Kevin Lampen Smith
Wellington, December 17, 2018
Selling a property is easy, right? All you need to do is stick a ‘For Sale’ sign out in the front, put a few photos online and hold a couple of open homes. Job done!
Why wouldn’t you do it yourself?
Drop in private sales
The fact that private sales made up just 10% of all residential property sales in New Zealand in the year to July (down from 13% in 2017 and 17% in 2014) might be a clue that it is not as simple and straightforward as you might think.
Research by the industry membership organisation Real Estate Institute of New Zealand (REINZ) found that the median price for properties sold by real estate agents was 10.9% higher than private sales.
Property transactions are big financial deals and they can get complicated very quickly.
Selling a home, which is likely to be your biggest asset as well as being a physical and emotional roof over your head, is not like selling a used car or flogging your unwanted Christmas presents on TradeMe.
If you decide to sell your property privately, you will absolutely save on the commission that you would otherwise pay a real estate.
Your target is to get at least close to what an agent would get for your house. You pay commission to an agent for them to get the best price and that extra value is what they will tell you pays your commission for you, along with less hassle on DIY basis.
You know your property better than anyone, so you are in a good position to ‘sell’ its features. You will have complete control over the process because you will be dealing directly with potential buyers. You get to decide every step of the process, including choosing the method of sale and setting the price.
However, with complete power comes complete responsibility.
When you are selling a property, you have a legal obligation to share all the relevant information about it, such as any issues with the boundary or title, any unconsented building work or alterations, any known weathertightness issues and whether there are any proposed developments that could have an impact on a buyer’s access, views or enjoyment.
If you fail to do this, you could be in breach of your agreement with the buyer. This could put the sale in jeopardy, or the buyer could seek compensation and take you to court.
Private sellers will need sharp marketing and negotiation skills, as well as the ability to be objective.
What you think of the property and what it is worth will not necessarily be shared by potential buyers.
Challenge of increasing supply
It is easy to sell a property when there are a few houses for sale and many buyers, but the market is not as buoyant now in parts of the country as it was a year ago. Your expectations of price and ease of sale are aligned with market conditions. These are things that real estate agents think about day in and day out.
If you are still keen to DIY it, make sure you’ve got some good advice from the experts.
It can be very useful to get an independent assessment of what your property is worth, so you can work out the price you’ll be willing to accept.
You can research online (for free) or pay for a registered valuation.
We strongly recommend that you use a lawyer or conveyancer to handle all
the legal documentation, including the sale and purchase agreement.
You may also want to consider help when it comes to preparing the property for viewings, whether that means engaging a home staging company who will make it look pretty, or a trusted friend to run any open homes.
Your decision finally
Ultimately, there is no reason why you cannot sell your own property if you think you have got the time, skills and energy.
You must be ready to juggle a lot of things at once, including marketing and negotiation, on top of your usual responsibilities.
Whatever you do, make sure you go into the process with your eyes open.
For independent guidance and information on buying or selling, check out settled.govt.nz.
Kevin Lampen-Smith is Chief Executive of the Wellington-based Real Estate Authority.