By William de Ora
I’m sure on your travels through Marsfield you’ve come across a ‘For Sale by Owner’ sign. Well it’s not as common as it ought to be. A while back we featured Pauline Cosgrove who sold her own property without using a real estate agent. If you are not familier with ‘For Sale by Owner’, I’d like to explain to you what it’s all about, so that you’re fully informed.
In a nutshell, it means that the owner is selling their property themselves without the help of a real estate agent. You might even come across the term ‘FSBO’ which again means ‘For Sale by Owner’. Often when people decide to sell their homes themselves they make use of various websites that are specifically for people selling their own homes, in order to get the word out there that their home is for sale and they’ll probably make use of their own signs outside their property as well.
Why would a seller sell their home privately?
There are a number of reasons, which could include the following:
- They more than likely have the type of experience needed in order to carry out ‘For Sale by Owner.’
- They could have had a bad run in with an estate agent, which means they just don’t want to go down that route again
- They might want to save on fees
- And lastly, they don’t actually see what a real estate agent can do for them, which they can’t do themselves.
What does buying from a ‘For Sale by Owner’ mean for you?
As a buyer, this type of sale could make you nervous, understandably as there is a certain level of expertise that a registered real estate agent has, and not having access to that type of knowledge can make you a bit jittery.
Also, it’s hardly a surprise that real estate agents aren’t keen on this type of sale and they are pretty vocal about it. Because of this, you can feel a bit exposed not having that expertise behind you to lead you every step of the way.
Of course it is a sellers right to sell privately, but what some people tend to forget is the fact that real estate agents have big databases of buyers that are ready and waiting. If a property is ‘For Sale by Owner’ those potential buyers can slip through the net, even though it could be their dream home.
If you are not entirely comfortable with the process, then there is absolutely no reason why you can’t use a buyer’s agent, which is there to protect you. They’ve got a team of professionals to help you, including solicitors, building and pest inspectors as well as accountants. Having this type of support can be incredibly useful and help to make the sale as easy as possible.
There is something incredibly important to remember with regards to a ‘For Sale by Owner’. The legal channels still need to be followed to the letter of the law. Before you hand over your deposit, make sure the sale of contract is water tight, and have it checked by a lawyer. Make sure you know the laws that are applicable to where you live.
Another thing to consider is that ‘For Sale by Owner’ sellers don’t need to pay agent’s fees, so there is a natural inclination from buyers to mentally deduct that amount and take it off the purchase price. It’s quite possible that the vendor won’t be negotiable on their price.
Something that can actually be uncomfortable is the fact that you have to negotiate with the seller. Let’s say for example you’ve noticed a few faults, it can actually be difficult saying this to the seller, whereas an agent can do those negotiations on your behalf.
What about the selling price? Some sellers are clued up when it comes to this, but the majority aren’t able to do a full analysis of what the selling price should actually be. How are you to know if you’re paying too much for a property?
Understandably Consumer Affairs recommends that ‘For Sale by Owners’ sellers have their property valued by a qualified valuer. If they do this they won’t make any misrepresentations about their property in the sales process. This can be damaging!
What are Real Estate Agents typical costs?
According to Agent In A Box the average agent’s commission is about 2.3% across Australia. On a $500,000 sale, that’s about $11,500. They also mention that most agencies suggest some advertising spend, which is normally about 0.5% of purchase price, which is $2,500 on the $500,000.
If you want some further information you can follow the link to the website.
I hope I’ve given you some food for thought when it comes to selling privately and that you’ve found this information interesting.