Private sales are fantastic. They can save you tens of thousands of dollars….if you are a buyer.
I was recently contacted by a friend who wanted some advice on the best way to go about purchasing a house which was being sold privately. ‘Excellent,’ I said. This is the very best way to purchase a house. Buying privately allows you to have maximum control over the process and will generally end up saving you a huge amount of money on the purchase price. After following my suggestions, my friend picked up a fantastic home in a popular Wellington suburb for $50,000 less than what they were prepared to pay. This literally saved her thousands.
So why do private sales save you money? A lot of it comes down to the mind-set of the owner. Most people who attempt to sell their homes privately are driven by a mind-set of savings not results. They place little to no value on the influence a good agent can have over the end sale price. They instead believe, a bit like the good old Kiwi DIY’ers, that they’ll be right.
Reasons why private sellers can get it wrong:
1. Because good quality photography entices buyers. Hence the existence of businesses such as Open2View. Dark rooms, pictures of toilets and shady entrances do not entice people through the door. No people = no sale.
2. The shop keeper approach. Buyers want to come and go as they please. They do not want to be tailed by emotionally attached owners keen to sell the benefits of every aspect of the property. Making buyers feel awkward hastens them out the door.
3. Private sellers allow themselves to form personal relationships with potential buyers, ignoring other parties so as not to offend. Not so in the case of agents who are acutely aware that two parties = competition which ultimately drives the end sale price.
4. Experienced buyers target private sellers looking to control the process and make savings. Anyone seen the 0800 we buy houses signs? That’s them.
5. A requirement of most banks for mortgages on private sales is that finance is subject to valuation. The savvy buyer will employ conservative valuers to come up with low level market values. This can lead to contract renegotiations and reduced sale prices.
6. Lastly, buyers will often look to make additional savings by asking the owner to reduce the price as they aren’t paying a commission. That doesn’t happen on the open market.
So while I too have heard rumour of successful private sales, in reality they have a very poor success rate. By the time they have languished on the market and end up in the hands of an agent, the damage has long been done.
Written by Ben Stevens
Ben Stevens - BBS Property Valuation and Management
As Wellington's only licensed agent and registered property valuer, Ben’s career has been focused on all aspects of residential property. From valuation, consultancy, investment and residential sales, Ben has the right qualifications for the job. Backed by a team of specialist agents, Ben was recently awarded Trade Me Property's and Leaders 'Top Property Marketer' award for 2015. Check out more about Ben and the team over their website or Facebook page.
The information contained in this article is of a general nature and should not be taken as advice. It reflects the opinions of the writer only and does not necessarily reflect the opinions of New Zealand Home Loans.