So, you think you should save on real estate fees and sell your property yourself.
“It’s easy selling houses isn’t it? Houses are in short supply right now and they are flying out the door?”
Well, so it would appear, but sometimes perception and reality don’t quite match. There are certain houses that are in high demand, such as those with all the modern conveniences. In contrast, houses with complications such as non-compliant issues or those located in a less desirable area, unfortunately, even in this market, can take a bit longer to sell. According to The Real Estate Institute of New Zealand, houses are currently taking on average 23 days to sell in Hastings and Havelock North. They’re not quite flying out the door!
To the outside observer, this perception of houses selling quickly makes it look like there is easy money to be made in real estate; and sure, just about anyone who can pass the real estate exams can work in real estate. However, you might have read my last blog where I suggest that ‘not all real estate agents are created equal’. Like any industry, you have those who plod along whilst the top 5% do the majority of the listing and selling. It might surprise you to know that even Agents in the top 5% find complicated or unusual houses difficult to sell. Now if the top 5% struggle to sell such houses, how do you think you are going to get on selling your house if your house doesn’t fit the ‘sought’ after mould?
To complicate things, studies indicate that most homeowners believe their property is worth 10-15% greater than its market value; and furthermore, studies indicate that most homeowners who sell their property in a private sale, sell their property below what the property is actually worth. This is because firstly, many homeowners don’t know how to negotiate a property deal. It isn’t any wonder, as it’s not something that they do every day. Secondly, both homeowners and buyers think that the value of a property at the time of sale is inclusive of real estate fees plus commission. This false perception leads a homeowner, who is selling privately, to discount their property based on the principle that they aren’t paying a Real Estate Agent’s commission.
Homeowners don’t tend to understand that they have a house for sale that has a value and then they have commission, they are two separate entities. Whilst many homeowners tend to pay the commission out of the sale proceeds, the commission is actually not included in the market value of the property. In this market, Real Estate Agents create competition where buyers will pay a premium. Real Estate Agents are competition makers who are skilled at finding the perfect buyer, qualifying buyers, guiding them on price and then negotiating a premium price for a property. This takes time combined with skills both of which many homeowners don’t always have.
The rationale for selling privately is to save on commission; the flip side is that buyers are looking for a bargain. They know that you will be prepared to discount the price because you aren’t paying a commission, and this will be the focus of their negotiation with you. So, from the onset you are on the back foot in the negotiation and are susceptible to the buyer bringing you back to your lowest acceptable sale price, whilst in contrast a Real Estate Agent always aims to pull the buyer to the seller’s ideal highest price.
Real Estate Agents carry Indemnity Insurance, and they are obligated under Acts such as The Fair-Trading Act, The Consumer Guarantees Act, and Contract Law. Plus, Real Estate Agents are answerable and regulated by the Real Estate Authority. The great thing about this, is that a Real Estate Agent works to protect the homeowner and the buyer by undertaking extensive due diligence on a property. This allows a buyer to have a sense of comfort in knowing that all information ‘known’ about the property is disclosed, only because the Real Estate Agent has spent hours learning about the workings of the property and its nuances. None of these protections are afforded to either a seller or a buyer when a homeowner sells their own property.
Albeit just because you sell your property and you have the buyer’s money in your bank account, it doesn’t stop a buyer making a claim against you in either the Disputes Tribunal or the District Court. Also, Banks are very skeptical about private house sales when lending on a mortgage as they prefer to mitigate their risk. Hence to mitigate risk in a private sale, a bank may not support a mortgage unless a valuation is undertaken, and in some cases an insurance and building report. If the insurer won’t insure the property, then the agreement is terminated based on the bank declining finance as a bank won’t loan on an uninsurable property.
So, if none of these elements marry up for the bank, then the seller is back at square one. A Real Estate Agent is trained and experienced to manage such complexities.
Selling a house is stressful, time consuming and complicated. Whilst you may have the aptitude to sell your house you may prefer someone else to manage the stress, the time and the problem solving to reach a premium price for you.
There is always room to discuss commission with a Real Estate agent. In my opinion, you are best to take this approach first before considering selling your own property. Afterall it’s not that easy selling property!
