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Selling privately – a recent experience

By 19 July 2011 32

allhomes screenshot

We recently found a new house to move to – so that meant selling our current place. Being reasonably confident people who were aware of the current market we decided to give selling it ourselves a go. Our decision was reinforced when an agent we spoke to quoted a flat fee of three percent (in our case equalling more than $12k in selling costs).

We had a fair idea of what our place was worth and luckily we were able to access a professional valuation (not agent appraisal) for our place through our bank that came to within 5k of that estimate.

So where to, once we made the decision to do it ourselves?

We contacted the building inspection people for the combined pest, energy efficiency and building report.
We then had the solicitor draw up the contract (which has to be prepared before a property can be listed for sale in the ACT). Within the contract is the building report.

Photos we did ourselves but did get a quote from a group (that only does real estate photography) for around $350. If you are not confident in taking pictures then this is probably money well spent. We also used one of the many free floor plan websites to do up a floor plan of the place but if you are desperate you can use the grainy one that will be in the building report.

Coming up with the flowery words took a couple of hours – though I was conscious to try and emphasise the property’s assets while not to sounding like just another real estate tosser!

Listing on AllHomes took all of 20 minutes. Register, load up the words, add the pics, pay the $995 fee and a couple of minutes later it is up there. Approx 12 hours later the property had been viewed almost 300 times. We chose to list inspection by appointment initially then listed a Saturday open house the following weekend. We had two offers that were a bit low for our liking and then following the second open house we had an acceptable offer.

So with a bit of organisation, a few hours work and a price to sell we have saved ourselves a fair chunk of money.

Some tips from our experiences:

    – Do get good pictures – in a listing everyone checks pictures first, then they read the details.
    – Do sell the place – upgraded insulation, painted recently, ducted gas heating, near a school or park, mention them all.
    – Do get people’s contact details (do up a simple registration sheet). We didn’t contact people just because they visited but stayed in contact with those that requested the building report.
    – And if someone asks for the building report – tell them up front about any unapproved structures or any other issues identified in the report.

Would we do it again? In a heartbeat. Know the market, price it to sell and then be open and honest with prospective buyers.

[Photo: Allhomes screenshot unrelated to the property being discussed]

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32 Responses to Selling privately – a recent experience
#1
dks00k9:05 am, 19 Jul 11

A saving in the order of $10K is great. I for one am glad that it worked out for you.
Or did it??
I’m a bit confused as to why the property is listed with Lutons and the auction date is still a few weeks away??

#2
johnboy9:08 am, 19 Jul 11

It’s an unrelated screenshot.

#3
Spectra9:25 am, 19 Jul 11

Combined with our excellent experience of buying privately, I really do wonder how on earth agents convince so many people to use them. Convenience and “not having to worry about stuff” is all well and good, but for $12k? It’d want to be a lot of convenience…

#4
Chip9:43 am, 19 Jul 11

Maybe it isn’t a totally unrelated screenshot JB. The Farrer house is open for inspection this afternoon and this exposure will definitely help. Whether a contrived post or not, the vendor and allhomes and Luton should be buying a flash lunch for AG!

#5
johnboy9:44 am, 19 Jul 11

The screenshot was my work.

#6
dks00k10:09 am, 19 Jul 11

That explains it :-)
The other thing I was struggling with was 3% fees of $12K means a sale price of around $400K.
I’d be first in line to buy that place in Farrer for $400K

#7
PigDog10:14 am, 19 Jul 11

The last place Mrs Pig and I purchased was done privately.

After the experience, which went as smoothly (if not more so) than dealing with agents, I would definitely consider selling privately.

#8
grunge_hippy10:15 am, 19 Jul 11

I often wondered about doing this, thanks for the tips.

We looked at moving recently, and the house we were looking at was on the market for over 7 months, with a failed auction to boot. that’s a whole lot of real estate fees. It dropped in price well over $50K. In the end we weren’t in position to make an offer without selling ours first in a very short time frame so we bailed, but we wondered if selling it ourselves is the go. Looking at that example, I would say yes! A 4 bedroom house being for sale in that area for over 7 months is not what the market is doing, so I wondered either was there something seriously wrong with the place that we couldnt see or the agent just wasnt doing enough to sell it.

#9
CapitalK10:37 am, 19 Jul 11

I love this story – now just to pluck up the courage to do this myself

#10
ma7trlb10:46 am, 19 Jul 11

the only reason we didn’t sell privately last time was because we wanted a quick settlement, with an weekly lease for us attached, and didn’t feel confident negotiating that ourselves. The agent, to give him his due, managed to get $10,000 more than we were aiming for (paying for his fee).

Would definitely sell ourselves next time though.

#11
Pooks10:54 am, 19 Jul 11

Thanks AG for going to the effort of writing this detailed and valuable post.

