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Increasing numbers of people are either selling privately or are considering a private sale as a home sell 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 on selling privately. The DIY homesell option could be right for you.
Listen to Garry Bond being interviewed about selling a property privately on the Radio.
There are plenty of good reasons to sell a property yourself.
This is by far the greatest motivator for people wanting to go down the home sell route and 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.
|Price||Agent Fee||Admin||Total Fee|
* The agents fee changes for amounts over $350,000 and often reduces to 2% + GST.
It's unlikely many real estate agents 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.
Many people feel they lose control in a home sell situation 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.
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.
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 number of people marketing their own property privately as a homesell is usually between 10% and 15% of all advertised property sales (as surveyed in this newspapers over a period of time). This may well be a lot higher with the internet making marketing to the masses a lot easier. 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 $120,000 for a basic two bedroom ownership flat to upmarket properties in the best areas of town selling for over $1,000,000
There are plenty of points to consider in favour of the home owner selling their house or property themselves.
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 with your own home sell 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.
Before selling privately you need to consider how much are you going to spend. Approximate prices are as follows:
DIY Real Estate sells a range of cost effective sign products including a 'how to' Private Sale Book plus Real Estate signs including For Sale Signs, Open Home signs, Sign Stands and Brochure Holders and more.
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.
Are you the right type of person to sell a house privately? The main questions you should ask yourself are...
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 simply erect a hand written sign on the fence (plus 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.
This section covers the many fequently asked question regarding a home sell.
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 home sell 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.
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.
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.
Is it better to run with your own homesell and 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?
This can be the most mysterious part of the homesell process when 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. DIY Real Estate always recommends you consult a lawyer or solicitor for legal advice before signing any form of documentation in respect to a property sale.
It's time to take some action and atart planning now about selling your home yourself.
After considering all of the options, you have to be comfortable with your home selling 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.
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 about how to sell privately 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.
"I enjoyed reading your book – it was informative and the checklists were very useful in making sure we had all the information. Thanks heaps." Carole Peterson, Christchurch
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