Big reasons not to sell your own home

Private property sales are hugely tempting if you want to save on commission, but there can be problems. Lanice Steward, managing director of estate agency Anne Porter Knight Frank, points out the pitfalls.

In these more difficult economic times sellers of homes will be tempted to go the do-it-yourself route and save on agent's commission - but all her experience in property indicates that this can be disastrous.

There is considerable propaganda now in favour of going it alone with the help of private seller organisations and a perception in some circles that using them will result in a better price.  I must say categorically that this perception is based on misunderstandings of the role of the estate agent and in every case that I have come across stems from ignorance of what the agent does and a lack of appreciation of what he or she can bring to the negotiation and sale process. 

It always amazes me that people who would never dream of trying to dispense with a doctor to diagnose or treat their own ailments or with a mechanic to service their motorcars somehow or other persuade themselves that they are qualified to market and sell their largest asset.

DIY home sellers often begin their pricing/valuation investigations by visiting show houses in their region.  Those will almost always be overpriced but without the relevant data to assess their real value in the current market, the seller all too often then follows the trend and overprices. In exceptional circumstances, the seller under-prices (because one or two nearby homes have been wrongly priced). 

Very occasionally the DIY seller "gets lucky" and finds a buyer who puts in a high price.

Far more often, however, they find that

•  Their DIY advertising costs are high and eat up their assets;

•· The possible buyers haggle and attempt to downgrade their price by pointing out drawbacks and defects;

•· The emotional strain of looking after people tramping through and criticising their home wears them down;

•·  Many apparently serious buyers are in fact chancing it and know that their bonds will not be approved; and

•·  If and when they find a genuine buyer, they lack the legal and negotiating skills to get a good deal.

Emotional flare-ups and painful silences often characterise the operation of a DIY seller.

On the other hand, when an agent is from a reputable company and is trained, he or she will have at his disposal convincing market research which will enable him to justify and explain his valuation.  He will also be emotionally detached and able to handle offensive, insensitive bargain hunters. 

He will be able, too, to benefit from participation in the agency's large-volume advertising - and through his long association with the area, he will have a potential client list that will include many of those currently looking for property in that area, at that price, who may well have already been shown other homes on the agent's list.

Above all, perhaps when the all-important negotiation process begins, the professional agent will recognise the pitfalls and traps to avoid and, when it comes to drawing up the offer and, later, the deed of sale, he will do this in a way that protects both parties from subsequent surprise or disappointment.

Certain details in the deed of sale can be contentious.

Giving just one example, every deed of sale at APKF will include a list of all possible defects such as damp or a leak in the roof, which the buyer must acknowledge and accept in writing.

The agent will, if necessary, also arrange the beetle and electric certification.  This type of extra documentation makes for a clean, satisfactory deal but is not available to DIY operators. 

Then, too, a good professional agent will work closely with selected bond originators to present the application to the bank in a way that will make it acceptable. 

Once the deed of sale is signed, the trained agent will continue to be involved, chasing up the legal conveyancers (and making sure they get the guarantees). 

If you go it alone they will have to work through an attorney in drawing up the deed of sale, whereas in a "mature" agency this will be provided as part of the service, their documents being legally sound.

The bottom line, therefore, is that although on the face of it an agency commission may seem high, in reality it is not - and paying this money will almost always get you a better and sounder deal.

Finally, sellers must accept that buyers will almost always trust the agent of a big brand company, whereas they will be worried and distrustful of a DIY operator. 

