The primary reason why some sellers choose to sell their property privately without an estate agent is to save on agent commissions, which can be very high.
Unfortunately, some property buyers take the absence of an estate agent commission into account by offering less for a private sale property. For others, there is a stigma associated with selling privately that can discourage them from even making an offer because they don’t want to deal with the seller directly.
The biggest challenges in selling your home yourself are:
- being able to market the property effectively
- managing the buyer-seller negotiations and relationship; and
- avoiding the legal pitfalls associated with the sale transaction.
Overview of selling privately versus an estate agency sale
Selling by Owner (Privately)
In a typical sale by owner transaction, the owner sets the selling price, markets the house (usually online), shows buyers around the property, negotiates the sale and project-manages the sale process.
Assuming a serious buyer is identified and all potential issues and price have been agreed, a conveyancing attorney then handles the legal matters. The property owner may have to collect and drop off documents as well as arrange compliance certificates (beetle, electrical etc.), and will do much more running around than if an estate agent were mandated to sell the property.
At Steeple, our Regular online low commission service falls between a private property sale and a traditional estate agent since we do everything a traditional agent does except show buyers around. We also have a Private Sale Assist service where the seller finds a potential buyer privately (e.g. by listing privately on a property website) and then contacts us. We take care of the whole offer-to-transfer process e.g. handle negotiations, prepare a customised offer to purchase, assist with bond financing etc. Find out more.
Estate Agent Sale
If the seller appoints an estate agent, the estate agent helps to value the property and is responsible for finding a buyer, usually by listing online, and closing the sale. The estate agent will help to co-ordinate the sales process but a conveyancing attorney will finalise the property transaction, as is the case with a private sale. The owner’s involvement is usually restricted to preparing and tidying the home before it is visited by each potential buyer.
Can a property that is sold privately be marketed effectively?
The ways in which a property can be marketed include:
- Advertising the property in the newspapers and magazines
Both a private seller and an estate agent can advertise in the newspapers, although some sections of the print media are restricted to registered estate agencies so a private seller is at a disadvantage. Print advertising used to be the key way in which a property was marketed but it is now overtaken in importance by internet marketing.
- Advertising the property on Property24, Private Property etc.
Agents will upload a property’s details to their estate agency’s website as well as to other property sale websites (“portals”). For cost reasons, usually an estate agent will only upload details to one or two of the main portals. For a sale by owner (FSBO), the owner can send the details to as many property portals that allow private sales as they choose (and pay for each listing). These days buyers go to the internet when they are looking for a property to buy so this is definitely the most important place to advertise.
- Putting up a For Sale board
As a private seller, if you have a professional-looking For Sale board then you should be able to compete for attention with an estate agent’s board. But many South Africans are suspicious of a private sale, believing that there must be something wrong with either the property or the seller. A “For Sale by Owner” board is therefore usually less effective than a For Sale board from an estate agent.
- Estate agent buyer lists
An estate agent who has sold in an area may have a list of potential buyers. If the seller does not appoint an agent then they will have to do without this potential source of buyers, although in practice this is more hype than substance.
- Networking amongst estate agents
Estate agents may have either informal or formal networks that may help them to source buyers. These networks are clearly not accessible when selling your home privately.
When marketing a property, someone doing an FSBO cannot compete equally with an estate agent for the reasons given, but there is always an element of luck involved!
Is a buyer more likely to buy a property from an estate agent or from a private seller?
There is some debate about whether an estate agent or an owner selling privately themselves is better at getting a buyer to put pen to paper. Top estate agents are trained sales professionals and may consider themselves to be more skilled at handling buyer objections. However, owners know their house and area best and so buyers usually prefer being able to deal directly with them.
Many believe that buyers have to “fall in love with the house” in order to buy and that no amount of sales talk by an estate agent will get a buyer that doesn’t like a property to change their mind. A home is a substantial financial and emotional asset and people cannot be persuaded into buying something they don’t really like. However, as selling and buying a house is an emotional experience, it can help to have an experienced estate agent as the intermediary between the two parties. A good agent can also help the buyer to obtain a bond, which is often a pre-condition in the sale agreement.
Ultimately the success of a private sale depends on the owner’s marketing skills and budget, their knowledge of the legal process, as well as their confidence and emotional maturity – because buyers can be very critical.
At Steeple our selling model combines the owner’s personal touch with the negotiation skills and knowledge of an estate agent so that the buyer has a great experience and is therefore more likely to buy. See all the features of our service.
A comparison between an estate agent sale and a private sale
Advantages of a selling a home yourself
- You save on estate agent commissions, which can be substantial
- You have control over the process and can show your house when it is convenient to you
- You may feel it is safer since you don’t have to entrust your keys and alarm code to an estate agent (but you have to be present when people you don’t know enter your house).
Disadvantages of selling privately
- You don’t have the training of a professional estate agent and this can cause stress because you are taking decisions about (probably) your major financial asset
- It can be difficult negotiating a price and other issues directly with a buyer without having an agent who can smooth the waters
- You need to do more work yourself such as showing potential buyers around your home and liaising with buyers, conveyancers, bond consultants etc.
- What you save in commission you may lose in a lower offer price for a “by owner” property transaction
- Realistically, you are less likely to find a buyer as quickly
- You have to pay your own marketing and advertising costs, upfront, even if you don’t sell
- As the seller you can’t advise a buyer about obtaining a bond, which is often crucial to a sale.
Step-by-step instructions to sell your home yourself
- Prepare your home for the sale so you can sell for top-dollar. Read our guide for more: Home Staging Secrets to Sell a House.
- Determine a selling price. Look online for the selling prices of the properties with the same number of bedrooms as yours in your area on Property24 or Private Property. Also compare your home to others in your suburb that have recently sold with a Comparative Market Analysis from Lightstone. Since your home is a major asset, we would suggest that you also get the opinion of some estate agents or professional valuers who know your area.
- Have some great pictures taken of your property. Photos are critical to attracting buyers, so don’t skimp. Read our guides on preparing your home for the photo shoot, as well as a tutorial on how to take great property photos if you’re doing it yourself.
- Register with Property24 (the biggest property site by far), Private Property, or Gumtree (free) and pay the necessary fee to list your property privately online. Then upload your photos, write the description, and publish…
- Show viewers around your home.
- If someone wants to make an offer, the simplest solution is to use Steeple’s Private Sale Assist service to make sure everything is taken care of professionally and there are no nasty surprises. Alternatively, you can source an Offer to Purchase document and customise it as necessary. Once signed by both the buyer and the seller, a conveyancer should be able to move the process along from a legal perspective.
Steeple’s Regular or Private Sale Assist services are the best solutions for the modern seller who wants to sell cost-effectively. There is no need to choose between selling privately by owner or an estate agent when you can have the best of both worlds!