Selling Privately in New Zealand

Increasing numbers of people are either selling privately or are considering a private sale as an option. Let's look at some of the reasons homeowners choose to sell their own homes and in doing so you can consider the facts before deciding if selling privately is right for you.

The Reasons to Sell Privately
- Save money
- Control the sale
- You know your home best
- Work for yourself
- The private sale trend

Points to Consider
- Myths about the time and effort involved
- The expense
- The right type of person
- The know how

Questions Commonly Asked
- Don't real estate agents have a greater number of buyers and coverage?
- My property could be difficult to sell, should I try to sell privately?
- Won't an agent "Sell my house" ?
- What about today's market selling conditions?
- What about offers, paperwork and all the legal stuff?

Decision Time
- OK .. What's next ?

Save Money
This is by far the greatest motivator for people wanting to sell privately. Typical real estate agent's fees are around 3.95% + GST (4.44%) of the total price the property actually sells for. Quite often there is also a $500 administration fee on top of this. Some agents do charge less but they are usually smaller local companies. The scope for negotiating the fee down is also limited as the sales person generally receives half of this fee in commission with the rest going to the actual agency. The table below will give you an approximate idea of how much fees will cost you.

I doubt there are many real estate agents who say "if I sell your home then it will cost you about $13,000". Most will quote percentage figures - it doesn't sound so bad, and after all it's only payable if it sells. Also most people don't actually pass a cheque over for the fees. The buyer is usually encouraged to pay a 10% deposit and the agency is paid out of this when the sale of your home becomes unconditional (any clauses that were put in the contract, ie subject to finance, are now approved). Your solicitor's statement detailing the sale of your home is generally the only time you see the real estate agents fees deducted and this way it seems more painless.

Lastly, real estate agents don't scale their fees according to the amount of work they have done to sell your home, so if its only been on the market a few days, you still pay the full amount of commission.

Control the Sale
Many people feel they lose control over their home when using a real estate agent. They often aren't given advanced warning or only know an agent's shown people through when they get home and see a business card on the bench. Some people also feel odd about leaving their own home for open homes or buyer inspections. Selling privately means you control all enquiries and you can then make appointments to suit thus ensuring you only ever allow buyers to view your home when it's looking it's best.

You Know Your Home Best
Basically you know your own home the best. You know that the sun pours into the living areas in winter and it's a warm house. You know the power bills are low and batts are installed in all walls and the ceiling. The list goes on and it's difficult to adequately convey these points to a real estate agent. Worse still is when someone else turns up to do the open home instead of your real estate agent and they have never seen the house before. Selling privately mean your personal knowledge helps market your home better.

Work for Yourself
Have you been in the situation where you have had several real estate companies trying to sell your property? How do you know a real estate agent or salesperson is working hard for you? Are you just one of many listings they may have? Do you only see them when they sign you up and when the contract is about to expire? Are they giving you regular feedback? Have you ever felt the pressure from a real estate agent to sell or have you been in a situation where you may have been mislead? If you sell privately, the only person's work you have to evaluate is your own.

The Private Sale Trend
In the Christchurch Press (property section Sat June 22nd 2002), there were 81 single adverts placed by people selling privately. This compared to 525 single adverts for real estate agents or 663 if you included all of the display adverts and those advertising several listings in a single advert. As a percentage this means that between 10% and 13% of all advertised property sales in this newspaper were by private sellers. To reinforce the point that a good number of people are selling privately, over 150 single adverts were counted in the local Buy, Sell and Exchange paper in the same weekend. Are those private sellers successful? That isn't known but they would certainly increase their chance of success if they read "Selling a Home Privately in New Zealand". It's now becoming more common for people to sell their own home privately.

And if you look at the type, value and location of homes being sold privately, you will see houses varying in price from $90,000 for a basic two bedroom ownership flat to upmarket properties in the best areas of town selling for over $650,000

Myths about the Time and Effort involved
In a broad sense, if you employ the services of a real estate agent, they organise a contract for you to sign, put up the For Sale sign, place an advert, field enquiries and sometimes distribute a few brochures around the area, but your biggest job will always be tidying the house before open homes regardless of whether you are selling privately or not. Agents then just turn up and take over. By selling privately, the time and effort you put in will be for your own benefit and you can even relax in between prospective buyers.

Knowing what you need to do and organise is often the biggest hurdle but a little planning will make it seem fairly minor. What you also need to consider is whether the time and effort you put in is worth the savings you will make in agents commission fees. It would take 500 odd hours at $20 per hour (in the hand) to recover $10,000 worth of fees - that's over 3 months additional work or overtime which equates to about an extra year and a half if you have sold 6 properties during your lifetime!

In addition, with open homes at the weekends your working week is generally not affected.

