7 Reasons Why Private Sellers Should Not Be Selling Their Homes

Private Sellers
Private Sellers are sometimes misinformed about what agents can do for them

At first glance, selling your home privately can seem like an attractive proposition. You’ll save the agents commission, right?

In fact many private sellers are home owners in financial trouble, and are hoping to avoid paying the agents fee in order to clear an outstanding mortgage loan without “paying in”.

The reality is that many of these homes end up as “distressed sales” and are auctioned by the bank at greatly reduced prices.

Sadly, in many of these cases the result can mean even greater financial hardship for the unlucky owners. In some cases the shortfall translates into a long-standing debt that will represent a financial burden for many years to come.

Many of these unfortunate experiences come about because private sellers are misinformed about the role of Estate Agents and about what an experienced Realtor can bring to the process. Without access to relevant data, private sellers sometimes begin by overpricing their homes — based on other overpriced homes in the same area. There are a few pitfalls to avoid. Here are 7 of the most important reasons why Private Sellers should not sell their homes:

7. Lack of Time
Selling a house involves a great deal of time. Someone must be on hand to handle all enquiries any day of the week, including week-ends, and to show the house, work with prospective buyers, and deal with paperwork. You may be working full-time or you could be relocating. You could find it difficult to devote the necessary time to selling your home. This can result in lost opportunities that may be scarce in a down market. A full-time Estate Agent can devote the necessary time to showing your home, dealing with prospective buyers, and taking care of the paperwork.

6. Lack of Objectivity
From a purchasers perspective, an Estate Agent brings an air of objectivity to the sale. One of the reasons that private sellers may find it difficult to deal with potential buyers is due to a lack of the required detachment. The private seller’s natural emotional involvement with the home can leave potential purchasers feeling awkward and inhibited while viewing. An Estate Agent can help to assess potential offers from an objective and expert perspective, offering a professional and researched opinion to help overcome the purchasers objections in a reassuring way.

5. Lack of Security
Private sellers are faced with the problem of giving out their personal information to strangers. As a private seller you will have no screen between you and an a potential buyer or a potential scam artist who may be trying to trick you into gaining occupation of your home. Even worse, you may be faced with a criminal inside your home who could try to steal things while looking around, or perhaps “case” the property and security systems for a much bigger crime at a later date. Estate Agents deal with potential buyers on an ongoing basis, can preserve your privacy, and can usually tell if something doesn’t “feel right,” thereby preventing potential problems of this kind.

Paperwork and legalities
Paperwork and legalities are an important aspect of the sale

4. Working with Unqualified Buyers
In the current market less than 50% of potential buyers will qualify for a home loan. It’s sometimes difficult for private sellers to ask the probing questions that are required to thoroughly check out the financial capabilities of potential buyers. Sometimes a buyer has not properly investigated how much cash is required upfront for the deposit and transfer fees, leading to a failed transaction. A professional Estate Agent is trained to do a proper assessment that can save time and expense down the line.

3. Paperwork and Legalities
Apart from the need to achieve familiarity with sale agreements and other legal documents, private sellers are faced with liability issues when dealing with buyers one-on-one. Laws dealing with property sales have become more numerous and complicated in recent times. The new Consumer Protection Act is the most recent of these.

A professional Realtor is trained to deal with these legalities and provides the seller with the security of knowing that these issues will be properly taken care of. When drawing up the Deed of Sale certain details can be contentious. An experienced Estate Agent can recognise the pitfalls and traps in any given situation, and do the drafting of special clauses in such a way that both parties are protected from later nasty surprises or disappointments.

2. Lack of Exposure
Private Sellers must carry the costs of advertising and marketing, whether they sell their homes or not. Most private sellers don’t have the knowledge or resources to create enough awareness and for these reasons they will not have the ability to select the most effective advertising methods and will not have access to a wide enough pool of potential buyers. However, a professional Estate Agent has access to an existing database of buyers and to national and international referral and marketing channels.

