HOW TO SELL A HOUSE PRIVATELY
This resource is intended to illustrate the process of selling a home privately without paying thousands of dollars to real estate agents in the process. It is best suited to people who are intrigued with the idea of selling privately but uncertain whether it’s the best way to go, and sellers who have already decided they wantto avoid real estate agents and want some guidance about how to sell privately.
If this sounds like you, then you have in your hands enough information to enhance not only the selling price of your property but the overall selling experience, too. You’re about to discover a gold mine of tips, strategies, suggestions and guidelines as we outline the step by step process for selling a property without using agents, and detail various key aspects of the process. You can use this information to gain a substantial financial advantage when selling your property and pocket all the fees and commissions you would ordinarily hand over to a real estate agent.
Most buyer interest occurs during the first few weeks after a property comes onto the market, so it’s essential that you equip yourself with as much knowledge as possible before you put your property on the market so that you’re better prepared for the task ahead. Therefore there is really only one opportunity for you to make an impact and create the highest quality and quantity of buyer interest, so use this eBook to your advantage and let For Sale For Lease help you get the best results.
WHY SELL PRIVATELY?
Each seller’s personal situation and motivation for selling their house is unique. However most people who decide to sell their own home without the help of a real estate agent will do so because they either want to save money on commissions and associated agent’s fee, or for similar reasons. This chapter describes the most common reasons why sellers choose to sell without an agent.
Save Money On Commissions
The lion’s share of the expenses related to selling your house are typically real estate agent commissions, which can consume a large portion of your house’s equity (that is, the difference between the market value of your house and outstanding mortgages). Typical real estate agent’s commissions range from 2.5 to 3.5% in Australia which means that on an average $500,000 home the commission fee would set you back somewhere in the order of $15,000.
You Know Best
You will probably know more about the strengths of your house and benefits of your neighbourhood than local real estate agents, especially if you’ve lived in an area for many years. Speaking from personal experience about how child friendly the neighbourhood is and how terrific the local schools are is also a bonus and will seem genuine when it comes straight from the home owner. You can also praise the virtues of nearby shopping, transportation, and entertainment, and praise your wonderful neighbours. And of course you can point with pride to all the improvements you’ve made to your house over the years.
Going The Extra Length
Your house and the money you have tied up in it are important to you. Some real estate agents, despite having dollar signs in their eyes in anticipation of the commissions they’ll earn if they sell your house, may be less than eager to invest sufficient time in promoting and showing your property.
If you’re the type of person who wants to be in charge, you may be unwilling to relinquish control to an agent. If you sell your house yourself, you can decide when and where to place ads for your house and exactly what features to emphasise. You may want to say when it is and isn’t okay to have strangers (interested buyers and their agents) strolling through your house. Perhaps you want to ensure that your house pet isn’t let out of the house by an agent who fails to notice your special showing instructions, or you just simply want to keep an eye on your valuables. Whatever the reason, for better or worse, you call the shots.
The House May Do All The Work
If the local real estate market is strong, and good houses get multiple offers as soon as the For Sale sign goes up, you may feel that selling your wonderful house will be a snap. More often than not, houses will sell better in a sellers’ market rather than a buyers’ market.
VALUING YOUR PROPERTY
When selling a home it is essential to learn how to accurately estimate the value of your property in order to get the best return. Unfortunately it is difficult to find accurate advice, and there is a lot of conflicting information from the media and real estate agents. For detailed information about how to determine your property’s sale price, please refer to our eBook on this subject. In this chapter, we will briefly summarise the main points of valuing your property. The ultimate success or failure of your transaction depends on accurately determining your house’s present fair market value. Don’t be fooled: this isn’t a place for wishful thinking. Overpricing is bad in any real estate market; in a weak market overpricing is a recipe for disaster, and in a good market it will leave you isolated. You must be realistic when pricing your house, or the sale of your property may flounder.
The most common method of valuing a property is to compare it to properties that have just sold in the local area, keeping in mind unique attributes that could add or diminish your property’s value. We recommend that you only consider comparing sales with these attributes: within 1 km of the property you are buying; sold in the last six months; and similar to the property you are trying to value. You can obtain lists of sales for any suburb or postcode from Residex, RP Data or For Sale For Lease property report, free to all our clients. You can also find comparable sales by researching the sold properties section of real estate websites.Look closely at the properties that have sold recently that are similar to your property. In particular look at the following attributes:
- Location: Is the location the same distance from amenities / transport?
