Often the number one reason for home owners to sell privately is to save on the exorbitant fee that are perceived to be the cost of sale by the general public. However in today’s market selling privately is in my opinion “Costing” private sale vendors 10’s of thousands of dollars………. and I am suggesting after you have taken the cost of the fees out of the equation.
I would like to point out the rationale behind this bold statement
Purchasers are educated in today’s market. They have viewed and researched many a property. They view the properties through real estate agents, the websites and they view the private sales. The private sales are obviously perceived to be less and therefore you as a vendor WILL get a massive response. What people forget is there is only one fee to save, the purchaser thinks they are saving it and so does the vendor. We have the same buyers visiting our open homes and we know them like you do. They will not tell you what is wrong with your property and they will tell you how delightful it is and then you will never hear from them again! They will however, tell us.
By selling privately it is difficult for you as a vendor to create competition and this is how vendors working through real estate agents are getting premium amounts for their homes. Unless you are able to create a multi offer situation, or generate competition, you run the real risk of underselling.
Purchasers know a bargain when they see one. Most vendors do little research on what has sold recently on the area. I always find this disconcerting. They all know what the place up the road is on the market for or what it passed in at but hardly ever what it sold for. This is the figure you need to work with. However the purchasers know. They are in the market and most of the time these purchasers have done the open home circuit for at least 3 months. They have missed out on properties at auction, they have thought about putting offers in, they have given up their weekends to visit and compare, and suddenly they turn up to your place and they know what it would be worth on the “open” market and what they can “pick” it up for privately and most importantly what it is worth to them.
In a market when even real estate agents are being surprised with the pricing that is being achieved, how can it be that you know that the price offered is all that your home is worth? We can be out by 10’s of thousands of dollars and the only way to truly know is to create public competition. Buyers will intimate their top dollar, however history would suggest that there is always more.
Question; Do you ever come in with nothing to spare?
I have a story that I would like to share, and I hope that this shows you as real estate agent how much I care about the worth of your property and in turn what greater choices this gives you in your next upward step in life. Nothing more.
I appraised a house about 3 months ago, saw the vendor at an open home a little time afterward and the vendor indicated that they would look to do something later on in the year. About 2 months later I was driving by and saw a private sale sign on the fence. I rung that evening and was told by the vendor that they were trying the market for 4 weeks and then I would be given the opportunity. I asked if they had it on Trade me and for how much. They responded with $675,000. This tells the market that the most they have to pay for this property is $675,000….I “panicked” for them, and immediately requested that they up that amount by $55,000 if they felt they wanted to continue without my assistance. I was then asked to pop over that night, they contracted me to market their home and we decided on an auction campaign. Ohh I hear you say…………….but wait there’s more!!
I was given the names of all the potential purchasers that had rung up in the brief 24 hour time frame. Of the 8 names, 6 of them I knew! When I rung to say that the property was now listed with Barfoot and Thompson the sighs were resounding! “Oh dear.” One of them said “We are going to have to pay far more than the listing price that the vendor had on aren’t we??”
Three weeks later 58 groups through and 3 active bidders on the day that property achieved a sale price of $735,000. The vendor who so deserved the sale price achieved another $61,881 in her hand above and after commission!!! (They intimated to me that they may have accepted $650,000 privately.) Now that is a good story, don’t you think? And this is not unusual.
In summary, there may be times in the market where private selling is a good idea (I struggle to think when) however when the market is buoyant private selling is nothing short of being fiscally irresponsible.