Selling your home privately vs using a real estate agent

Posted by Danny Bates on October 13, 2020
Danny Bates
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Selling a home privately vs using a real estate agent

Let’s face it, the reason the majority of people choose to sell their homes privately is to keep more money in their pocket. Why should you get someone to do very little work while pocketing a percentage of your home’s sale price? There are plenty of buyers out there, so how much effort is it really to sell a home?

After all, who doesn’t like to save money and place a bit more in their bank account rather than into a selling agents? In fact, according to TradeMe, during January-June 2020, 6% of Kiwi homeowners were trying to sell their home privately. That’s quite a number of people. So why are so many people choosing to sell privately, and is the grass really greener on the private sale side of the fence?

There are many reasons why someone would choose to sell privately but it mostly comes down to money. Homeowners cringe at seeing a percentage of their homes sale go to someone else. There’s also that kiwi ‘give it a crack’ mentality, which is often followed by ‘she’ll be ‘right’ and ‘how hard can it be?’. These are pretty brave phrases to be used in the same sentence as the sale of your most valuable asset. Here are some other reasons American website Home Sell lists for selling privately:

  • You’re in control - you choose when open homes occur.
  • Save money - you don’t pay an agent’s commission.
  • Set the price - you decide how much your home is listed for.

But with all that freedom and control comes a few extra responsibilities too:

  • You manage the open home - rather than taking a half-hour walk as you are the one that hosts these events.
  • You set the price - go too high and there won’t be nibbles, too low and you’re selling yourself short.
  • Spend time - what you save in dollars on an agent’s fee you spend in hours.
  • Marketing - it’s now your responsibility to get the word out there that your house is for sale.
  • Negotiations - you process all the offers, lawyers questions and late-night status updates from prospects.
  • Rinse and repeat - if the sale falls through you get to do it all again!

There is no denying that New Zealanders love to ‘do it yourself’, it's the good old kiwi mindset. Sometimes it can go your way and other times it can be a huge disaster (if you’re in need of a good laugh just check out these DIY projects that have gone terribly wrong). There is also the satisfying feeling of accomplishment and doing it yourself is perfect if you want to go and give it a try. Completing a veggie garden in the back yard may feel like a great triumph but is DIY’ing the sale of a high-value item like your property worthwhile?

Below we explain some important points that you should consider before making your mind up between selling your house privately or investing in a professional salesperson.

How are the buyers likely going to interact with you?

As we mentioned above, this can be one of the biggest purchases someone can make during their lifetime, just like it may have been yours. Not only will you have a financial connection, but like it or not you are more than likely emotionally connected with the property, as this is probably the place you raised your children or spent many memorable Christmases with family and friends. It is going to be hard to hear negative comments about your property and dealing with objective feedback, which is common with buyers as they are working through their negotiation process to get a price that works for them. The lack of experience in negotiating can have a huge impact on the final outcome of a private sale as the ability to make the right decisions in a timely manner can make or break a sale. How about dealing with multiple potential buyers? Are you confident that you will be able to play them off against each other without scaring them off completely? Can you look past the person to the offer and can you be flexible if the market isn’t responding. Can you say no to the sob story for a better outcome for you? Can you handle the late-night texts and calls asking whether you’ve made a decision?

You also have to look at the cost/time-saving. For every dollar, you save doing a private sale that equates to hours and minutes of you doing the work instead. How much would you pay someone to not receive a call about a private viewing while you’re at work? How much is 2 hours of your time worth over a couple of Sundays? Will you enjoy following up with every open home visitor asking for feedback only to hear why your family home isn’t good enough for an offer? Can you keep up with the shifting COVID restrictions and contact tracing?

How are buyers going to interact with a real estate agent differently?

A skilled agent makes your buyer feel safer about paying you the big bucks. McDonald Real Estate’s Taranaki Residential Sales Manager, Danny Bates agrees that when dealing with potential buyers, the majority are more comfortable dealing through a third party when it comes to a high-value transaction. The more people who engage in your process, the better your odds of securing more for your property. Buyers have more protection buying through an agent and they know it, and comfortable people generally pay better money.

A real estate agent knows the reality of the market. While QV might give you an estimate or the bank might have an idea, only someone that listens to buyers every day will really know what they’re willing to pay. Maybe they have someone on their books willing to pay over the odds for a home just like yours? Could someone returning from overseas because of COVID-19 have more money available than a local? Could you be saving money on real estate fees only to lose much much more by undervaluing and underselling your property?

What is the worst-case scenario?

When a house doesn’t sell quickly, it can come across as looking stale, this is when people can start to ask questions like ‘what’s wrong with it?’, ‘are the sellers being difficult?’. Houses that don’t move quickly also tend to sell for less than the asking price. The most important factor when it comes to whether or not a home sells or not is the price. The listing price you set is your most important decision and can have wide-reaching ramifications if set at the wrong level.

List your home too high and you go right over the search filters of most buyers, go too low and you’ll be selling yourself short. This decision may create a situation where your home ends up sitting on the market for longer than it needs to while your home is at too low of a price and buyers get suspicious, or worse, you end up getting less than what the house is worth. Like many things in life, there is always trial and error, but this is one of those cases where you can not afford to take the risk as you don’t get a second chance.

So what happens if you fail to sell your house privately yourself? Chances are you will then need to engage the services of a real estate agent or salesperson anyway and your actual cost will end up exceeding real estate fees which you tried to avoid because now you will need to factor in a lost opportunity. Not only will you have the sunk cost of time and marketing, which you won't recover but now you have to start from scratch and the agent’s job is a lot harder because you’ve missed the opportunity to make the right splash at launch. The first two weeks on the market is your property's prime time. It is when your home gets the most attention and creates competition amongst buyers hungry for new listings. This is why it is important to get your strategy right from day one. According to interest.co.nz the median number of days to sell as of the 30th August 2020 is 24.

“One of McDonald Real Estate’s team members is currently achieving 16.9% above rateable value” - says Residential Sales Manager Danny Bates.

Buyers have more protection buying through an agent and they know it. They know the process will be fair, they know it will be safe and they know it will be their best chance of securing the home of their dreams. But as a seller are you also aware that a real estate agent's services are free until an unconditional sale takes place? They don't get paid until the vendor/seller accepts an offer and that offer has gone unconditional.

In almost every case a real estate agent is likely to get the best price possible for a home, which could mean a higher selling price than if you were to sell privately. In the majority of sales, the real estate agent has paid for themselves in increased offers, increased sale price and reduced stress on the seller. So are you really saving anything by not using a real estate agent?

Not all transactions are straightforward and when things get tricky having an experienced professional by your side makes a world of difference to your outcome.

If you're thinking now might be the perfect time to sell your house in Taranaki, contact us today for a no-obligation property appraisal done on your home by clicking on the image below. 

Free property appraisal with our real estate agents

 

Topics: Selling a house

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