- Size: Is the land size similar? Is the living area similar?
- Quality: Are both properties of a similar standard?
It is critical that you compare properties that are as similar to your property as possible, and to remain objective in your evaluation, otherwise your final figure will not be accurate. Search for the suburb or postcode you’re interested in and then sort the search results by date so that most recently sold properties are shown at the top. If you haven’t seen the comparable properties from inside, you can find out more information about them from their old listings on the Internet. Google maps is also a useful tool to get an idea of what a property looks like.Once you have a list of three to five properties that are similar to the property you are looking at then try to decide which properties are superior to yours and which are inferior. Try to be objective, if this is difficult for you then ask a friend to decide which ones they think are better. You should now end up with a range for the value of your property.
In a hot market comparable sales from more than three months ago are no longer an indication of current market conditions. Make small adjustments to your estimate value to take this into account. If you have been going to lots of open homes and auctions you should have a good feel for what the market is like in your area. Otherwise, as a client of For Sale For Lease you can obtain a copy of the houses for sale in your local area and use that information. Be careful as facts and figures can be easily misinterpreted or can be twisted by the media. In addition to this be aware that aside from the auction clearance rate, most figures will be at least a month or two old by the time they are published so they are always a little behind the current market.
If you make the right improvements when fixing up your property, you increase the odds of selling it quickly for top dollar. On the other hand if you make the wrong changes to your property, you waste the time and money you spent, prolong the sale, and possibly even reduce the ultimate sale price.Most buyers make snap judgments about your house. Their first impressions, whether they’re good or bad, are generally lasting impressions.
Buyers begin forming their opinion of your house long before they go inside. Curb appeal, the external attractiveness of your property when viewed from the street, is critically important. If you want to see how your house looks to strangers, go across the street and take a good, hard look at it.No matter how magnificent your house is on the inside, many buyers willdrive by your house without stopping if the property lacks curb appeal. Yourhouse’s exterior appearance and landscaping either attract buyers or repulsethem. You can enhance your house’s curb appeal through some tried and true ways:
Painting your house’s exterior before you put it on the market can be expensive (unless you do it yourself), but it’s one of the best ways to increase your curb appeal provided that you use colours that conform with your neighbourhood’s decorating norm. White, light greys, or soft tans are safe choices for exterior walls. If your house doesn’t need a new paint job, at least touch up window frames, front shutters, gutters, and down spouts and have your house gently power washed by people who know what they’re doing. Also, be sure to give your mailbox and front door a fresh coat of paint. Greet prospective buyers by dressing up your freshly-painted entrance with a new welcome mat.
A freshly mowed, neatly trimmed lawn gives your house a well-maintained appearance. Don’t leave toys, lawn equipment, or garden hoses scattered around the yard. You can make your grass look extra lush and green by fertilising it in the appropriate season.
Sweep your sidewalks daily. A badly cracked, crumbling sidewalk is a lawsuit waiting to happen if someone trips and injures himself due to the sidewalk’s poor state of repair. In addition, a poorly maintained sidewalk creates a terrible first impression of your property. Compounding the problem, buyers know that if you don’t fix the sidewalk, they’ll have to do it. Patching cracks or replacing damaged portions of a sidewalk prior to putting your house on the market is money well spent. Keep cost to a minimum by getting bids to do the corrective work from several reputable contractors.
Filling flowerbeds with seasonal flowers is an inexpensive way to add colour and charm to property. Choose bright, fresh colours that draw buyers’ eyes to otherwise ignored areas of your yard. Don’t forget to keep flowerbeds watered and weeded throughout the marketing process until your sale closes.
Be sure that all gutters and downspouts are in place and clean. Replace missing roof shingles and broken or cracked windows. Repair cracks in your driveway and remove large oil stains. Replace or repair broken stairs, torn window screens, broken or missing fence slats, and defective doorknobs. Make sure that your front and back doors, garage doors, and all windows open easily. Check exterior lights to be certain that they’re working properly.
Keep your windows spotless inside and out throughout the marketing period. When you’re not home, curious buyers attracted by the For Sale sign will peek through the windows to size up your house. Don’t let their first impression be windows covered with cobwebs and smeared with fingerprints. Don’t forget that interior window treatments can be seen from the outside. Worn or faded drapes or lopsided window shades need to be replaced or removed.