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Comments

 

responses to this article

Strange thinking I am battling with the logic here - Lanice says that "experienced" estate agents have show houses where they knowingly overprice the house, so when DIY sellers use these prices as guidelines, they are being foolish. If these agents are such . .more geniuses, why are they deliberately over pricing houses to start with. It seems everyone is trying to catch the sucker who doesn't know he is being ripped off. How about pricing houses correctly? Who knows, you might then even start selling a few ? . .less by CJ Says on November 26 2008, 09:23 Find this comment inappropriate? Report it

What does advertising cost? How far will the R100k you save on commission go towards advertising? What does a web listing cost per week? Or for that matter an ad with picture in the local weekly? by TSJones on November 26 2008, 09:40 Find this comment inappropriate? Report it

Big reasons not to sell your own home Asking an estate agent to comment on the wisdom (or otherwise) of selling your property yourself is the real estate equivalent of asking turkeys to vote on Christmas! Comments will be biased in favour of their business and lacking in objectevity, and . .more therefore of little value as a serious input to anyone considering this step. The views and comments of sellers who have actually "done it themselves" will be of significantly greater benefit. . .less by wrightstuff on November 26 2008, 09:45 Find this comment inappropriate? Report it

Property Agents' new entry qualifications Thanks goodness for the introduction of the new qualifications as I, for one out of many, have been selling my own homes since 1990 and, on each of the four occasions, I realised a selling price 14% higher (the lowest end!) than the highest estimation . .more provided by top SA property co's . .less by Private Seller... ALWAYS! on November 26 2008, 09:56 Find this comment inappropriate? Report it

Price biggest fault of the do it yourselfers From what I've seen sellers who try to do the selling themselves tend to be greedy (which is why they don't want to pay an agent in the first place). They always seem to end up asking for 10-20% more than the rest of the market. Privateproperty.co.za is . .more full of sellers like that. Most of those houses have been there for 6 months or more. If I was buying right now I would always use an agent, at least you know the process will be mostly painless and it doesn't cost you anything. . .less by Junkyard on November 26 2008, 09:59 Find this comment inappropriate? Report it

Some biased logic here ... Comparing the skills of a doctor or mechanic with an estate agent is an insult to them. Selling anything is not exactly a science, its common sense. Then there is the question of on whose side your agent really is - the buyer or you, the seller? At least . .more you have a good idea on whose side you are. . .less by AT on November 26 2008, 10:04 Find this comment inappropriate? Report it

Lanice jy moet WAKKER SKRIK Lanice ... Like in what ever dude. by Bark on November 26 2008, 10:25 Find this comment inappropriate? Report it

knowledge Most agents I have dealt with when selling have been either:- brain-dead, useless,or arrogant and interested only in the buck they hope to make, with absolutely no regard for the buyers' or sellers' requirments and capabilities. As for giving some clown . .more sole agency!!!- the mind boggles.However, there have been a couple who actually did try and were'nt just bored housewives.Theyre o.k. as regards finding the buyer, but dont let them near the deed of sale;- Thats strictly for you and your attny. to draw up.Commission system;--crazy--5 or 8% of anything is better than a % of nothing,-- hence -sell at any price to anyone. . .less by seller on November 26 2008, 10:32 Find this comment inappropriate? Report it

Not serious I do property transfers. I have two comments about these alleged advantages of using an agent and paying R60 000 com. HAHAHAHA-you must be joking.OK-maybe 1. by Goofy on November 26 2008, 10:32 Find this comment inappropriate? Report it

OVERPRICED I STILL DON'T SEE THE VALUE AN ESTATE AGENT ADDS IN SELLING MY HOME.THE ESTATE AGENTS ARE NORMALLY OVERPRICED THEMSELVES NOT THE HOUSES.I HAVE SOLD MY OWN HOUSE AND IT WAS COOL..... NO STRESSES , JUST PLAIN PATIENCE AND PRESENT A NEAT HOME......WELL . .more , I HAVE SAVED 7% ON R850K = R60K... IT WAS ABSOLUTELY WORTH IT. . .less by ARTY on November 26 2008, 10:40 Find this comment inappropriate? Report it

Privare sale I have always sold my property privately with no issues and get better prices by Dave on November 26 2008, 10:41 Find this comment inappropriate? Report it

Blabbing Lanice, do you think your audience are 5 year olds? Retarded 5 year olds?! Doctors, mechanics vs estate agents?? WTF??!!! What a rubbish column... by Rogi on November 26 2008, 10:52 Find this comment inappropriate? Report it

