Selling property: private sale vs estate agent
Property attorney gives some tips on different selling methods.
Savings in commission are an incentive to sell a home privately but the decision of whether or not to use an estate agent should be carefully considered.
While commission savings are attractive, estate agents are often able to secure a better price for you than you are able to by yourself as, amongst other benefits, they have access to an existing buyer base.
Private sellers most often have little or no skill or experience in negotiation, marketing, financial or legal implications surrounding the sale of a house.
When making the decision to sell privately or not, also consider the demands on your time commitment, your knowledge of the real estate market and advertising costs.
A good estate agent should take care of all the marketing detail for you, show the house, and help you to determine a price. The agent would advise the seller of their house's real value in the current market to avoid the mistake of over- or under- pricing the house.
If a property is over-priced it obviously won't sell and will become "tainted" after being advertised for months on end, leading to perceptions that there is something wrong with the property - other than its inappropriate price.
Agents have access to buyers whom they screen and negotiate with on the behalf of the seller. Taking the time to research the history and experience of a particular agent is highly advisable.
However, if a property owner decides to go it alone, they should first determine the realistic value of their property. A seller can do this by requesting assistance from an estate agent as to the fair market value of the property and by finding out how much similar property in their area, and preferably in their street, have sold for.
A private seller must also decide how to market the property. They may do so by means of a sign board on the property, adverts in local newspapers, internet classifieds, internet services that are available to assist with the marketing of the property. The distribution of own pamphlets, brochures and posters by the seller are good means of marketing the property.
In terms of drafting the agreement, the process may vary. But on a typical transaction, the purchaser arranges preparation of the offer and presents it to the seller. Either the employed estate agent or a property lawyer will assist the seller and buyer with the drafting of the Agreement of Sale and Purchase.
If selling privately, a property lawyer should be arranged to assist with the drafting of the agreement. The seller should request that the agreement be explained to them. A signed Agreement of Purchase and Sale is a binding legal document and should not be signed unless all the terms and relevant details and arrangements are fully understood.
The agreement should make provision for the names of the parties, property description, the arrangement of finances, anything which might be considered to be a fixture that a seller would like to be able to take with him when he moves should be expressed. Excluded items which are not fixtures and which a purchaser may want to include should be specified, all with as much detail as possible. It is also advisable to make provision for occupational interest on both sides, in case of delays in the transfer process.
It is important to prevent loopholes that can be exploited at a later stage. For example a buyer may first need to sell his existing property or obtain mortgage bond finance. A specific time frame and amount should be should be stipulated.
Sellers need to be aware of any automatic extensions of time written into the agreement, which can cause a delay. Both the seller and buyer must understand the exact meaning of the wording in an agreement.
Don't leave any blank spaces. Either fill them in very carefully or cross out everything that does not apply and then initial the changes.
Selling privately requires far more effort and diligence from a seller than it may appear. Make sure you have the time, energy, know-how and technical assistance before going the private route.
*Heather Downs is an attorney at the property department of Shepstone & Wylie Attorneys.
Article by: Heather Downs - www.realestateweb.co.za