Selling Privately - Is it Worth It?

October 3, 2017

Selling your property privately is an attractive prospect at first glance – you have more control and you save money by not using a real estate agent. Before launching into this endeavour, what’s needed is a careful look at the effort you’ll invest and how the price you get may not render it worthwhile. So, let’s pull back the curtain and take that careful look at the prospect of selling privately.

 

Selling property is a job made up of multiple jobs

It’s easy to look at selling a property as one big, relatively straightforward task. However, it’s in fact a multi-faceted proposition with sub-tasks that each need to be performed skillfully to improve the potential for a sale. To achieve this, knowledge of the law, conveyancing, contracting, marketing and negotiation are all required. The more knowledge and skill bought to a listing, the higher the chance of a sale at a good price. If there’s a weak link in the equation, there’s a good chance the whole process will come tumbling down.

The knowledge and skills mentioned are acquired by real estate folk and lawyers over years of study and on-the-job experience. It’s absurd to expect a homeowner to suddenly pick all of this up overnight and run the sale single-handedly to the same potential as those who do it professionally.

 

A certain type of buyer and negotiation

Private listings often attract a certain type of buyer, one who can smell a lower price. They see that the seller isn’t going to incur any agent fees and they see that saving coming off the listing price and going into their own pocket rather than the seller’s.

They can also see that the price isn’t going to be influenced by a professional negotiator who has no qualms about asking for more money. This is mental bargaining power that can see them offer, sometimes successfully, a price that’s well below the property’s full market value.

Another common scenario is one that sees lots of ‘interest’ from a potential buyer, but no follow through. During a viewing a private seller will be buoyed by a buyer looking around and giving compliments about their pride and joy. What’s actually happening is the buyer doesn’t like the home, but finds it too hard to tell the owner straight to their face. This is where a salesperson would be asking questions, and the buyer wouldn’t feel so awkward sharing their honest thoughts.

 

Listing costs reflective of scale

An advertisement on major real estate websites and/or in print publications is a primary avenue to attract buyers when listing your home. Sadly for the private seller, they can pay up to five times more for it than a real estate agency. Due to their juggernaut buying power based on the sheer volume of listings they purchase, agencies will usually pay around $1 for every $5 you spend, for the same amount of space.

 

Creating competition to achieve full market value

When contemplating selling privately, the priority of savings versus sale price needs to be weighed up. You can save money on the fees, but without a professional setting the scene to sell your property for full market value, will it really be a worthwhile saving if your sale price is lower than it should be?

Market value refers to the result of a number of buyers competing for the purchase price of a property. This creates a competitive purchasing environment that drives the price up. This is hard – if not impossible – to create when you have one buyer dealing with a willing private seller.

That may be all good and well for the private seller if selling at any price is their motivator. Real estate salespeople on the other hand, operate in a competitive domain – they must generate a strong price to secure the property for the buyer, but also to get paid themselves. This scenario is very hard for private sellers to replicate single-handedly.

If you’re still considering selling privately, look at this higher ‘market value’ you can receive as the reason to pay a real estate agency like First Avenue Property to take care of things. That and the fact that they’ll bring a deep pool of knowledge and skills to the equation, and deal with the daily aggravations of selling property.

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Filed under Christchurch Earthquake \ Real Estate Investment

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