New Zealand’s property bubble shows no signs of bursting and more people are selling their home or investment property privately than ever before. But there are a lot more things to do if you take that path.
The country’s median house price jumped $118,300 in 2020 to hit $730,300, a 19.3 percent jump. With the market running hot, many people are jumping on the bandwagon and selling their home or investment property.
Usually, the easiest way to do this is to work with a reputable real estate agent company. However, with the market so buoyant right now, some property owners are looking to sell their property themselves. They see houses selling for well above their capital value (CV) and think how hard can it be?
The attraction is obvious. A private sale means a substantial saving on commission and more coin in your pocket. However, private sales still incur costs, and the seller needs to be well prepared and understand the process to avoid coming unstuck.
Getting top dollar for your house by selling it yourself starts with some do it yourself and good old-fashioned elbow grease. You need to make your property look presentable and attend to those niggly repairs you have been avoiding for years.
Then comes the more challenging job of sorting out the business and legal side of the sale. This is where we advise sellers to get some help but for those who choose to go it alone, here are some pointers.
1. Know your property
The purchaser will want to know everything about the property before they part with their hard-earned cash. This includes whether the property complies with the restrictions outlined on the title or relevant resource consents, and whether all work done to the house has the right council consent.
It is also prudent to get a building report and a Land Information Memorandum from your local authority. Having one’s ducks in a row will ensure that a buyer does not find out anything in their due diligence that will derail the deal or give them an opportunity to reopen negotiations to lower the sale price. Failure to disclose any information about the property that you are aware of and that may be relevant to the buyer could cost you substantial money, so full disclosure is advised.
2. Check the vendor warranties
The standard sale and purchase agreement includes several vendor warranties that are effectively promises about the property. A seller needs to ensure they understand the warranties being given and ensure they are true. It could be costly to get this wrong.
3. Preparing the sale and purchase agreement
Without an agent, the responsibility of preparing an agreement for sale and purchase falls on the seller, or buyer. Ultimately, the buyer needs to present an offer, but a seller would be wise to provide a pre-prepared agreement to assist them to do that. In many circumstances, legal assistance will be required to ensure the appropriate terms and conditions are included in an agreement.
If either the buyer or seller is not comfortable with the negotiation process, then, without an agent being involved, help from the lawyer may be needed.
4. Value your time and money
A private seller must organize the many other tasks normally undertaken by an agent including taking professional photos, deciding on a marketing plan and budget, and showing prospective buyers around the property. Deciding on the best sale process and setting a target sale price if needed are also decisions to be made. Getting this right is vital or you run the risk of it ending up costing you money, as well as your time.
One thing to note in deciding on sale process, and it is super relevant when the market is hot, is that a private seller cannot sell by auction without the help of a registered auctioneer. An online auction on the likes of TradeMe is not technically an auction though so there are some quirks to bear in mind. Taking the auction method out of the sales options available could mean missing out on getting top dollar for your property so it pays to think carefully about how you will get your best result before proceeding.
Final points to keep in mind are the non-tangible things with a private sale, such as the added stress and whether potential purchasers are comfortable dealing directly with the homeowner.
5. Be Prepared
As you can tell there are many factors to consider when deciding how to sell a house and it may not be an entirely easy process to conduct yourself. Regardless of how you ultimately choose to sell your house, we recommend being prepared and getting good advice before you start.