12jun private house sales hero default

Private house sales

Since Trade Me began its property section in July 2005, private sales have averaged 10 percent of total listings through buoyant markets and downturns. It seems there’s a steady stream of private sellers willing to give DIY real estate a go … and not pay a commission.

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Selling your own house can be time-consuming and stressful. It requires good planning and attention to detail. Not everyone has the people skills for it. You may have to do leaflet drops and run open homes.

You’ll also need to be easy to contact and be available to show buyers around. These are the tasks you’d otherwise pay a real estate agent to do.

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For what it is worth

The Real Estate Institute of New Zealand (REINZ) monitors the housing market. It provides monthly figures on your region’s days-to-sell, median house prices and market conditions. You can also read the property listings in your local paper to get a feel for the market.

You should get a report on your property’s value. Quotable Value (QV) sells reports online from $3.25 to $79.95, depending on the level of detail. The most helpful is the Comprehensive Property Report Guide ($79.95 for casual users, $67.95 for subscribers). It includes information on school zones and sales history, and a hazard summary.

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It can be tempting to economise on advertising. False economy?

Ian (not his real name) bought his house in a private sale after spotting a 3-line classified in the Wednesday paper for “a wonderful 4 bedroom home”. He says “apart from the classified, the only advertising they had was a home-made sign on the front lawn. At that time, they could have really ratcheted up the price with wider advertising. We would have paid another 30 grand for it – though of course I’m glad we didn’t! If I were to sell my house I would definitely do it privately, but I would never skimp on advertising”.

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Compliance risk

You need to know your property – inside and out – which means it’s a good idea to get a Land Information Memorandum (LIM) from your council. The LIM details everything the council knows about your property. This includes whether the land is prone to flooding or has had contaminated soil. Importantly, it lists building consents and certificates of compliance for any alterations or renovations.

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Conveyancing is the legal work that’s done whenever a house is bought or sold. It can include negotiating a sale-and-purchase agreement, checking the title of the property, obtaining a LIM, preparing the memorandum of transfer of ownership, and liaising with the buyer’s lawyers or other professionals.

Lawyers used to have a monopoly on conveyancing – until the Lawyers and Conveyancers Act established standalone “conveyancing practitioners” (conveyancers) in 2008.

It’s up to you whether you choose a lawyer or a conveyancer. As the seller, you can expect to pay between $736 and $1680 for conveyancing on a house with a mortgage, or $621 and $1360 for a house with no mortgage, depending on your location.

You can do the conveyancing, but you’ll have to order hard copies of documents and lodge them manually as LINZ’s online system is only available to registered land professionals.

Conveyancing’s also where the greatest legal risk lies. Once you’ve signed an agreement it’s legally binding – so mistakes are costly. We think you’re much better off using a professional.

The sale-and-purchase agreement sets out in writing all the agreed terms and conditions between buyer and seller.

When a buyer makes you an offer, an agreement is drawn up outlining the price and any conditions the buyer wants to include. It should include the chattels to be sold with the property, the rate of interest paid by the buyer for any late payments, and the date of settlement. Conditions placed on the sale usually include finance, valuations and council LIMs, building and engineer’s reports, or sale of the buyer’s home.

Once buyer and seller are happy with the agreement, it’s signed and becomes legally binding. Real-estate agents usually do this stage of negotiations – so if you’re doing a DIY sale you must get a lawyer or a conveyancer to help you draw up the agreement. They should also check it before you sign. There can be legal fish-hooks with any agreement, so professional advice can save you time and money.

You’ll also need a trust account – either your lawyer’s or that of the conveyancer – to hold the buyer’s deposit until the sale becomes unconditional. If a buyer pulls out of the sale after this point, they’re no longer entitled to a refund of their deposit. However, without a trust account, you might never have seen that deposit in the first place.

Report by Amanda Lyons.

Success story

Sarah (not her real name) sold her house the DIY way. It wasn’t difficult but she puts this down to her circumstances: “Our house was in an area where all the properties were of the same period, style and size. We were able to go to other open homes in our street and see what their values were, which gave us a good idea about ours.”

For advertising, she placed an ad in the paper, listed the house on Trade Me Property and put up her own signs on the lawn. “The advertising cost us under $500.”

The house sold quickly, as had others in the area, and for higher than the listed price. “The negotiation was the hardest part, but you have to decide what your bottom line is. A real estate agent may have got more than we did but I doubt it would have been enough to make up for their costs. We wanted a fair sale for both parties and I think we achieved that.”