In March 2020 we made the decision to not engage a real estate agent and to sell our home privately instead. We didn’t rush into it. We weighed up a bunch of things before taking the plunge. In this post we explain our top 5 steps before selling your house privately for big dollars. We sold our home in Queensland, Australia. But our top 5 tips apply equally to South Australia, Victoria or other states. And if you are not in the land down under, the concepts we go through are pretty universal so our tips should help you too.
If’ you’d like know what we did to sell our house privately for a price $40,000 above real estate agent appraisal and $55,000 above bank valuation, read on.
Why consider selling your house privately?
For the money it saves you financial freedom seekers! If you’re on your financial independence journey with us, every dollar counts. Real estate agents routinely charge commission of between 2% and 3% of the total sales price here in Queensland. Plus, they charge you for ‘marketing costs’. These are the cost of photos, online listings, flyers and features in agency direct marketing and other publications.
In commission alone, selling privately saved us over $20,000.
Sell your home yourself websites
In our experience, marketing can cost you anywhere from several hundred to a few thousand dollars. Listing agents often make money on their marketing packages as well. But there are other services (at least in Australia) that can offer the same online exposure for a lot less. We used For Sale by Owner. Our total cost for this service was around $700 and that got us listed on realestate.com.au, full control over the listing, as well as a message forwarding service for direct inquiries.
Just know, these types of services are purely online. No print ads in the paper. But these days if you’re in a major city selling a middle or a lower income property most of your leads will come from online. In some regional towns print ads in the newspaper still make up a large proportion of sales leads in the local property market. These ads can cost a couple of thousand dollars to run depending on size of spread.
Will an agent always get a better price?
Some folks might say a real estate agent will always get you a better price, and this more than covers what you pay them in commission. Not necessarily peeps!
Is the agent working for you or for themselves?
Here’s an anecdote from our experience to demonstrate why it’s worth understanding the different motivations of agent and owner. Friends buying in our area at the same time we were selling placed an offer on a home that was selling through a listing agent. Although there ended up being multiple offers on the property, the listing agent didn’t even bother to take the process to a multi offer situation. A multi offer situation is when all offerors are informed they have one last chance to put their best offer on the table and are given a deadline to do so. It can build a sense of strong competition among buyers and is designed both for transparency and to push the price up. Good for sellers. Fair for buyers some would say.
It’s important to understand that even if you pay a real estate agent to sell your home, the agent does not share the same financial incentive as you, the owner. For the agent, the extra time and effort involved in a running a multi offer situation may outweigh the few hundred bucks in commission extracted from pushing the price $10,000 higher. Sometimes, they’re better off just churning through the sales instead. But 10 grand is a lot of extra money to put towards our financial freedom cause! In this case, our friends had more money but were not given the chance to show their hand. What a shame for the owner…
Do these 5 things before selling your home privately
So you’ve read through the why you might sell your home yourself. But what do you need to do or know before heading down this path? Here are our top 5 tips:
Know what type of market you are in
The best time to sell privately is when you’re in a seller’s market. We made the decision to sell ourselves after watching the local property market for 6 months. We noticed that there were fewer and fewer homes coming on the market and that new homes in the middle-income bracket went quite quickly under contract. We also noticed that listing prices were rising over this period and that listing tactics changed from nominating a ‘for sale’ price to advertising as ‘offers over’. There were also few listing to choose from.
These are all indicators you’re in a seller’s market, which is the best possible time to sell your home yourself. A seller’s market is simply when there is more demand than supply, or more buyers than there are homes for sale.
So if you’re looking for information about your market, watch realestate.com.au. For suburb market data such as demand levels for homes in your area, we recommend checking out the little-known investor resources on realestate.com.au – here is a link. Start watching listings for your suburb on realesate.com.au. Realistically, 6 months before you want to sell but 3 months at a minimum. Count how many listings there are each month. Notice many are under offer at any one time. Pay attention to how they are advertised.
Understand the market value of your property
Getting to a value is pretty subjective until you actually put that question to the market. You can get a valuation done or you can look at comparables in your area to form a view yourself.
You can get a desktop valuation which is cheaper but less accurate. You simply buy a report online from one of the major property data providers. A report by a valuer will mean a visit to your home so this is more expensive but arguably more accurate. Beware though peeps, a valuer will be conservative in their valuation to avoid issues of liability. So in a seller’s market you could reasonably expect a valuer to come in under the true market value.
If you research value yourself you’ll need to look at ‘market comparables’. These are properties in your area like yours that have sold recently. The best way to find free market comparables if you are in Australia is doing a property address search on realestate.com.au or domain.com.au or on onthehouse. These sites will give you an estimated value for your home based on recent property sales data. You can also look up your neighbour’s homes, especially if they’ve sold recently. If you do this yourself make sure you are comparing like with like. We’d suggest looking for similar properties on your street with a similar aspect. The property features, condition and aspect can make a big difference to value.
Understand the process and paperwork to sell your home privately
If you sell your own home you will be in control of the selling process so you need to have a good idea of the process in your state. Each state has its own peculiarities and legal requirements. Engage a solicitor and have them take you through the steps and things to watch out for. We recommend a solicitor rather than a conveyancer if you’re selling your own home as you may need to call on the legal expertise. A solicitor will also help you with the paperwork to sell your home yourself. They can provide a standard property contract (these are generally not available for free), help you fill it out and take care of title transfer paperwork. If you’re confident you understand the process and paperwork after you’ve done this, you’re good to sell yourself. If it’s still a bit of mystery, you’ll probably need a listing agent to help you through.
Work out whether you have the skills needed to sell well
By sell well we mean for a great price. There are some skills involved and if you don’t have all of them, you’ll need to find folks that do to help you.
Strategizing – Are you confident that by selling yourself you can get a good price? If you have no idea what your selling strategy might be before you start the process, it’s probably best to use an agent. A strategy to sell your own home should cover how you present and market the property, how you price it, how you run your open homes and any private inspections. All of these things should be informed by your market research and knowledge of the target buyer.
If you don’t have a strategy in mind to maximise your price, then you probably won’t end up there. Run through your plans with your solicitor first to make sure its all legal.
Interpersonal skills – ultimately you’re selling something and to do that you’re dealing with people. Can you connect with others, build rapport and trust quickly and keep calm in tense situations? Are you good with people? If you don’t have these skills then it will be tough to run great open homes and private inspections, and to do the follow up phone calls agents would normally do to talk up the price or seal the deal.
Copy writing & design – can you write emotive copy that promotes your home’s selling points and appeals to your target market? This is key to converting realestate.com.au traffic into inspections. You also need to make your own marketing collateral when you sell your own home. Can you use apps like Canva to design your own professional flyers for open inspections?
Negotiation skills – these will also come in very handy when the offers come rolling in and contract process starts. Also, when things get tense, as they often do in property sales.
The final word – should you do it?
We say go for it, if the market conditions are right and you have the skills. If you can tick these 5 boxes it’s absolutely worth it. If you are in a buyer’s market however, this is when the real estate agent buyer databases and their sales experience is worth the commission they are paid.
