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Selling a house – private or agent?

I have often been asked whether it is better to sell your house privately or to use an agent.

As with anything to do with property there is no single answer - certainly no right or wrong answer. It very much depends on the person, the property and the circumstances. 

I recall a number of years ago a real estate research report found that while around 12% of people said that they were planning to sell privately, compared with 40% who said they would definitely sell with an agent, a large proportion, close to one in three of those surveyed, said they would probably sell through an agent but they may well try to sell privately first. 

I sensed at the time and still feel nowadays that this group reflect a commonly held view - give it a go to sell privately and if you don’t have success, fall back on the agent as they will likely sell it.

It is interesting psychology. You know that if you list with an agent you will sell your house, while to do it yourself has less certainty but has no downside except for the time factor.

Not an approach you would take with a legal matter or to fix your car but far more reflective of DIY work - give it a go and if you can’t do it, call in the professionals.

Certainly the cost of an agent sale is in itself a motivation to try a private sale, added to which is the full knowledge that as agents rely on Trade Me for the bulk of their listings the site offers private sellers the same level playing field on which to attract prospective buyers.

It is interesting therefore to compare the approach private sellers take toward advertising a property on Trade Me compared with agents.

I recall a few years ago that private sale listings had far more photos and richer content description than those of agent listings. I believe this differential has almost disappeared as agents have accepted the role of online as the pre-eminent form of advertising.

Just the other day, however, a perfect opportunity presented itself to make such an assessment - comparing the approach taken by a private seller and an agent. Unusually though this is for a property that is being marketed as a private sale after failing to be sold by an agent!

I became aware of the property when viewing the NBR site - the advert caught my eye as the image looked very much like an advert for a holiday home but it was clearly a property for sale. An unusual placement for an advert - that is the kind of thing that caught my eye.

The advert leads through to an excellent website - a wonderful presentation of the property built off a simple WordPress themed platform. The photos are excellent, mostly taken at night, are emotionally engaging and of a very high quality.



The website is a consumate example of a professional and comprehensive presentation, including 42 photos, a video, the LIM report and rateable value, details of school in the area and an insight into a recent registered valuation. A building inspection is due to be added shortly. What more could a prospective buyer want in order to make an informed decision on this property before an inspection?

Doing a bit of research on this property brought insight into its marketing history - it was marketed by a real estate company with an auction date April 27, providing a unique opportunity to see how a private seller approaches the marketing of their property compared with an agent.

The presentation for the property in April is equally professional with 20 professionally taken photos and two detailed floor plans (interestingly there is no floor plan on the new private sale site). The key difference is all the agent's professional photos are taken in daylight while the private sale images are moody night time images that do add to the "sub-tropical private paradise" sense of the property - which is a great positioning statement.

I was fascinated by the difference in the way the same property was presented in the description between an agent and a private seller.

Below is the text of each starting with the private listing taken from the current listing on Trade Me:


"Down a long private driveway opening up to a beautiful subtropical private paradise. The 2 steps and entrance way lead to 10mm industrial glass front doors

"Bottom floor has 2 bedrooms.The master bedroom has ensuite, walk in wardrobe, extensive wardrobe & storage space, glass sliding doors leading to deck with spa, stepping down to one of the 3 outdoor living/dining spaces & pool area. 

"Wooden floored hallway from entrance leads to open plan kitchen, dining area & step down carpeted lounge, with bifold glass doors on both sides leading directly to the solar heated pool. The heat pump is UNDER the flooring , with 6 vents distributing consistent warmth throughout winter, & air conditioning in summer

"Just past the stairs (that lead up to 3 more bedrooms & bathroom, all with glass fronted sliding doors for wardrobe & storage) & you step into a very spacious sunny office/granny flat with bath/shower/toilet/kitchenette fully carpeted with underfloor heatingin the main room. 

"Sliding glass doors open out onto another patio, the other end has glass doors which bifold out making it entirely open. This office/granny flat has dual access, either through the house ( which has a 2nd door inbetween for added privacy) or through the glass doors accessed from the parking area.

"The property is fully fenced so pet friendly for the smallest up to the largest of animals to roam/run freely due to the size of the land.