No logic Agree with CJ - when deciding on a house price, the private seller compares to similar properties in the same area, which have been priced by Estate Agents?! Yet, this is deemed to be an incorrect basis... Far too often, the estate agents sufficient . .more knowledge about the product they're selling anyhow, including details reagrding servitudes, council plan approval status, future planned/approved developments in the area...they're unfortunately in a conflicted position and not necessairly the best placed to negotiate the best price because they act on behalf of the buyer and the seller...why not have buying agents and selling agents? . .less by Max on November 26 2008, 11:00 Find this comment inappropriate? Report it

Lies Come on lady. Estate agents are battling and your are just trying to sell your services. I've been to many showhouses recently and the majority of them have "sitters" who represent the agent. The "sitters" are either young students or retired indivuals . .more who have no idea of the property. They only ask you to fill in attendance register and agent calls you back during the weekday. You estate agents now need to earn your money. When last have you sat in on a showday? Can't believe that you also have the nerve to liken your services to that of other professionals. What service do you offer that I, Mr average homeowner, cannot do myself. I know the market (I did purchase my own house, so I know market value), I have a set price, advertise on-line for approx R2000,00, and we take it from there. . .less by RD on November 26 2008, 11:10 Find this comment inappropriate? Report it

Agents CNA offers some of these very technical documents. Most of the problems are experienced by agents as well and the clearances are not impossible to come by. Keep in mind that private sellers are the competition, therefore the author is by . .more definition biased. The more private sellers, the less stock/turnover on the agents books....equals less commission. Remember guys, if you sweat a little, you could be paying yourself R70K to R100K minimum. Worth the hassle, surely.... . .less by Basil on November 26 2008, 11:30 Find this comment inappropriate? Report it

OVERPRICED WHERE'S MY COMMENT ???????????????? by ARTY on November 26 2008, 11:34 Find this comment inappropriate? Report it

My friends lost out A few years ago my friend was so excited at selling his own house on the FIRST DAY! Did some brochures at the local graphix shop, put up signs in the neighbourhood and invited people in on a Sunday. Unfortunately, afterwards they came to realise that they . .more could have got a lot more than they did. The reason they sold so fast was because the price looked low relative to other prices in the neighbourhood. Lesson? You could sell yourself short. . .less by Not an estate agent on November 26 2008, 11:37 Find this comment inappropriate? Report it

But absolute com levels are ridiculous Granted, some agents are good at what they do and offer excellent service. But what they do is not rocket science. Is what they do really worth R250-R300k VAT on a R5mil sale? by Raymond on November 26 2008, 11:48 Find this comment inappropriate? Report it

Great article Having an estate agent do this article is very objective - not!!! by What the hell on November 26 2008, 12:10 Find this comment inappropriate? Report it

Estate agents add no value to selling/buying process A few things I learned from the houses I have boiught and sold: 1. Estate agents do not act in the best interests of buyer or seller. they only act in their own interests. 2. Most (and I mean the vast majority) of estate agents are either . .more incompetent, dishonest or both. I have dealt with hundreds and every single one of them was a joke. 3. If they screw up, an estate agent will not take any responsibility or blame whatsoever. I sold my last property myself (ironically to a not very bright estate agent) and not only made about 100k more than I would have had I used an agent, but saved on the comm, too. There is no justifiable reason to use an agent if you know what you are doing, have a good lawyer on hand and all the right documentation. . .less by ps on November 26 2008, 12:48 Find this comment inappropriate? Report it

Private sale is no sweat Contrary to what the estate agent with vested interests says above, selling privately is no sweat. As a property trader, i have successfully sold 4 properties privately in the last two months by advertising on Gumtree...and they all went off without a . .more hitch. So beware of the lies and deceit spread by the agents re this issue. . .less by WTF on November 26 2008, 12:53 Find this comment inappropriate? Report it

Really? "Finally, sellers must accept that buyers will almost always trust the agent of a big brand company, whereas they will be worried and distrustful of a DIY operator." I have seen how one of the big brand companies behaves, and it is not pretty. No I . .more don't trust the big brand companies and would rather go with an small experienced agency or a DIY sale. The disadvantages of people traispasing though your house criticising it and trying to negotiate a price down because of faults happens through agencies as well. . .less by Cheryl on November 26 2008, 12:54 Find this comment inappropriate? Report it