Get Rid Of Clutter
Clear everything you don’t need out of the garage. Friends and family who live nearby can be a great source of temporary places to stash your excess stuff. If you can’t clean your garage out, at least keep the door closed to conceal the mess from prying eyes. Store recycling bins in at a concealed spot at the back of your house. Don’t have a fleet of cars, trucks, boats, and campers cluttering up your driveway or parked in front of your house.Interiors sellCurb appeal draws buyers into your house. Appealing interiors make the sale. But you don’t have to spend tens of thousands of dollars on your house prior to putting up the For Sale sign. On the contrary, the little things you do generally give the biggest increase in value.
Clean, scrub, and polish your house. Your stove, oven, refrigerator, microwave oven, and other appliances must be spotlessly clean inside and out. Scour walls, floors, bathtubs, showers, sinks, and faucets until they sparkle. Clean or repair tub and shower grout. Don’t forget to clean the ventilating hood in your kitchen as well as the dusty heating and air conditioning vents throughout your house. Buyers will notice strong smells as soon as they walk through your front door, so eliminate smoke, mildew, and pet odours. Cleaning drapes and carpets helps get rid of odours. So does cleaning your cat’s litter box daily. Remove ashes from the fireplace. If you’re a smoker, clean all ashtrays daily and take your smoking breaks in the great outdoors until you sell your house.
Use air fresheners to keep your house odour free. Open windows at least ten minutes every day to let in fresh air (unless you live near something emitting an undesirable odour). Whether you do the work or hire someone, make sure that your house is spotless and smell-less. Fix drippy faucets. If any of your sink or bathtub drains slowly, unclog them. Just as car buyers love to kick tires, some property buyers test houses by flushing toilets and running water in sinks and bathtubs to check drains. Buyers consider leaky faucets and clogged drains a sign of poor maintenance and, more often than not, they’re right!
Get rid of clutter. Removing clutter increases the perceived size of your house. Eliminating clutter and excess furniture makes rooms appear larger. Try this simple test: take shoes, sweater boxes, and so on off your closet floor and look again. Small rooms such as closets and bathrooms seem larger without a ton of stuff all over the floor. Where furniture is concerned, less is more. Go through your house room by room with a friend who isn’t a hoarder. Get their opinion on what to eliminate. Set a goal of getting rid of at least a quarter of the furniture in each room, although half would probably be better. Big furniture such as large sofas or grand pianos make a room look smaller. A glass table, for example, seems smaller than a solid wood table of the same size.
If you want a better idea of what your room looks like, take pictures of each room. Remember the rule of three: no more than three items should be on your kitchen and bathroom counters, table tops, and mantels. Keep dirty dishes out of the kitchen sink. Store, sell, or give away surplus or bulky furniture. Recycle those stacks of old magazines and newspapers you’ve been saving for no good reason. Don’t just move stuff into the attic or garage. On the contrary, dump all that junk from your attic, basement, and garage that you’ve accumulated over the years. Closet space sells houses. Create additional space in your closet by weeding out all those old clothes you never wear anymore. Clean and organise closets, bookcases, and drawers. Like it or not, serious buyers inspect your closets and open built-in drawers. Be sure that they’re neat and roomy. Closets look more organised if you replace wire hangers with matching wood or plastic hangers.
Make cosmetic improvements. Painting isn’t expensive if you do it yourself, but be careful when selecting interior colours. Lighter colours make rooms look larger. Avoid cherry red, canary yellow, cobalt blue, emerald green, and other bold colours with strong visual impact. You may love the effect, but you aren’t the buyer. Stick to conventional whites, soft pastels, warm tans, honey, taupe, and other neutral colours that won’t clash with most prospective buyers’ tastes. If, like most basements, yours is dark and gloomy, paint the walls and ceiling a light colour and put the highest wattage light bulbs that you can safely use in your light fixtures to brighten up the space. Repair cracks in the floor. Just because we recommend using neutral colours doesn’t mean that you should turn your house into a bland, boring blob of mush.