"Garden lighting is activated by movement sensors, as does the many security lights throughout the property. House is fully alarmed with activation pads in the house and the office/granny flat.

"This is a beautiful SUNNY PRIVATE OASIS right in the heart of Mt Albert.

"If you love this property, it would be a pleasure show it to you. Please contact us for appointment to view. We have available upon request a Website showing a Video, Picture Gallery, LIM Report, Rateable Valuation, Registered Valuation, Schools in area, & a Building Inspection Report next week. AUCTION IS ON SITE 2PM THURSDAY 31 JULY. Many Thanks."


Here is the full text from the agents description from the agents website (Google cache) from April


"Enter the private inviting driveway that leads to the rear impressive landscaped entrance, this property exceeds the WOW factor.

"The glassed front entrance foyer of this impressive contemporary home beckons you to enter, giving you a glimpse of something special.

"To the left a spacious light filled master bedroom with ensuite and walk in wardrobe. Flowing out onto a private enclosed spa pool area adjacent to outdoor pool and entertaining area.To the right a generous sized office.

"Just past the office climb the stairs to three sunny light double bedrooms and a bathroom.

"Return downstairs, down a small staircase and discover two huge areas of work from home office space, set up for business, or a granny flat complete with own bathroom and entrances.

"Up to the main level, past the laundry and w.c. to the kitchen/dining which has a subtropical outlook encompassing the lush backyard with mature trees yukkas palms and plants.

Entirely private this flows onto a further entertaining area. The kitchen has integrated whiteware central granite work island and granite bench.

Adjacent is the step down lounge seamlessly opening on two sides to a fabulous swimming pool/entertainment area. The lounge has a woodfire.

"The solar heated pool complex with tropical feel exemplifies indoor/outdoor living at its best.

"There are so many more features in this extraordinary property we invite you to view this paradise in the heart of Mount Albert.

"Open Homes Saturday & Sunday 1.30-2.30pm or view by Appointment.

"Auction - On site 27th April 2014 at 2.30pm."


The first thing that struck me was how the agent description is effectively a commentary of a walk-through of the property - useful. However when comparing side by-by-side with the private listing the most striking difference is the use of features and benefits in the descriptions. I have highlighted what I see as contextual and relevant features and benefits in italics in each of the listings' description.

The agent's description totals six features and benefits, the private sale description totals 16.

I have often heard the comment made in the real estate industry that the best person to showcase a property is the owner. They know the house, they know the features and benefits and maybe this is a clear example that maybe of benefit to agents: ask owners to write down a description of how they would communicate their own house in terms of features and benefits as part of the marketing!


Former Realestate.co.nz CEO Alistair Helm is founder of Properazzi.

 

Comments and questions
5

But the key issue is the price expectation. You can talk up a property till the cows come home but if the owners are asking a silly price neither they nor an agent will be able to sell it. We are now in the situation in Auckland where median prices are falling (as expected, higher interest costs reduce demand and the China real estate bubble is deflating + record high NzD is reducing offshore demand) but agents have pumped up vendor price expectations so much they are convinced their house is worth more than the market wants to pay, hence sales volumes falling off a cliff. You can see this in all the data and anecdotally surfing the websites where houses nearly all have offer prices or "for negotiation" after failing at auction, and if you track the listings you can see most ask prices have been reduced in the past 1-2 months.
Alistair, it would be great if you could track auction clearance rates over the past 12 months and look at the change in median prices happening, plus past experience of lagging price and volume changes. The media currently seems obsessed with trying to pump up a deflating tyre and it's frustrating seeing the inaccurate and poor quality reporting some of your peer news outlets do on the topic. You would think that the Herald was owned by the Barfoot family...
I continue to predict a price fall of 10% by year end (from the Sept 2013 peak) and we actually may get there early (looking at the more relevant median level). The market is on the verge of total capitulation and Nz's macro picture is looking increasingly shaky 12mths out given the continuing collapse in dairy and log export prices. The catalyst will be spring listings when agents are forced to bring vendor expectations down to earth as the inventory overhang will start becoming unbearable.
I also pity the developers who still believe in a housing shortage/crisis. It is as if they can't do research or read (or do maths) and can't see the glut of rental properties on the market. Buying plots for 1250/sqm in a poor area and 2500/sqm in a supposedly rich area makes no sense. When you factor in the area you can actually build on and the cost per sqm to construct, you are in at anywhere from 5000 to 7000/sqm for the house before profit margin. A child can do the maths on what that implies for a standard 250sqm house...