My partner and I have recently bought a house and I’ve been to many, many forums where people want to know this exact information.

#12
troll-sniffer10:57 am, 19 Jul 11

grunge_hippy said :

A 4 bedroom house being for sale in that area for over 7 months is not what the market is doing, so I wondered either was there something seriously wrong with the place that we couldnt see or the agent just wasnt doing enough to sell it.

Ummmm don’t know what to say to the above… other than than it is obvious to Blind Freddy that the vendors are asking above market price for the house. Not rocket science. Whatever other factors come into play (problems, condition, attitudes etc) cannot raise a house’s price above the current market.

Despite the protestations of agents who point to figures that deny it, most of Canberra has suffered a drop in selling prices in the last 6 months to a year. Suburban houses that would have been inundated with offers over $650,000 are now lucky to attract reluctant bids of $20,000 less. Sellers who need to shift a property are accepting less than was hoped for, while obstinate ones aren’t convinced and continue to hold out.

As for selling privately, if you know your market and are happy with getting your calculated price based on your research, it’s a win win situation for you and the buyer. The only things to consider are that you may not be in possession of all the facts, and that the buyers will often assume they can expect the price to be lower, given that you’re not paying for an agent. If I were to sell privately I would set a price that I would expect to pay and not budge. Unless you really know what you’re doing, as soon as you start to negotiate, you’ve probably lost more than a good agent could bring you anyway.

#13
AG Canberra11:12 am, 19 Jul 11

As I said in my post we were confident that the price we were asking was reasonable and had the valuation to back up our thinking.

In all my buying experience the real estage agent has just been a middle man with the vendor and buyer doing the actual bargaining.

We did recieve a couple of low offers and politely informed them that as it was early days we would decline their offer as we were seeking a higher price. We were lucky enough to get that price the following week. Again, I believe it was down to reasonable pricing. We could still have our place on the market today and we ‘might’ get another $10k or $15K than what we got but at the end of the day months of waiting for the right offer isn’t worth the stress. And I’m not sure what extra activities an agent would be able to do in that situation to speed up the process.

#14
Classified11:15 am, 19 Jul 11

AG Canberra said :

As I said in my post we were confident that the price we were asking was reasonable and had the valuation to back up our thinking.

In all my buying experience the real estage agent has just been a middle man with the vendor and buyer doing the actual bargaining.

We did recieve a couple of low offers and politely informed them that as it was early days we would decline their offer as we were seeking a higher price. We were lucky enough to get that price the following week. Again, I believe it was down to reasonable pricing. We could still have our place on the market today and we ‘might’ get another $10k or $15K than what we got but at the end of the day months of waiting for the right offer isn’t worth the stress. And I’m not sure what extra activities an agent would be able to do in that situation to speed up the process.

Well done to you, sounds like a great result.

#15
grunge_hippy11:24 am, 19 Jul 11

troll-sniffer said :

grunge_hippy said :

A 4 bedroom house being for sale in that area for over 7 months is not what the market is doing, so I wondered either was there something seriously wrong with the place that we couldnt see or the agent just wasnt doing enough to sell it.

Ummmm don’t know what to say to the above… other than than it is obvious to Blind Freddy that the vendors are asking above market price for the house. Not rocket science. Whatever other factors come into play (problems, condition, attitudes etc) cannot raise a house’s price above the current market.

Despite the protestations of agents who point to figures that deny it, most of Canberra has suffered a drop in selling prices in the last 6 months to a year. Suburban houses that would have been inundated with offers over $650,000 are now lucky to attract reluctant bids of $20,000 less. Sellers who need to shift a property are accepting less than was hoped for, while obstinate ones aren’t convinced and continue to hold out.

As for selling privately, if you know your market and are happy with getting your calculated price based on your research, it’s a win win situation for you and the buyer. The only things to consider are that you may not be in possession of all the facts, and that the buyers will often assume they can expect the price to be lower, given that you’re not paying for an agent. If I were to sell privately I would set a price that I would expect to pay and not budge. Unless you really know what you’re doing, as soon as you start to negotiate, you’ve probably lost more than a good agent could bring you anyway.

yes, even us as newbies could see that they were asking waaaaaaaaaaay too much, but shouldn’t the agent, as a paid professional be advising the vendor of such and helping them to negotiate a sale? (actually, now that I typed that, the answer would be duuuuh no, he wants money!) Hence why I would probably go without an agent next time.

My understanding is that they were in Perth and were ‘desperate’ to sell (although, they had tenants in place, so they were getting some income, it wasn’t an empty house) To have a house on the market for 7 months in the ACT is crazy. They obviously weren’t that desperate.