Disclaimer - This is a opinion piece written by Linda, and is not the opinion of Ray White.
Well, so it would appear, but sometimes perception and reality don’t quite match. There are certain houses that are in high demand, such as those with all the modern conveniences. In contrast, houses with complications such as non-compliant issues or those located in a less desirable area, unfortunately, even in this market, can take a bit longer to sell. According to The Real Estate Institute of New Zealand, houses are currently taking on average 23 days to sell in Hastings and Havelock North. They’re not quite flying out the door!
To the outside observer, this perception of houses selling quickly makes it look like there is easy money to be made in real estate; and sure, just about anyone who can pass the real estate exams can work in real estate. However, you might have read my last blog where I suggest that ‘not all real estate agents are created equal’. Like any industry, you have those who plod along whilst the top 5% do the majority of the listing and selling. It might surprise you to know that even Agents in the top 5% find complicated or unusual houses difficult to sell. Now if the top 5% struggle to sell such houses, how do you think you are going to get on selling your house if your house doesn’t fit the ‘sought’ after mould?
To complicate things, studies indicate that most homeowners believe their property is worth 10-15% greater than its market value; and furthermore, studies indicate that most homeowners who sell their property in a private sale, sell their property below what the property is actually worth. This is because firstly, many homeowners don’t know how to negotiate a property deal. It isn’t any wonder, as it’s not something that they do every day. Secondly, both homeowners and buyers think that the value of a property at the time of sale is inclusive of real estate fees plus commission. This false perception leads a homeowner, who is selling privately, to discount their property based on the principle that they aren’t paying a Real Estate Agent’s commission.
Homeowners don’t tend to understand that they have a house for sale that has a value and then they have commission, they are two separate entities. Whilst many homeowners tend to pay the commission out of the sale proceeds, the commission is actually not included in the market value of the property. In this market, Real Estate Agents create competition where buyers will pay a premium. Real Estate Agents are competition makers who are skilled at finding the perfect buyer, qualifying buyers, guiding them on price and then negotiating a premium price for a property. This takes time combined with skills both of which many homeowners don’t always have.
The rationale for selling privately is to save on commission; the flip side is that buyers are looking for a bargain. They know that you will be prepared to discount the price because you aren’t paying a commission, and this will be the focus of their negotiation with you. So, from the onset you are on the back foot in the negotiation and are susceptible to the buyer bringing you back to your lowest acceptable sale price, whilst in contrast a Real Estate Agent always aims to pull the buyer to the seller’s ideal highest price.
Real Estate Agents carry Indemnity Insurance, and they are obligated under Acts such as The Fair-Trading Act, The Consumer Guarantees Act, and Contract Law. Plus, Real Estate Agents are answerable and regulated by the Real Estate Authority. The great thing about this, is that a Real Estate Agent works to protect the homeowner and the buyer by undertaking extensive due diligence on a property. This allows a buyer to have a sense of comfort in knowing that all information ‘known’ about the property is disclosed, only because the Real Estate Agent has spent hours learning about the workings of the property and its nuances. None of these protections are afforded to either a seller or a buyer when a homeowner sells their own property.
Albeit just because you sell your property and you have the buyer’s money in your bank account, it doesn’t stop a buyer making a claim against you in either the Disputes Tribunal or the District Court. Also, Banks are very skeptical about private house sales when lending on a mortgage as they prefer to mitigate their risk. Hence to mitigate risk in a private sale, a bank may not support a mortgage unless a valuation is undertaken, and in some cases an insurance and building report. If the insurer won’t insure the property, then the agreement is terminated based on the bank declining finance as a bank won’t loan on an uninsurable property.
So, if none of these elements marry up for the bank, then the seller is back at square one. A Real Estate Agent is trained and experienced to manage such complexities.
Selling a house is stressful, time consuming and complicated. Whilst you may have the aptitude to sell your house you may prefer someone else to manage the stress, the time and the problem solving to reach a premium price for you.
There is always room to discuss commission with a Real Estate agent. In my opinion, you are best to take this approach first before considering selling your own property. Afterall it’s not that easy selling property!
Disclaimer - This is a opinion piece written by Linda, and is not the opinion of Ray White.
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