Who is this lady?????? This estate agent says ...''sellers must accept that buyers will almost always trust the agent of a big brand company''...who exactly is Anne Porter Knoght Frank. Never heard of them. Ae they a ''big brand company''?...far from!!! This article is a load . .more of hogwash. . .less by papa shengo on November 26 2008, 12:57 Find this comment inappropriate? Report it

An commission is better than no commission Agents often tell a prospective buyer that the seller will accept a lower offer (pssst....they are desperate to sell............he has a job in another town). Assuming a commission of 3,5% the agent is motivated to get the sale, so much better to . .more drive the price down and at least get some commission - the reduction in commission on a sale of, say, R2 million , driven down to R1,9 million is a paltry R3 500, and the agent still pockets R66 500! . .less by Ernst on November 26 2008, 12:58 Find this comment inappropriate? Report it

this is the funniest thing i've read in a while! lanice- you know full well the only reason u believe sellers should use estate agents IS THE FEE they add ZEROOOO value i wish more people would start to DIY and save money- i have and it worked for me by charlie on November 26 2008, 13:10 Find this comment inappropriate? Report it

C.J.! Good lord I finally find myself in agreement with C.J. What will sell first A property priced at 1070000 or the identical property priced at 1000000? Answer the one where an estate agent is not involved................its like renting if no-one makes . .more offers this month at 1070000 then next month reduce it by the agents commision as it is obviously overpriced. As for estate agent contracts they are geared towards only one thing....making sure the agent gets his com anything else is not thoroughly gone into! . .less by andrewa on November 26 2008, 13:40 Find this comment inappropriate? Report it

an agent will try to give the property away to get a sale quickly - that's a fact! Estate agents over-rate their intellect while fact remains that most are varsity or high school drop-outs who couldn't get regular employment - that's another fact! by GungetsTuft on November 26 2008, 14:04 Find this comment inappropriate? Report it

Estate agents are like prostitutes If I hear one more estate agent make the blanket statement that properties are genereally overpriced I'm going to have a bowel movement on the spot. Has anyone ever heard them say that a property is well priced, except when they are trying to sell it to . .more some sucker??? Give us all a break. Not to worry - all estate agents with 4 names or more will probably be out of business very soon. Personally I'm glad to see a bit of heat applied to an industry that is rife with halfwits and scammers. . .less by MotoMike on November 26 2008, 15:03 Find this comment inappropriate? Report it

Misrepresentation I find it obscene that estate agents should compare themselves with professionals such as doctors or mechanics. These last named need formal training and appropriate qualifications before being let loose on the public. Estate agents, on the other hand, . .more are generally matric dropouts and worn-out divorcees with no qualifications who would battle to get a real job in the formal sector. As for the size of the standard commission in SA, 1-2% would be more than adequate reward for their "expertise" and "effort". . .less by Darwon on November 26 2008, 15:41 Find this comment inappropriate? Report it

Trying to make a market in down times? I recently bought property where there were lots of problems and time delays and the estate agent added.............absotlutley no value to the transaction. All they do is complete standard templates for offer's to purchase and perhaps advertise a bit. . .more Beyond that its the lawyers that complete the transaction. . .less by S on November 26 2008, 16:01 Find this comment inappropriate? Report it

Hammer in Boards DIY The only bit of work estate agenst do is nock in boards on a Sunday morning. That bit of DIY, nobody needs them for. Rather compare then to second hand car sales men. That's more their league.... sorry 2nd hand car sales men, but had to compare to . .more someone.... . .less by Moolies on November 26 2008, 16:26 Find this comment inappropriate? Report it