#16
thatsnotme12:33 pm, 19 Jul 11

thatsnotme said :

yes, even us as newbies could see that they were asking waaaaaaaaaaay too much, but shouldn’t the agent, as a paid professional be advising the vendor of such and helping them to negotiate a sale? (actually, now that I typed that, the answer would be duuuuh no, he wants money!) Hence why I would probably go without an agent next time.

My understanding is that they were in Perth and were ‘desperate’ to sell (although, they had tenants in place, so they were getting some income, it wasn’t an empty house) To have a house on the market for 7 months in the ACT is crazy. They obviously weren’t that desperate.

Sometimes vendors just won’t accept facts, and for whatever reason refuse to accept what an agent will tell them. I would think that for most agents, getting a property off their books for a lower price than what they’d aimed for originally, would ultimately be a more cost effective move than working for an extra few months to get that sale. They will have to spend time on open houses, liaising with vendors, following up after inspections, etc etc. Their per hour return may end up being lower by chasing a higher price, than if it’d sold at a lower price more quickly.

Buying the house we’re in now was a much bigger chore than it should have been, purely because the owner was being stubborn throughout the process. From initially listing a standard 4 bedroom house in the suburbs with a ‘by negotiation’ price, to refusing to accept any risk if the tenants failed to move out before settlement, he just didn’t listen to what his agents were telling him, and they were as frustrated with him as we were. That was one instance where I was grateful that he was using an agent…dealing with him directly would have been a nightmare!

On the other hand, when we were selling, and getting less interest than what we’d hoped for, the agent gave us good advice on how to adjust our price, and the week it went down, we suddenly had a dozen people through on a Saturday, and two offers at full asking price that same night. I don’t think we went too low on that one either – we just hit the price point our market was at.

Selling privately is definitely something I’d consider for future sales – but going through the process of buying and selling with agents was a good learning experience that first time. I don’t think I’d have done a very good job as a first time seller.

#17
EvanJames1:17 pm, 19 Jul 11

Very interesting post, thank you OP. I’ve known agents to actually lose sales for vendors, I know I was on the point of offering for a place but the agent got fascinated by someone else and dropped me like a stone. The property stayed on the market for another year!!!! Queanbeyan-based small agency.

Price is the final determinant, in the end. You can sell anything for the right price. If it isn’t selling, it’s priced wrong.

#18
MissChief1:37 pm, 19 Jul 11

Would recommend care with bank valuations. My Bank Manager told me recently that banks will generally value below market price.

#19
Disinformation3:24 pm, 19 Jul 11

Nothing has done so much to reduce the average income of the standard Real Estate Agent as the Internet.
Now the average person can, if they feel the need, do the research to accurately price their house and arrange to have the legal requirements met to have it sold. The Canberra market place is so well served by just one website alone, that if more people were in the situation to sell their own houses, they could easily do it if they felt like it. Anyone who says otherwise, is obviously in the Real Estate industry…. If you would like a very interesting view of the role of the Real Estate Agent and their role, pick up and read Freakonomics which has a little bit on the motivation levels and incentives of their job and an analysis of the difference between a Real Estate agent selling their own house, to someone else’s. (The cost breakdown on their commission is different to Australia, but the rest applies absolutely) Actually, I’d recommend more people read Freakonomics for a look into how some things really work. It’s highly entertaining and educational, as is the sequel.

#20
watto235:04 pm, 19 Jul 11

My parents ended up buying a place 2 years ago for 500k. Stupid thing is the vendor intially wanted $550k and my parents offered $535k and he turned it down. Several months later he was accepting $500k from them…. He was losing buyers on his stubborness to budge on price and then obviously got desperate.

Generally after you’ve had a few offers you should have an idea what the place is worth to buyers. Yeah they are always trying to get something as cheaply as possible, but if all the buyers are offering say 10% less than what you want, your price is most likely too high.

Same goes for selling a second hand car. I’ve seen many people spend months trying to sell a second hand car. I’ve often sold mine to the first buyer. Its just not worth the hassle and risk for an extra few %.

#21
djk9:12 am, 20 Jul 11

MissChief said :

Would recommend care with bank valuations. My Bank Manager told me recently that banks will generally value below market price.

Bank valuations are generally on the conservative side, I would not say they are below market price.

#22
Fashion Queen12:16 pm, 20 Jul 11

A great post! Thanks for the info as I have often thought if I ever sell my house I would do it myself. It would be lovely to speak to the owners about a potential purchase you are about to make. I have always been my own property manager too with rental property which also saves the ridiculous % a real estate agent takes for doing virtually nothing and issues are solved quickly and developing a relationship with people who are living in your investment is ideal. The only bad side I would see is if you get some crazy having your contact details after you had sold the home…

#23
Rex Banner8:27 pm, 20 Jul 11

Thanks for this detailed description of the process AG, it’s really helpful. We are seriously considering selling privately ourselves, so a step by step guide for doing it in Canberra has helped to answer a lot of our questions (and saved hours of trawling through other forums….).

