June 4th, 2010
Every time the Private Seller topic comes up, it seems to polarize folk into two very separate, and distinct camps.
For some reason, it also seems to engender a very defensive attitude in many potential sellers as well. (hence things like the “No Agents” bit on most Private Seller adds.)
I suggest it’s down to how they have been treated prior, in a generalization type of way.
Years ago I was listening to an agent call private sellers (FSBO for those offshore) and there seemed to be no time taken on the call at all. It was more or less “you’ve been on the market for 3 months now and no action, its time you tried me.” If they responded non-positively to his talk, then he’d find a way to end the call as quickly as he could.
So I guess against that sort of “perceived interest” in the individual seller on the other end of the telephone, it was no wonder, and possibly still to this day, no wonder at all…….that many private sellers aren’t bouncing out of their skin when they get a phone call from a Real Estate Salesperson.
From their past experience, and who knows….perhaps the additional experience of a friend or other family member, they have been forewarned to listen out for the tell-tale cues…..does it really seem like this person is going to help me like they are telling me…….or can I read through the lines…..and are they just after the sale.
However there are definite advantages to looking at the reasons why many sellers choose an agent, and that’s not just the stats that show over 50% of Private Sellers ultimately go with an agent anyway.
Last week a major international business magazine published an article about this exact topic. They headed up the piece Five Reasons Why You Still Need A Real Estate Agent and the article started this way;
Doing the work yourself can save money, but it could end up being more costly than a realtor’s (ED – Real Estate Agent in NZ speak) commission in the long run.
Obviously there were 5 take out points, so here’s my “New Zealanderised version” of them.
1. Better Access / More Convenience
Simply put, that a real estate agent is on the job full time to facilitate transactions between buyers & sellers. Experience has shown that buyers are likely to discount your property if they can’t get hold of you quickly or can’t view “right now.”
Real Estate Salespeople, and you have to pick the right one, are trained to know what needs to be done to get a “win/win” deal together, because that’s what they are paid to do all day long.
And if they are only young in the industry, then perhaps you should enquire as to their background…..do they come from somewhere in their recent past where they can point to demonstratable success in a previous vocation (even if it was not Real Estate) where negotiation skills were paramount and vital to the role …….or were they just working in a ……….?
You must re-assure yourself that this individual in front of you is working for you…………….or not (as in its the “just a job” mentality. If you call 5 Real Estate salespersons to offer you their presentations on why you should go with them, their company, and after-wards you feel they were all after only “the sale”, then I can’t blame you for considering a different option. Sad to hear, but obvious that in your case fellow members of the industry have let the team down. At the end of the day, yes of course, its about you……after all its one of your biggest assets that we are talking about here, not an ole single bed + base, Masport mower, or F & P Washing machine now, is it!
2. Negotiating Is Tricky Business
Although at first the prospect of direct negotiation between a seller and a buyer seems like an easy way to conduct a property transaction, the reality is often-times quite different.
The most common frustration of sellers seems to be the “I’ve had 2 couples last weekend, they both told me they loved it, but I haven’t heard back” scenario.
Some investors just love to buy privately, for exactly the same reason people like to buy an Auction property before the official auction date. In both cases to get it cheaper than what it would have been had the correct process been duely conducted.
In fact many of the Property Investment gurus, recommend this method of buying from Private Sellers because experience has shown that without a hard nosed Real Estate Salesperson getting in the way ……working for the interest of the seller, homes can literally….be brought cheaper.
The mere act of having a middle-man person (a messenger) can alleviate deal stopping statements, body language and emotion from getting involved.
In the article it was put thus;
A real estate agent can also play the “bad guy” in a transaction, preventing the bad blood between a buyer and seller that can kill a deal. Keep in mind that a seller can reject a potential buyer’s offer for any reason–including just because they hate his or her guts. An agent can help by speaking for you in tough transactions and smoothing things over to keep them from getting too personal.
3. Contracts Can Be Hard To Handle
In the old old days you used to put down “subject to finance” or another quite obscurely worded clause in your offer so that you had an “out.”
In case you weren’t aware in 2010 100,000 new lawyers are leaving Uni every year and they need an income.
I’ve had it reported to me that a seller actually challenged that clause last year, and the buyer was asked to stump up with supporting paperwork to prove in fact they did go through the whole loan application process. (this could also be cross-referenced against the CRA file to see that an inquiry was initiated, but…..) Turns out they didn’t….and the judgement went in favour of the seller. They lost their 10% deposit.