Not a bad article... 50-50 weighting based on 2 valid points to be fair. Not everyone is a hard nosed clued up top notch negotiator like you find on Moneyweb comments section. The majority of people selling their houses are emotionally involved with their property as its full of memories...and it can hurt when you get . .more insensitive bargain hunting vulture investors looking for easy pickings from the emotionally vulnerable divorcee, widows and orphans who I might add make excellent prey. The emotional flare ups and negotiating points in the article are valid points for using an agent. The rest are not. Just negotiate the amount of commission with an agent. 7% is nonsense and it would not need to be marketed that much if correctly priced. Anyone who trawls the "professional" estate agents websites can clearly see that "professional" estate agents clearly cannot price property as some of its sits on their website for YEARS not MONTHS! Professional agents and agencies do not do POA. Whether you sell through an agent or yourself never do POA. Its not that if you have to ask you cannot afford it financially...its because you cannot afford to waste your time on undecided incompetent agencies and agents looking for purchaser details. . .less by Bull on November 26 2008, 16:50 Find this comment inappropriate? Report it

Fixed Fee There is a place for an estate agent and its not about offering expert knowledge. It's purely a cost of convenience, very similar to garden services and fast food. The only reason to use an estate agent is because the owner does not have the time or the . .more patience to do it themselves. I do not know how we arrived at the commision based system that is based on house price. A fixed fee fee for advertsing etc is fair. A commision could apply for any price above an agreed threshold value. . .less by JZ on November 26 2008, 17:04 Find this comment inappropriate? Report it

Sorry Lanice Looks like consensus here suggests you are talking S***. Try publish this in, I Was A Teenage Property Player, you might get more sympathy. by BS on November 26 2008, 17:32 Find this comment inappropriate? Report it

@Lanice Please honestly answer me this question Lanice. There are two identical townhouses next door to each other in a complex .One is for sale at R1070000 (for sale by through estate agent) and the other at R1000000 (for sale by owner). Which would you . .more personaly buy and what are your reasons for doing so? Go on, answer truthfully I DARE YOU! . .less by andrewa on November 26 2008, 23:22 Find this comment inappropriate? Report it

andrewa Bearing in mind that with a 10% deposit and the buyer being able to afford NCA payments on a R1000000 bond the house for sale by agent requires the buyer to have R70 000 AVAILABLE CASH more than the home for sale by owner. (Bet you dont answer) by @Lanice II on November 26 2008, 23:25 Find this comment inappropriate? Report it

I will "surely" listen to an estate agent advertising why she must be paid 7.5% vat for some pics in the newspaper, and why it is so bad to do it myself... by Agnostic Liberal on November 26 2008, 23:41 Find this comment inappropriate? Report it

@Max Estate Agents represent the SELLER always, not the buyer. And @Lanice II, the buyer would only require R7,000 more cash with the estate agnent as the commision is included in the purchase price. Do not understand you attempted logic? For the record I sold . .more my last three properties privately and will continue to do so in future. . .less by Joe on November 27 2008, 09:50 Find this comment inappropriate? Report it

No Commission Fact is selling and buying privately on-line at zero commission rates after DYI pricing on the property save up to R70,000 on a R1m sale. Doing that should be within reach of anyone with a normal intelect, a capacity the majority of estate agents prove . .more time and again they do not have. . .less by Adriaan on November 27 2008, 10:05 Find this comment inappropriate? Report it

@joe Sorry dont follow your logic, Sale price WITH estate agents commision included = R1070000. Sale price with commision of private seller included = R 1000000 ( seller wants R1000000 in his pocket remember?) buyer to supply extra R70000 (plus transfer duty . .more on extra R70000) NOT R7000 . .less by andrewa on November 27 2008, 22:35 Find this comment inappropriate? Report it

@Lanice again No reply Lanice? Didnt think so sigh only to be expected I suppose it is difficult to argue against facts honestly by andrewa on November 27 2008, 22:39 Find this comment inappropriate? Report it

get professionel and compare apples with apples My dear Lanice. you are either confused or misinformed. What buyers and sellers need is solid legal back up when they are buing or selling property from a lega expert. Nobody better than aan experianced conveyancer. Howe you can compare Doctors with . .more estate agents is beyond me. . .less by @vr on November 29 2008, 09:43 Find this comment inappropriate? Report it

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