A guide to selling your house privately : PersonalFinanceNZ

A guide to selling your house privately : PersonalFinanceNZ

Hi Reddit! Few months ago I managed to sell my house privately. You gave me a few valuable advices and some confidence. It would be fair to pay back the community. I hope that my experience will help others to do the same. Happy selling!

Success story

  • Story of others. I personally know three families who sold their houses privately. Therefore, I’ve decided to give it a go and save a few months of my salary on agents commission.

  • My story. It was February 2020, Auckland. Almost all properties in my area have been sold by agents around CV. My place had a really nice renovation. Therefore, I knew that I could do much better. After all the preparations I’ve got interested buyers in the first week and final offer in two weeks from my first open home. Agreement went unconditional in less than a month after my TradeMe listing. I’ve been contacted by 100 interested buyers and shew my place for 65 families. Final price was +20% on CV and 15% more than homes.co.nz/TradeMe estimation.

  • My neighbour’s story. My neighbour wanted to hire an agent and waste more than $100k on reduced price and agent commission. But after my success he did the same and sold his house for a really good price in less than a month.

Motivation

  • You’ll save ~$25k. Imagine how many months you should work full time to get this kind of money after tax. For most people it would be 3-5 month easy. Yes, selling the house will be your second job for some time. But in most cases it would be much better pay than your first job.

  • Agents are not motivated to give you the best price. It’s a much better strategy for them to sell it ASAP and move to another client rather than negotiate for another $30k-$50k for you. In my area they sold most of the properties around CV. CV + agent commission in the best cases. Me and my neighbour sold our properties for +20% above the CV. If you add agent commission it would be around 25% easy. Selling by yourself will give you 15%-25% more money than selling with an agent.

  • There is no secret buyers list. Agents will not bring someone who will not see your TradeMe listing by themself. Agents will tell you that they have buyers who come to them instead of TradeMe. This is total bs. Unless, you are going to sell something for a few millions and looking for too busy buyers. Normal people will figure out pretty quickly that agents are pretty useless and will look on TradeMe by themself.

  • Nobody can promote your house better than you do. We’ve got a lot of feedback that it feels much better when owners tell you about the house rather than agents full of marketing bs.

  • It’s a unique experience. You will not have many opportunities like this to sell something big and meet a lot of nice people. Use it!

Prepare your house

  • Invest in cosmetic renovation. It would make a huge difference. Fresh up the paint, fix easy stuff around the house. Make it feel that people can move in and do nothing for some time. It would cost you a few hundred bucks but there are a lot of buyers who’ll value it in the thousands.

  • Make it spotless or hire someone to do that. Dirty marks here and there, dusty windows tell a story of a bad maintained place. It would cost you nothing but set up a completely different vibe.

  • Remove as much of your personal stuff as possible. It will add more space and make it more like magazine picture.

  • Do some staging or invite a friend who has a taste for decoration. You could invest ~$1k to make your house look like a professionally done place. Few nice rugs, pillows and plants will do the magic.

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Documents

  • Make sure to have all the documents before first viewing. Buyers will ask for it straight away.

  • LIM report. This is the first thing buyers will ask from you. You can get it from your local council website for $300 – $400. In Auckland I’ve got it from here.

  • Title & Memorandum of Lease. You can order it for $15 each here. The form is a little bit confusing. On the second step you’ll need to select what document you are looking for. For the title select “Record of title – Guaranteed Search”. For Memorandum of Lease they don’t have drop down items. Therefore you’ll need to select “Other record” and put “Memorandum of Lease” in the “Record Required” field.

  • Sales & Purchase Agreement. Something weird going on with this document in New Zealand. Officially it’s an intellectual property of NZ Law Society or something like that. Therefore, officially you can’t legally distribute it. But it really depends on your solicitor. Some solicitors will provide you with a PDF version on request. Others will ask buyers’ solicitors to get one for their clients. Check with yours about it. But it’s not a big deal if they’ll handle it for you. It was my case.

Solicitor

  • Get one. You can’t sell your house without one. It would cost you around $1.5k – $2.5k. You can’t avoid this expense even with an agent. (One of the redditors pointed out that it’s technically possible to avoid solicitor service. But I don’t have any experience with it.)

  • In most cases it doesn’t really matter how good your solicitor is. If they are in NZ Law Society list then you are good to go. Some recommended options would be preferable of course.

  • You don’t need a solicitor to start selling your house. You need one for S&P Agreement magic in the end only. Therefore, you can get one when you agree on a price with your buyer.

Marketing

  • Take good photos. Everyone has a friend who can’t go for a walk without a camera. Invite them to take nice pictures of your place. Use TradeMe listings as a point of reference where to put your camera. Please don’t take photos on your iPhone. Your marketing should look as professional as possible.

  • Write description. You’ll get what to put in your description after reading a few on TradeMe. Just show it to a few people to fix grammar. Don’t give your buyers a chance to think that you are an amateur.