You have our permission to give it visual spice. Use fabric – area rugs, tablecloths, napkins, sofa cushions, window curtains or drapes, bedspreads and quilts, bath and hand towels, shower curtains, and so on – to create temporary colour accents in rooms. Unlike other more permanent improvements, you can take these items with you for use in your next home. You can also use flower arrangements to add bright splashes of colour to rooms.
In a red-hot seller’s market, just sticking a For Sale sign in your front yard produces all the buyers you need. When you have five buyers for every good property on the market, advertising isn’t so critical. Unfortunately for sellers, the market isn’t always hot. When your neighbourhood is a forest of For Sale signsand buyers are few and exceedingly far between, merely getting a buyer’s attention is a major victory. The key to selling your house for top dollar – even in a dismal market – is simple: implement a broad-based advertising campaign to generate spirited buyer competition for your property.Advertising isn’t a cure-all. Glitzy advertising won’t sell a house that’s in terrible condition, poorly marketed, and overpriced to boot. Give buyers credit for having a snippet of knowledge about property values and a smidgen of discernment. Think of advertising as the setting for an engagement ring. The world’s most beautiful setting can’t transform a cheap zircon into a priceless diamond.
A stunning setting will, on the other hand, heighten the appeal of an appropriately exquisite diamond. Research company Matusik Property Insights monitored the origins of home buyers in Brisbane and found young families and first home buyers typically move less than 4 kilometres when they buy. Older buyers tend to move greater distances: typically about 10 kilometres. Only 18 per cent of buyers were from interstate. This means that even in Queensland, Australia’s biggest destination for interstate migrants, eight out of ten buyers are ‘local’. Add that to the typical behaviour of hopeful buyers. Home hunters drive around their target area to get a feel for the suburb and to look for For Sale signs. Given that potential buyers may already live close by, or be trawling the area, sellers can attract their attention with good signage and well-placed fliers.Several themes recur in the stories of private sellers. The buyer is often found in the local neighbourhood. Sometimes apartment buyers are foundamong those renting in the same block. Buyers drive around favoured areas looking for possibilities. There are simple ways to tap these possibilities, and they don’t cost much.
The Internet is a major weapon for private sellers. Posting photos and details of the property on the web is an inexpensive way of reaching people. And it’seasy to manage. There’s a reason the Internet is being used more by home seekers. On the big web sites you can key in the suburbs you want and call up all houses in those areas. Or you can request houses in a price bracket. Real estate agencies don’t matter on the Internet. You access information according to the area, dwelling type or price range you want.
- The Web is therefore more buyer-friendly than newspaper property guides, and you get more information and visuals.
- A staggering 85% of consumers identify the Internet as their primary research tool, and in terms of where real estate leads come from, 55% of enquiries are now coming from the Internet.
- The biggest player in the Australian online real estate advertising game is realestate.com.au owned by the REA group. Realestate.com.au is Australia’s No. 1 property site, with over 3 million people visiting the site each month.
- In fact, so many people use realestate.com.au that is has more unique visitors than the next 19 competitors combined.
- Every month since October 2000 they’ve helped more people find a home than any other Australian site.
However the problem lies in that private advertisers such as you cannot advertise on realestate.com.au and other industry-only websites without first going through a conventional agent and paying enormous advertising costs and commission fees. Owner-assist websites such as For Sale For Lease are a window of opportunity for private advertisers as they offer a hugely reduced advertising cost on industry-only websites because they involve the owner in the sale of their property. The only two things that the owner is required to do is answer enquiries about their property and conduct Open For Inspections (OFIs).
Often the buyer is a friend, or a friend of a friend, or someone known to a work colleague. Signage is often a key ingredient and doesn’t cost much.Sellers may also consider pointer boards on nearby major roads or intersections.A humble, low-tech For Sale sign stuck in your front yard or nailed to your house is, without a doubt, one of the most effective ways to tell folks looking for a home in your area that your property is on the market. Real estate brokers know that sign calls (people calling to get more information about a house after they see the For Sale sign) are far more likely to result in a sale than ad calls (people calling about property they read about in an ad). Why? When ad callers find out the location of the advertised property, the style of the house, the age of the house, or some other basic fact they’d already know if they’d actually seen the property from the street, they more often than not reject it.