Negotiation is a key aspect
Negotiation is a key aspect of any successful sale

1. Inexperience in Negotiation
Possibly the most important aspect of selling a home involves the concept of price negotiation when an offer is received. The agents fee is percentage based, so the bigger the sale, the higher the fee. Typically, buyers approaching a private sale feel that the private seller’s saving in commission should accrue to them, and not to the private seller. A good Estate Agent is a trained negotiator and is skilled in the art of maximizing the selling price of your home. For these reasons an Estate Agent will often achieve a higher net value than a private seller at the end of the day.

5 thoughts on “7 Reasons Why Private Sellers Should Not Be Selling Their Homes”

  1. I would also like to know _ what are chances of a property price to double in 3 years? example- say i bought a property in 2006 for 190000 and sell it in 2009 for 400000 in such short period of time.

  2. We have just bought a house and are paying occupational rent. We got a good deal and the deposit was paid into a trust account and the bond was applied for through FNB.

    When we moved in, due to heavy rainfall we discovered hectic leaks. Also, the bank sent a building inspector and a structural engineer and discovered that the staircase was not compliant. The ceiling is built so badly and beams are not up to standard. Everyone was notified in reports written and the lawyers appointed by the seller have been a nightmare. No correspondence and help, however they forget that we are also the client.

    Now the seller refuse to fix to get occupational certificate and wants to cancel sale. We are not prepared to move as we fixed up a lot already. Wasn’t the agent suppose to have house thoroughly checked and get all compliance certificates? Why did he agree on offer? Did he know about everything that was wrong and why weren’t we notified?

    Please help we are extremely stressed out.

    1. Hi Lola,

      At this point you have three options: cancel the sale, pay for the repairs yourself or have the seller pay for the repairs.

      It’s difficult to comment further without seeing your agreement of sale. The sellers attorney is acting in the interests of his client, the seller, so you are unlikely to get much help from that quarter. Your best option may be to take your documentation along to an experienced attorney of your own choice, and have the attorney assess your options and advise you accordingly.

  3. Hi John

    I’d like to share my experience with you…

    My husband and I recently bought a new house (I actually had sent you a question regarding a bunch of issues we had with the seller under your article regarding the CPA)
    We were thankfully not in a position where we *HAD* to sell our current house. So we decided to go the private route.

    We had specific reasons:
    1) Cost – we were not happy paying the agent’s fees and had not had many great experiences with the agents we had come into contact with… And the negative attitude was quite shocking!
    2) Time – we had the time; we were not in a rush and were happy to wait 6 months if necessary
    3) Legal Assistance – we have a good friend who is handling the conveyancing side of things

    With all that noted; we registered our property with a reputable online service and held 3 open days; two of which had a reasonable turn out and the other one a complete waste of time with only one person coming to see the property.
    We even had an agent popping in to have a look and try and convince us that he should sell the property as “we would battle to sell this house” (his words!)

    The good news is that after just 6 weeks on the private market, we have accepted an offer which is within the range we were looking for and at least R100K higher than one agent said we would possibly get! And all we paid was about R1500 for registration on the property website and their marketing tools!

    I am not suggesting that everyone goes the private route, but when the circumstances are right it can work out to your advantage! And I’d say have good legal assistance through the whole process!

    Thanks for your article – I thoroughly enjoy reading your page!

    Kind regards
    Sarah

    1. Hi Sarah,

      Thanks for sharing your experiences. While the majority of private sellers experience results that are less than satisfactory, it’s worthwhile noting that some private sellers do in fact have good results. As you’ve mentioned, your case is an example of how to do everything right! To mention a few of the things that I would say contributed to your success:

      – You were prepared to take your time, plus you had the right attitude
      – Expert legal assistance on tap
      – Realistic pricing — in spite of the agents comments

      Once again, thanks for your contribution. It’s greatly appreciated and it certainly gives some balance to the article.

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