Even though we have a new 2008 Act that should not let any layperson out there assume that just because its there, that the paperwork they complete “will do.”
It can be a minefield, especially once lawyers get involved.
From the article…….
An experienced real estate agent deals with the same contracts and conditions on a regular basis, and is familiar with which conditions should be used, when they can safely be removed and how to use the contract to protect you, whether you’re buying or selling your home.
4. Real Estate Agents Can’t Lie
The new REAA 2008 Act has ushered in a world of much greater transparency to the whole Real Estate transaction process in New Zealand, and not before time.
This means greater security for the real estate buying and selling public. There are serious repercussions on any “wrong-doing” or unethical agent, and not just fiscal ones.
They will be lucky enough to have any disciplinary actions detailed in full alongside their name in the agents directory.
But there is one crucial difference here…..and the article in Forbes certainly draws attention to it;
In addition, most realtors rely on referrals and repeat business to build the kind of clientèle base they’ll need to survive in the business. This means that doing what’s best for their clients should be as important to them as any individual sale.
If you doubt that your agent has upheld his fiduciary duties, then they also mention the safety value……..
Finally, if you do find that your agent has gotten away with lying to you, you will have more avenues for recourse……
And one that comes up all the time – multiple offers……Hmmm can’t remember the last time I was ever told that happened on a Private Sale? But as the articles author Tara Struyk wrote…..
When a buyer and seller work together directly, they can (and should) seek legal counsel, but because each is expected to act in his or her best interest, there isn’t much you can do if you find out later that you’ve been duped about multiple offers or the home’s condition.
As a complete aside here, and almost a post in itself……….Private Sale buyers should be reminded here that they need to exercise extra caution for the same or similar resaons detailed in this post.
5. Not Everyone Can Save Money
Ok the proviso is that you are selling/or buying privately to save commission……….but are you really?
In the real world it is very unlikely that both parties will save commission, and should anything go wrong……..?
Again in a long story short version….I’ll let Tara tell it her way;
However, buyers who are looking to purchase a home sold by owners may also believe they can save some money on the home by not having an agent involved. They might even expect it and make an offer accordingly. However, unless buyer and seller agree to split the savings, they can’t both save the commission.
6. The Excitement Factor
Number 6, well I’ve added this one as an extra (there were only 5 points in the original article) but its so important that it needs to be stated.
Generally as a Private Seller, there may be you and perhaps your partner as the most excited people out there espousing the virtues of your fabulous home.
Considering that in Nelson there are dozens and dozens of agents ( at Summit I’m part of a 44 person on-the -road full time sales team covering the main Nelson-Stoke-Richmond corridor alone) and yet, it still takes all of us & the rest of the Nelson agents combined on average 31 days to sell a property…….now how long will it take you, if you are the only ones excited about your home?
The Bottom Line
In conclusion they offer a great reverse psychological way of finalising. They discuss the long lists of frequently asked questions (FAQ) that seem to dominate most Private Seller sites, and suggest that therefore all isn’t as rosy as it seems.
And as an endnote they ask the reader to consider this……
While there are certainly people who are qualified to sell their own homes, taking a quick look at the long list of frequently asked questions on most “for sale by owner” websites suggests the process isn’t as simple as many people assume. And when you get into a difficult situation, it can really pay to have a professional on your side.
I think they are trying to say, what at first might seem to the average person obvious, just like the above picture………….may not in reality be the case at all…….and that for as much as we take direction from them………that you can’t always judge by what would seem, at first glance, the most obvious signs.
** great reverse psychological method – I also tell many of my sellers that to prepare themselves for the selling of their property, when they happen to have a bit of time on their hands before they want action, then whatever selling price they have in the back of their mind, “armed” with that figure visit the weekend Open Homes to see what that figure will buy them, and then compare that to their own home. They will probably be doing this prior to whence they sell anyway, or even once the home is on the market…so I think its a great way for them to get in tune with the market to see what their money will buy.
Some times I’ve had them come back and say they can’t buy anything that they like and therefore aren’t going to sell…..ok but isn’t it great that they have found out now, and not after they have sold and have a looming deadline to work too…..?
Apologise a “tad” for the extra long post but didn’t feel there was any other way to cover it how I wanted to?