If you have a friend, family member, or neighbour who wants to buy your property at a price which is acceptable to you, you should definitely consider selling it privately. You will just need your lawyer to assist you with the legalities.
The perceived advantage of selling your home privately is that you avoid paying a commission to a real estate company. That’s fair enough, as the commission is a reasonable chuck out of your sales proceeds.
But what if you don’t have a buyer lined up and you still want to try to sell your home yourself?
Having seen many home owners give this a go I wouldn’t recommend it, and here’s why:
- The risk of getting it wrong: You could be taking a huge risk with your most valuable asset because you probably don’t have the time, expertise, experience and skills needed to put a premium real estate deal together and see it through to completion.
- Fewer leads: You almost certainly won’t be able to reach the same number of potential buyers as a professional real estate agency.
- Longer time on the market: Due to the reason above, your property may end up sitting on the market for a lot longer. This is even more likely during ‘cooler’ market conditions when the broadest possible market exposure is critical to success.
- Lower offers: With a private sale, buyers will often reduce their offers by the amount that they calculate you’d typically pay to an agency (they usually want to claim at least half if not all those savings). So you won’t necessarily be saving anything at all, despite having done all the work yourself!
- Lower sale price: A salesperson has honed their negotiation skills over many years and numerous sales. People without real estate experience will likely struggle to achieve the same selling price that a professional salesperson could.
- Greater risk for buyers: When a buyer purchases a property listed with a licensed real estate agency, they receive numerous legal protections against false representation, etc. These safeguards do not exist to the same extent when a buyer deals directly with the homeowner. As a result, some buyers might be put off from engaging in a private sale scenario.
- Increased advertising costs: When selling privately, you need to advertise more because you don’t have the same buyer contacts that an agency has, and of course you will have to bear these costs yourself. Plus, you will have to pay the full retail price for your advertising, whereas real estate companies have access to discounted advertising rates due to the volume of work they bring to their suppliers.
An interesting observation….
In my opinion, the few professional groups that may have the skills to sell their properties without the help of a real estate agencies are lawyers, property developers and real estate salespeople. However, I’ve noticed that many lawyers and property developers I know use real estate salespeople to sell their properties anyway.
They simply don’t have the time and don’t want to take on the hassle and risks associated with operating outside their areas of expertise. It just makes sense, doesn’t it? Even when a real estate salesperson wants to sell their property, they’ll often get someone else in their office to handle the sale. They do this because they know how hard it is to be objective and unemotional during the selling process.
I hope you’ve enjoyed this post and would hugely appreciate it if you could share it with anyone considering selling their property.
In my next post, I’ll share my thoughts on the pros & cons of working with a professional agency/agent. Subscribe here so you don’t miss out!