Sign callers, on the other hand, obviously like the neighbourhood and at least the property’s exterior, or they wouldn’t have called; they have a higher probability of being serious buyers.Good signs are simple and large enough for people to read easily. To attract people driving by your house, use a two-sided sign placed perpendicular to the road so that people can read it from either direction. If you have a corner lot, use two signs so both streets fronting your house have signs. Be sure that your sign makes a good first impression. Recycling is fine, but a worn, dented, faded sign makes your property look equally tired. Don’t put up the sign before you’re 100% ready to sell, because after the sign goes up, you will start receiving calls.
Brochures are an excellent way to advertise for next to no money. Simple brochures with photos and information can be cheaply produced, then dropped in letter boxes, pinned on noticeboards and distributed among friends or work colleagues. Alternatively you may wish to consider newspaper advertising. Amulti-week program of expensive display advertising is not needed. Buyers can be found with simple classified ads. There is no need to spend more than a few hundred dollars on newspaper advertising.
So you’ve found a potential buyer and now it’s time to sit down and negotiate the right price – one which will be high enough for you the seller, and low enough for the buyer. Unfortunately no one can offer you a magical, one-size-fits-all, guaranteed best negotiating strategy that you can use in every situation, because no such strategy exists. Smart sellers adjust their negotiating strategies to accommodate such factors as whether they’re dealing from a position of strength or weakness, how well priced their houses are, how motivated the buyers are, and, of course, how motivated they, themselves, are. The following are common tips and strategies on how to negotiate well in every situation, including selling your own property.Anatomize challenging issues – they’re oftentimes comprised of multiple layers.
Once you’ve dissected the problematical point into its different parts, pan back and look at the negotiation as a whole. Avoid treating each individual part as its own separate zero-sum negotiation. Build packages of agreement with give and take on the various issues.Negotiating requires the confidence to ask for what you want, and the focus to get it. Negotiating also provokes strong emotions, and emotions can cloud a person’s focus. Staying calm and not confrontational keeps aggression at bay and the negotiation on track. Asking questions sets a positive tone for the other party, and for you. Cultivating curiosity allows you to unpack the situation, focus on the important issues, and rein in your emotions. It’s hard to be upset and curious at the same time.Define success before you come to the table. What do you really want? Generally, people lack confidence when entering a negotiation, and they set their aspirations too low. Thinking about what you can achieve and then pushing it a little is always a good idea.Determine your best alternative. This is not your bottom line, this is your plan if negotiations fail completely. Your best alternative is in your control and you can always work to create a better one. Write down your best alternative with your aspiration.
Your aspiration and best alternative delineate the range of possible agreements for you. If the person across the table offers you something below your best alternative, don’t take it. It helps to think through all the options that will work for you, and to write them down. Take your notes into the negotiation with you – they offer a touchstone to keep you focused. What do the people across the table want? What’s their best alternative? Compare their range to yours. Where do the two overlap? That’s where you will find agreement.And lastly, let your buyer know that you hear what they want, understand why they want it, and think that it’s a legitimate interest – even though you may not be able to deliver it. This will often make further negotiations much easier.
TIE UP THE LOOSE ENDS
You’ve successfully generated interest, found a buyer and negotiated the price. Now you have to tie up the loose ends and finalise the sale. When someone makes an offer on your house, don’t take your property off the market until you’re sure that the buyer is going to be able to swing the deal financially. Few buyers are wealthy enough to pay all cash for your house. Most people need to qualify for a mortgage. Ideally, the buyers are preapproved for a loan with a conventional lender. As opposed to merely being pre-qualified – a quick financial once-over, pre-approval means that they’ve gone through a rigorous financial examination. If, however, the buyers are just starting to shop for a mortgage, inquire about their occupations, incomes, and the source of their down payment for the purchase. When the buyers apply for a mortgage, get their permission to contact the lender to find out the likelihood of loan approval. At this point you should consider hiring a professional lawyer, settlement agent or a convenience to organise all the paper work including contract of sale, Section 32 statement and other documents. They will also be the best people to advise you on all the taxes and related payments that you may need to settle during the handover.
Other things you may wish to consider at this point:
- Keep copies of the closing and settlement papers.
- Keep proof of improvements and prior purchases.
- Invest your new earnings in a good money market fund.
- Double check the taxes you may need to pay.
- Keep in mind that renting could be an option for the future.
- Consider your personal finances if you are planning on another property purchase.
- Think through the deposit you wish to pay on the next property.
- Remember to send change of address notices!