Private verses Agent
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.
This advice comes from Heather Downs of Shepstone & Wylie Attorneys' property department.
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, says Downs. "Private sellers most often have little or no skill or experience in negotiation, marketing, financial or legal implications surrounding the sale of a house."
Furthermore, she advises that 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 by advising you of your house's real value in the current market so that you do not make the mistake of over- or under- pricing your house. Downs stresses that 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. "They also have access to buyers whom they screen and negotiate with on your behalf. Taking the time to research the history and experience of a particular agent is highly advisable," she adds.
"However, if you decide to go it alone, you should first determine the realistic value of your property", advises Downs. 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 properties in your area, and preferably in your street, have sold for.
A private seller must also decide how to market the property. "You 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 you in marketing your home on your own, or by means of distributing your own pamphlets, posters or brochures."
In terms of drafting the agreement, the process may vary. But on a typical transaction, Downs explains that 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, it is strongly recommended that you arrange for a property lawyer to assist you with the drafting of the agreement. "You should request that the agreement be explained to you. A signed Agreement of Purchase and Sale is a binding legal document and should not be signed unless you fully understand all the terms and relevant details and arrangements."
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 expressly 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.
Downs comments that 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. 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 concludes Downs.