Are you serious, Alistair? Who wants to read a novel when it comes to real estate wordage? Advertising-text has never sold a house; all it does is to get a buyer off his chuff to go and see it. There is a complex amalgam as to what prompts a buyer to buy, and droning verbosity isn't one of them; it's an interplay of practical wants-and-needs, together with emotive responses.
Any home owner can sell his house; it's the price that he gets is what matters.

The oft-quoted "I saved thousands in commission by selling, privately" is either a moot point or questionable, when no one can be sure if the value the home was sold for, was ever the optimal value -- that is, it was never worth a penny more what it was sold for, privately. And who can be certain of that?

It's right up there with "List with real estate co. ABC and save thousands $s in commissions. That spiel is fatuous as it is meaningless. Hell, list it with me mate, Jasper who lives at home with his mum, because he'll sell it for a flat fee of $300 and two cartons of Corona.

A excellent article Alistair.

It does in my mind raise the question, what value does a agent in todays modern world bring for a buyer?

In marketing I would say it is getting less and less.

The reference that Wakey Wakey makes in regards to vendor price expectations and the world of reality is one that will always be around as the greed factor is in many instances is part of the human DNA.

This is where a good knowledgeable agent can contribute quite substainially and for the want of a better phrase' assist the seller to 'wake up and smell the daisys".

The major problem and root cause of highly inflated house prices and sections ,without a doubt in my view can be squarely laid at the door of our Councils and land bankers.

Robust evidence is so over powering in support of my view that it is unbelievable that the public is not up in arms about it by paying more than lip service to the problem.

Politicians are pretty gutless when it comes to address the issue of home affordability .

It is not just a Auckland problem.

Without even introducing a capital gains tax the problem can be addressed but some people of influence need to have the balls to front up with constructive answers.

Very few people buy a property based purely on the advertising. As previously mentioned it just gets them of their butt to check it out.

Trademe is just a marketing communication channel that is replacing the likes of the NZ Herald that the public have always ben able to use to advertise their own property to execute a private sale.

One of the main issues is who gets to save the commission? The vendor or the buyer? Most buyers will feel they should be able to buy the property cheaper because no commission is being paid by the vendor.
Now that there is so much consumer protection for buyers when they buy a property through an agent it is probably appropriate that the buyers who buy a property privately should save the commission because they are in a buyer beware situation with no protection from the Fair Trading Act 1986 or the Real Estate Agents Act 2008.

Some buyers feel more comfortable dealing with an agent (go between) rather than directly with the vendor. If they feel the property sucks in some way they are usually to polite to tell the vendor where they would tell the agent.
There is little doubt that a vendor will know their property better than an agent. Vendors usually show their own properties in England even when they do use an agent. Most NZ agents would not be comfortable with this happening because of concerns about misrepresentation by vendors that the agent could be liable for.
Trademe has become the main website in NZ for real estate and Mr Helm should take some credit for that as he was the CEO of realestate.co.nz when Trademe took the number one position off realestate.co.nz. However there are a number of other websites that tap into the offshore market better than Trademe and offshore buyers will often pay considerably more than local buyers for a piece of paradise.

If you are a private seller, trying to get the buyer from looking to offering without coming across as rude or pushy is tremendously difficult , unless you have a seasoned buyer who doesn't mind offending you .
People inherently want to pay as little as they can Vs vendor who wants as much as they can

I suspect a lot people who "get what they wanted" selling privately may have been able to get more if they had gone via an agent who has access to buyers who are not always scanning all the ads or gone to auction.

Conversely an inexperienced agent will just advertise and work with the buyers who come off that rather than utilising a network, so you do need to meet a few and get a feel for who you think has the goods to do a great job for you - after all you will pay them good money for the job they will do and don't be afraid to be demanding as you are the boss, not the agent - ask to look at the copy they will post on the internet and the photo's they want to use etc