Just a quick question – does it make a difference in terms of receiving a deposit? Who handles that? When we purchased out house (sold through a real estate agent) we paid a $1,000 deposit when our offer was accepted and a 10% deposit bond when contracts were exchanged. We were under the impression that the seller’s real estate agent was responsible for managing and holding the $1,000 deposit, and we can’t really recall who managed the 10% deposit bond until the sale was finalised. Any chance you could please shed some light on the process for private sellers? Thanks!

#24
AG Canberra9:03 am, 21 Jul 11

Rex – we agreed with the buyers that the small financial deposit wasn’t required. If you did want to request one to re-assure yourself before exchange, then the appropriate place would be your solicitor’s trust account. This is where the main 10% one will also be deposited to.

#25
djk10:35 am, 21 Jul 11

Rex Banner said :

Just a quick question – does it make a difference in terms of receiving a deposit? Who handles that? When we purchased out house (sold through a real estate agent) we paid a $1,000 deposit when our offer was accepted and a 10% deposit bond when contracts were exchanged. We were under the impression that the seller’s real estate agent was responsible for managing and holding the $1,000 deposit, and we can’t really recall who managed the 10% deposit bond until the sale was finalised. Any chance you could please shed some light on the process for private sellers? Thanks!

The $1k “holding deposits” that agents take are more or less pointless anyway, as they have to be returned if the sale doesn’t proceed and most buyers know this.

If you are really keen on getting some sort of financial committment from potential buyers, you can still take their $1k and put it in your solicitor’s trust account. This is the same place the 10% deposit will go once it is exchanged, to be held until settlement.

#26
self110:54 am, 21 Jul 11

Thank you so much for the detailed info. You’ve inspired us to sell ours privately! Who did you use for the building/pest/energy report?

#27
AG Canberra5:19 pm, 21 Jul 11

We used a well known building inspection company though given what I’m about to say next, I won’t name them.

Essentially these documents are only good to see what building works have been approved/unapproved.

The energy rating stuff is next to useless. Our rating went from two stars when we bought the place down to half a star now and that is after we bettered insulation, and internal and external window treatments! For more info on this issue check out the ABC 7.30 ACT (the old Stateline) story on it from about 6 weeks ago.

The building bit is ok at highlighting possible issues that are easy to see. The guy literally spent 20 minutes at our place including a ‘glance’ under the house and into the roof cavity. Anything else will be missed.

The pest stuff again only highlights easy to see stuff.

When you see the report there are only about six pages of info and then about thirty pages of disclaimers.

Either way – any of the local companies will do the job and provide some independent info for prospective buyers. A smart buyer will go over the house themselves and/or bring along a trusted tradie to quiz you on any points that they identify.

Good luck!

#28
fish6:38 am, 09 Aug 11

Hi AG,

Thanks for the great write up. I’m at the stage of selling my place and after meeting with a couple of real estate agents and reading up on selling private, I’ve decided to go it alone. I have guessed the value of my place based on what similar places are currently on offer around the same area, mainly through Allhomes. Hopefully a more truer value will be reveal later when offers are provided.

I do have some concerns though so any help would be appreciated. I have only just organised a building inspection for my place. I have not organised a conveyance/solicitor yet. The solicitor I went with when I purchased the place 4 years ago proved to be a disappointing experience. The whole affair dragged for another month before I finally got the keys. They were recommended by the real estate broker at that time. This time round, I will be asking friends to see if they can recommend one but if anyone or yourself can recommend me one this would also be appreciated.

I was also wondering how my current mortgage is ‘managed’ during this sale. Is it simply I sell the place and use the money to pay the mortgage plus the extra charges for paying early? Or is this handled by the conveyance/solicitor?

The other thing I noticed that you didn’t have was a ‘For Sale’ sign. Part of my planning was to get a sign done up but after reading your experience, it may not be necessary?

Thanks,

#29
AG Canberra8:27 am, 09 Aug 11

We used Conveyancing Canberra and have been happy with the service they have provided.

They will arrange discharge of your mortgage, change of title etc and then find out from you where you want the balance sent. They will need a contact at your bank to get the final pay out figure details. They also hold in their trust account the deposit provided at exchange of contracts.

We didn’t do a “For Sale” sign but if it hadn’t sold as quickly would have done so. And I did get a couple of coments from people viewing the house during inspection that they expected to see the “open for exhibition” sign out the front when we had the place open.

I reckon there could be a decent little business printing up cheapish for sale signs and then renting open for exhibition signs….

#30
fish7:00 am, 11 Aug 11

thanks AG!

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