This is based on thoughts coming from some surveying I did, a while ago.
In Wellington, about 7% of ads were private sale. At that time only 4% of sales were private, & that included non market transactions. (That is, selling to the friend that had always wanted it, selling within families etc.) So probably more than 50% of all private sales attempts ended up concluded by a realtor. I don’t know if web sales have increased. Anecdotal indications are it doesn’t seem to be very widespread
Why do they try? To save a fee, I think. And/or because no agent will take it on at “Their Price”.
I think a lot believe their house has only one value to all purchasers, like a car of a certain year and mileage. They think that all that has to happen is put the property in front of the market, and pocket the fee an agent would charge.
They think it is a rational transaction, and that selling is not a skill. Selling is actually the most highly paid skill in the world. Look at Donald Trump and Richard Branston.
So what seems to happen?
There are several flaws to sellers pocketing $10 to $20 000.
Firstly the buyer usually deducts the real estate fee before they offer…and 50% of sellers do the same, in their minds too! So the buyer saves the fee, and the seller does the work for nothing!
Security issues, or being unable or willing to show the house at requested times cause some to falter.
Personalities kill the deal. remember this is 15 rounds of the sellers greed vs the buyers fear…a potent battle!
A real estate adage, often true is “to kill a deal, put the seller and buyer in the same room”. One reason real estate salespeople are accused of bad conduct, or outcomes, is because one party or the other has been a total pillock, and demanded a totally unreasonable thing be conveyed to the other party! So shoot the messenger! A big part of sales success is keeping the two parties reasonable to each other!
Clever buyers con weak sellers. Self explanatory. I hear these buyers boasts all the time. Of course they try it through agents too!
Private sellers pay very high rates to advertise in newspapers, and cant get into the Real Estate magazines. Trade Me offers more than it delivers, for real estate, in my opinion. The owner doesn’t have a pool of existing buyers, or a team of salespeople. So private sales usually get only a small number of inspections. Less inspections, less offers.
Very occasionally sellers underprice. I heard someone recently who claimed to buy a property they said was worth$1.4 million in Oriental Bay privately.They bought it off the first ad, paying the full asking of $1.1m.
Joho Lomu’s house in Mirimar was sold privately ( I saw through it at the time) and resold for huge profit soon after. I was told how his manager allegedly handled the sale, by the private buyers. I wont comment on the story!
So my Stats…total guess:
10% of private sales attempts do as well as the best agents could. Often these sellers have sales skills
10% sell for a “normal” price, & save the fee.
20% sell for “normal” less commission..IE do it for nothing.
5% sell for a poor price.
55% attempt, then give it to a professional.
Thats the way I see it.
October 24 2009 10:58 pm | Selling Tips