When there’s a high demand for houses and the market is booming, it comes as no surprise that some homeowners toy with the idea of selling their homes privately. Especially if doing so could mean thousands of dollars could end up in their own pockets, instead of a real estate agent’s pocket. Plus people often wonder whether using a real estate agent will result in a higher price for their home or not.
From risks to rewards, there are many factors to be considered when selling your home privately. While the internet is filled with endless resources that might help you through the private sales process, real estate transactions are complex. The can have catastrophic consequences if something were to go wrong both during the sale process as well as after. Yet, statistics show that 15% of total house sales in 2021 were private, which shows it is a popular option amongst some.
To help you decide whether selling privately or through a real estate agent might be best for you, we’ve highlighted some of the pros and cons to selling your house privately. Let’s explore each in more detail.
Pros of selling a house privately
When selling your house privately you’re in the driver’s seat
With a private sale, you cut out the middleman and are in control of the entire process. From the price you market the property for, to hosting open homes yourself, and dealing with the buyers directly — you get to do it all. You know the property the best so you can really sell its key features and have a personal relationship with the new owners from the get-go.
You can save money with a private house sale
When people talk about the benefits of selling privately, the driving force is usually the cost. By selling the property yourself, you save money that you’d normally pay in commission. Some people have saved as much as $30,000 by selling their homes privately!
Cons of selling a house privately
When selling a house privately you often end up with a lower sale price
Statistics from REINZ show that homes sold by real estate agents sell for a 15% premium over a private sale. This increased sale value often covers the commission of using a real estate agent, basically meaning they’re working for free (as far as your bottom dollar is concerned). So while you’re saving the direct fee of an agent you’re also missing out on a bit of extra value from the sale too.
Private house sales leave you with more outgoings
Cost-conscious sellers look at the real estate agent’s fees and immediately see an area to save money, without actually considering what’s included in that cost. Marketing a property involves printed flyers, advertising in real estate publications, promotion on social channels and on company websites, not to mention listing it on TradeMe and RealEstate.co.nz. Going solo means these are costs and activities you’ll have to bear.
You’ll miss out on a real estate agent’s list of active buyers when you sell privately
Savvy sellers are more likely to choose an agent who has a track record for selling properties similar to their own and within close proximity to their location. Because of these past successes, that agent is likely to have met plenty of buyers who are eager to purchase a property just like yours. Good real estate agents will contact these potential buyers when your house is placed on the market in an attempt to bring multiple offers to the table. Selling privately means relying on your marketing to bring attention to the sale — something you’ll also have to pay for yourself.
You’ll also miss out on a real estate agent’s professional contacts
Selling a house for a substantial profit includes more than just popping it up on TradeMe. Professional staging, photographers, contacts with lawyers and more are what experienced salespeople can tap into to get the best price possible. They also understand what the buyers in the current market are looking for and can use their team to help showcase your property in the most attractive way possible.
You may lack some important buyer insights when selling your home privately
Don’t forget your house isn’t the only one prospective buyers will be looking at. Understanding the right time to sell is as important as the features to accentuate the home. Today’s buyers are demanding, despite the low supply of housing, and you may find yourself overwhelmed by the sheer amount of admin involved in answering queries and keeping them happy. Seasoned agents will know what to expect and will handle the late-night phone calls for you.
It can be extremely time-consuming trying to sell a house privately
Selling a home privately involves a lot of planning, logistics, and communication. When you’re selling your largest personal asset you need to ensure you dedicate time and attention to the most important areas. This can be hard to do when fielding dozens of questions from interested prospects as well as running your day-to-day life.
You’ll need to know your legal obligations for a private house sale
There can be catastrophic consequences if something was to go wrong. One of the biggest rules when it comes to selling a house is making sure that you disclose any information you are aware of that may be relevant to the buyer, including any issues. Misrepresentation, inaccurate marketing, and withholding information about other offers can land a private seller in very hot water. Fail to disclose a multi-offer situation or worse, lie about one and you could find yourself in court.
During a private sale you don’t have the safety net a real estate agent provides
When you sell a house using a licensed real estate salesperson, you have the backing of the Real Estate Authority should things go awry. Agents provide sellers with expert advice and a safety net for risk, and this is perhaps one of the most valuable things they can do. In the unlikely event that something goes wrong, the agent will take on some of the responsibility for correcting the situation, which can save you a lot of time, money and stress.
There is a reason why good real estate agents are the ones who deliver record-breaking sales. It’s not because they were lucky enough to list the right house at the right time but because they sell homes full-time and are experts in offering advice on how to best present a home, find the right buyer, and get the best price. Their method of sale leverages buyer competition while reducing the impact of a very stressful life event, which is something that can take a number of years to accomplish.
Essentially, the decision to list your home privately is less about cost and more about value. By saving a few tens of thousands in fees are you losing more than that in the sale price? Are you taking on additional stress and potentially landing yourself in legal trouble because of what you don’t know? If you’d rather take on all of this regardless then a private sale is definitely the best route for you. But if you’d like to reduce the risk and stress while increasing the price you get for your home then talk to the team at McDonald Real Estate.
The team here at McDonald Real Estate are always willing to help share their experience and knowledge so why not request a free property appraisal today. It’s the best way to see what your home could be worth in today’s market and they’ll happily discuss their marketing packages with you to explain how they’ll get your home in front of the right buyers.
