cost them to remortgage now – and consider locking into a new deal.
Most mortgage deals allow fees to be added the loan and they are then only charged when it is taken out. By doing this, borrowers can secure a rate without paying expensive arrangement fees.
What if I am buying a home?
Those with home purchases agreed should also aim to secure rates as soon as possible, so they know exactly what their monthly payments will be.
Home buyers should beware overstretching themselves and be prepared for the possibility that house prices may fall from their current high levels, due to higher mortgage rates limiting people’s borrowing ability.
How to compare mortgage costs
The best way to compare mortgage costs and find the right deal for you is to speak to a good broker.
You can use our best mortgage rates calculator to show deals matching your home value, mortgage size, term and fixed rate needs.
Be aware that rates can change quickly, however, and so the advice is that if you need a mortgage to compare rates and then speak to a broker as soon as possible, so they can help you find the right mortgage for you.
> Check the best fixed rate mortgages you could apply for