  • Put your listing on TradeMe. This is a one-stop shop. Don’t waste your time on other free options. You will not get any motivated buyers from there. I’ve been there. Just believe me. Moreover, you will not get access without an agent to websites like oneroof.co.nz, homes.co.nz or realestate.co.nz. But it doesn’t matter because you’ll get more than enough buyers from TradeMe.

  • Get a sign. I’m pretty sure that a simple red SALE sign from Bunnings would be enough to guide buyers to your property. But if you want to impress buyers and make agents cry then get a full size 1200×900 banner with photos and printed materials. It costs nothing. I’ve got it all for around $100 here (Not paid. Just really nice guys with awesome prices.). If you’ll go this way then use this for the banner and this for brochures.

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Open homes

  • Do private viewings. I can’t emphasise this point even more. All my buyers who made an offer came from private viewing. Most motivated buyers will not wait for open homes. If they are in love with your place then they’ll call you straight away. Be ready to tidy up your place in one hour and show it every evening. This is another advantage you have over agents.

  • Do 1 hour open homes. Usually open homes are only half an hour. Doing it for an hour will give your buyers a bit more flexibility to fit it in their schedule. It’s not a big deal for you but could be a deal breaker for them.

  • Clean up. Do vacuum cleaning and wipe the dust before every open home. Be professional.

  • Dress up. Show that you are serious. At least you will feel more confident.

  • Get buyers contacts. It might feel uncomfortable but it’s very important. Ask for at least name, phone and an email. Just say that you’ll send them all required documents. I’ve made a spreadsheet to keep everything in order and keep interested buyers up to date.

  • Hold on. Open homes was the most difficult part for me. You need an hour before open home to get ready and one hour after that to send all the documents and cool off. But remember how much you “pay” (save on agents) yourself for that. Usually, it’s a pretty good deal.

  • Bargain. I’m not really good at it. Just look at the asking price in your area on TradeMe, check recent sales on homes or oneroof and you’ll get an idea how much your place is worth. Add a bit for a bargain on top and you are ready.

Sales & Purchase Agreement

  • Email all details to your solicitor. When you agree on a price with your buyers then email all details to your solicitor. You will need:

  • Unconditional S&P Agreement. If you have a lot of competition for your place then you could propose to sign an unconditional S&P Agreement as an advantage for a competing buyer. Sometimes it makes sense to give a small discount to buyers who are ready to do that. It will give you some peace in mind. Unfortunately, it’s pretty rare.

  • Conditional S&P Agreement. In most cases buyers will have some conditions like Mortgage Confirmation from their Bank, Building Report, Market Valuation Report, etc. Everything will be paid by your buyers. Usually it takes around 1-2 weeks.

  • Sign S&P Agreement. You’ll get a filled agreement from your solicitor. Print, sign it and send it back. Usually you’ll get it with buyers signatures already.

  • Money deposit. Buyers will transfer around 10% of the purchase price to your solicitor. It will be a safe deposit to make sure that they will not just change their mind. Don’t worry about that. Everything will be handled by your solicitor and their trust account.

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Settlement

  • Going unconditional. If you had conditional S&P agreement then it automatically becomes unconditional when all conditions are satisfied.

  • Final inspection. One day before settlement day the house should be ready to move in for new buyers. They will come for final inspection. Clean the place to make it nice for them to move into their new home.

  • Give the keys. On the settlement date you’ll get confirmation from your solicitor that money has been transferred to the solicitor trust account. You are ready to give your keys to the buyers now and move on.

  • Get the money. After buyers confirm that they’ve got the keys you’ll get the money minus your mortgage debt and solicitor fees on your account. Congratulations!

Other pitfalls

  • Don’t do market valuation. I thought that after a good renovation I can justify asking price if I have a report from a registered valuator. I’ve ordered one. Don’t make my mistake. Without signing the S&P Agreement with asking price you’ll get the same number as homes.co.nz or any other service will give you for free. Don’t waste your money. In my case I’ve got a valuation much lower than my CV which doesn’t make any sense. You can’t get anything comparable on the market for that price. A valuator just didn’t care about renovation which is a big deal for many buyers. It was a completely different story when another valuator came from my buyers after the signed S&P agreement. He’s been recommended by their broker agent and given the required number. The whole valuation industry looks like a scam to me.

  • Don’t let agents bring their clients. Agents will come to you with “exclusive” clients. It’s total bs. All motivated clients will find your place on TradeMe. Don’t pay $25k+ for nothing. Remember how much time you have to work to get this kind of money.

  • Banks will not approve more than your place worth. If you are in the first home buyers range then don’t be fooled by agents that they could sell your place for much more than you can. Usually first home buyers under very strict limits from banks. Banks will do automated valuation or order independent one. They will never loan much more than the market price. And they will never add agents commission on top.