With over 40 years’ experience as a lawyer, I have a few thoughts on selling houses, and whether you should sell your house privately, or use a real estate agent.
Private sale – will you really save money?
First of all, you can sell your house yourself, but it is difficult, so I don’t generally advise it. The attraction of course is that you can save on the real estate agent’s commission. That sounds good in principle, but with a private sale, buyers will look for a reduction in price, so there is often little saving to be made in reality.
Benefits of using a real estate agent
Using a real estate agent, on the other hand, offers a number of benefits when selling your house.
Real estate agents have objectivity, and recognise what should (or should not) be done to attract a potential buyer. This can save you both effort and money.
Real estate agents also have access to several useful networks, including potential buyers and advertising media, which are not always available to the private seller.
Real estate agents also have the experience and skills to close a sale – which of course is the whole point.
So – my advice is to use a real estate agent to sell your house, unless you have special skills in the areas mentioned above, and a lot of determination too.
Which real estate agent?
There are lots of good and reputable real estate agents in Whangarei, so my advice would be to ask around for recommendations.
You can opt for a ‘sole agency’ agreement which gives one real estate agent the exclusive right to list your property, and often comes with benefits in terms of marketing, as well as more dedication from the agent. Alternatively a ‘general agency’ agreement allows any number of agents you choose to list your property, and generally allows you to sell privately too – as long as the agent hasn’t introduced the buyer to the property first.
Should you sell your house by auction, tender or selling price?
Auctions are good at bringing out buyers and can provide excellent results. But auctioning your property requires work and expense by potential buyers before the auction, which may put some buyers off. That’s because there is no opportunity for buyers to negotiate other terms when buying at auction (e.g. delayed settlement, vendor finance), which might otherwise allow them to make an offer. And unless there are many bidders, you will only get the price the last unsuccessful bidder was prepared to pay. There are many advantages to selling your house at auction, but some disadvantages too.
Tenders are a good alternative to auctions, as buyers generally put in their ‘best offer’ and have flexibility in the terms of sale. You can also go back to negotiate with potential buyers. A closing date for offers is a similar process.
Stating the selling price or asking price can work, but you can never increase your price, only reduce. If you have set the price too high, your property won’t sell.
It’s best to take the advice of a real estate agent before choosing the sale method, which is yet another good reason for using a real estate agent rather than selling privately.
Get reports to make it easier for buyers
The easier you can make it for buyers, the better. Providing details of the title and easements/covenants is a must. Obtaining a land information memorandum (LIM) is useful, as is a building report, and a “P” test.
Seek your solicitor’s advice
Whether you choose to sell privately or use a real estate agent, you should always get advice from your solicitor before signing the sale and purchase agreement. It generally costs you very little to seek advice, but it may save you complications and costs down the line, so it’s well worth it.
Ian Reeves LLB has been a partner of Henderson Reeves for 33 years. His law experience extends over 45 years of practice in New Zealand, England and Australia. Ian leads the property law team at Henderson Reeves and has broad experience in commercial and business law, with a special interest in farming and trusts. He has been a presenter at an Auckland District Law Society trust seminar.