PRIVATE SALES CAN BE HAZARDOUS TO YOUR WEALTH
On the face of it there is certain wisdom in selling your own property to save money on agent’s commission but there are many pitfalls that few will tell you about.
Twice now, I have sold my own home and I believe it was only a fool’s luck that got me a good result.
The first property I owned was a 2 bedroom unit in a tacky group of 6 in St Marys, South Australia that cost me $38,500. Then some years later I was getting married so I needed something bigger. I had 2 agents come to give me an appraisal but then decided it would be so easy to sell it myself. So I put it on the market for ‘Offers over $48,000’, if I remember rightly.
After a few uneventful open inspections someone pointed out to me that a very similar property was for sale only a few streets away but it had a second toilet and a carport attached to the unit, not in a common group like mine, and it was advertised for just $45,000. I was a bit worried but left the price the same for a couple more weeks with no result.
Then out of the blue someone came in who loved the place. Later that evening they rang me back and offered $56,000 and I was shocked at what was such a huge price at the time. The buyer said he needed to know immediately if I would accept his offer but I just wasn’t sure and wanted time to ask the family. He wouldn’t budge and wanted to know right there and then otherwise he said he would withdraw his offer permanently. All I wanted was 2 minutes to put the phone down to ask my mother and uncle in the next room but he wouldn’t let me go!
Whether it was a bluff or not is irrelevant; the point is, if I was an agent acting for a vendor he would know I couldn’t do anything until I had sought instructions so this pressure tactic becomes ineffectual. At best they could ask for a quick answer, say 12 hours, but this gives the agent and vendor plenty of time to weigh up the pros and cons.
As it happened I caved in and luckily it was a good price but no thanks to my selling skills.
The second time I did a private sale was in 2003. This time I was in no doubt about the correct price I should be asking for.
Again at the open inspections there was no stampede of buyers so I was glad after a few weeks to have someone make me an offer that was acceptable but I thought it could easily be worth a bit more.
This lady stood in front of me and told me her offer then said why she couldn’t offer any more. I said that I would get back to her but she replied,
“What do you mean?! Why can’t you tell me now?, I don’t want to wait, there are other places I can look at.”
Again I was not sure if I might lose my one and only decent offer so to keep her subdued I said that I needed to speak to my wife. Her reply was,
“Come off it! You don’t need to speak to your wife”, she said with a sneer. “Make a decision now!”
I bumbled around then said I wanted $500 more. She was aghast and said that she couldn’t believe that anyone would lose a sale over $500. I could have said the same about her.
A few days later I got my higher price with another buyer but if that person had not come along I could not have reconnected with that first lady because she had already been burned by a tactless sales process.
So for the second time I did not have at my disposal one of the best tools in a sales agent’s arsenal; that of being able to take a written offer back to the vendor that would allow me time to regroup, sort out my facts, get instructions and then return to the purchaser for a second bout with renewed pith and vinegar.
This simple strategy will help you to avoid killing off your sale as I had done by being compelled to respond with an immediate rejection and by enabling you to draw out negotiations there is always hope that the parties will soften their positions.
If a buyer makes an offer and you straight out reject it to his face there is every chance that you will kill the deal on the spot. Rejecting someone is not the way to win friends and influence people. It may be fine in a flea market or garage sale but people take the biggest purchase of their lives a lot more seriously and very personally.
But once a buyer decides to commit an offer to paper the pressure starts to settle down. You are now dispassionately doing your job by filling out the contract. Even if you know the offer will not be accepted just the process of taking the contract to the vendor will give everyone breathing space. The parties have time to get off their high horses, calm down and start thinking clearly.
What was impossible on the day of the open inspection becomes reality a couple of days, and a lot of negotiations, later. And the agent will do as much negotiating with the vendor as with the purchaser to get everyone to a compromise position that is a good representation of the market value.
There is a huge amount that can be said about this process of taking written offers between the parties. There is a right way and a wrong way to do it and that is where selecting the right sales agent becomes so critical but this whole process it something that is totally missing from the Private Sale.
And any agent worth their salt should be able to increase the price so the vendor will make enough to cover the cost of his commission and, dare I say, with the right negotiation skill even get a higher price than might have been expected in the current market.
The bigger the sale price the bigger the possible returns to the vendor from using an agent. There can be so much extra to make for such a little cost with the right agent.
So having tried it twice this agent will not go down the path of a Private Sale for the third time because the third time might not be so lucky.
If you feel that you might want to discuss your situation then please ring us on (08) 8186 2777.