The Expense
Before selling privately you need to consider how much are you going to spend. Approximate prices are as follows:

The only regular cost will be the adverts but effectively the overall cost should be looked upon as an investment rather than an expense. Often real estate agents will ask for advertising money if you want more or larger advertising. Also, depending on how much your house is worth, an agent usually has a fixed amount to advertise with. This is generally allocated by the real estate franchise or company and the real estate agent must "make this last" over the period you have signed up for. Any extra advertising will either come out of their own pocket or perhaps yours. If you sell privately you can allow for marketing expenses out of your weekly budget or savings.

The Right Type of Person
Are you the right type of person to sell a house privately? The main questions you should ask yourself are...

a) Am I confident enough to sell privately?

Lack of confidence is often associated with lack of knowledge. Buy the book - it will show you exactly what to do - step by step. Gain knowledge, skills and confidence. Do it right the first time in a professional manner and give yourself the best chance of success.

b) Have I got the right personality and manner?

If you're a basic grump and haven't got time for people, then no, let a real estate agent sell your property. You don't have to be best friends with potential buyers, indeed this is not recommended, but you do need to be polite, helpful and friendly. You need to answer the phone pleasantly and greet buyers with a smile - not with a "Yep, what do ya want".

The Know How
This is probably the biggest area where people fail. Many homeowners who try to sell privately just "give it a go" without any forethought. They see the dollars that can be saved and whack a sign on the fence (and I've seen some beauties - hand written signs, poor information, bad marketing and no presentation at all). The public are used to certain standards and you don't want to put a potential buyer off so look at increasing your chances of a successful sale by doing it right first time. The book "Selling a Home Privately in New Zealand" is available to buy and will give invaluable advice as well as taking you through the process step by step.

Don't real estate agents have a greater number of buyers and coverage?
I wonder how many homes are sold by agents who have buyers waiting for your home to come onto the market? Local brochures in your letterbox may indicate they have buyers but is the buyer looking for your house in particular? Also how willing is your agent to "work in" with another agent or would they rather hold out and see if they can get all of the commission. People looking in a newspaper have just as much chance of seeing a private sale advert as one put in by an agent. In addition the Internet is fast becoming a very good advertising medium for private sellers and private sale newspapers are providing further coverage. Market your own home correctly and you can reach the potential buyers effectively.

My property could be difficult to sell, Should I try to sell privately ?
You'll need to think about this one and perhaps you'll try selling privately anyway, but if you have a difficult property to sell then basically your pool of potential buyers will be smaller. Having said that, a real estate agent will also strike the same problem. An example may be a two bedroom home on a small cross leased section (usually two houses on the same section - one at the back, one at the front) with a shared driveway in a predominantly young family orientated area. You will have to think harder about the wording you use in advertisments about who you think your potential buyer may be i.e. perhaps it's a single parent with one child or an older couple who want to be closer to family. Regardless of who markets your home - it may just take longer to sell.

Won't an agent "Sell my house" ?
I doubt there are many agents who successfully sell a property to buyer who doesn't like it. Just think about the house purchases you have made. Probably most of them have been because you liked the home - it had a nice feel, or it suited you at the time. The majority of your potential buyers will treat your home in the same way regardless of whether you use a real estate agent or not.

What about today's market selling conditions ?
Is it better to sell privately when the market is booming and houses are selling fast or when it's slow and depressed? Basically if houses are selling fast then so should yours! When it's slow and prices are lower, then wouldn't you rather save the agents commission therefore allowing you to price your home very competitively?

What about offers, paperwork and all the legal stuff ?
This can be the most mysterious part of selling privately but a basic understanding will be all you require. If a prospective buyer is interested in your property you can be sure they will ask about how to go about making an offer. It's important to know some of the legal jargon associated with property sales but again you don't need to be an expert. The book "Selling a Home Privately in New Zealand" covers these areas in an easy to understand manner and gives you the information required to move confidently through this process.

NOTE: The book details all of the steps involved including what to do if you get an offer, how to proceed, negotiating, legal jargon and the paperwork. Private Lane always recommends you consult a lawyer or solicitor for legal advice before signing any form of documentation in respect to a property sale.

OK ... What's Next ?
After considering all of the options, you have to be comfortable with your decision. Hopefully the points that have been raised on this Web site will make your decision easier. You also need to look at how urgently you want to sell. If you need it sold yesterday, then perhaps a real estate company can get the ball rolling in a day rather than in a week if selling privately. Auctions are also probably best left with a real estate agent as well. Other than that though, besides a bit of planning, time and a small amount of expense, there's nothing to stop you selling privately - the gains can be huge in terms of monetary savings and you will probably learn a lot from the experience and gain a few extra skills.

The only thing is that to gain the greatest chance for success, you really need to make sure you are totally prepared. Even if you have "got a pretty good idea" about what to do, there will be important things you may not have considered which could make all the difference between success and failure. This is especially true when it comes to offers, negotiating and the paperwork.

Buy the book today - it's full of information which will guide you through the steps, the jargon and everything else involved in selling your home. It may even help you finalise your decision to sell privately.

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