Selling a home has traditionally involved the use of a real estate agent who has been tasked with the responsibility of marketing and selling the home. For their time and effort they are paid a commission on the sale proceeds. Whilst many view this as a necessary part of the sale process, the question needs to be asked, can I sell this house without an agent?
The good news is that it is actually possible to take control and sell your house privately and for the sake of some time and energy, thousands of dollars can be put back into your pocket.

Before I go through the pros and cons, I feel it is a good idea to explain how the commission process for real estate agents works. In this sense, real estate agents don’t always have your best interests at heart.

Real Estate Agent Commission Structures

You will employ an agent who works for a particular firm; that firm will have a set commission structure. As an example a NZ firm will charge the following, 4% on the first $250,000 ($10,000) and then 2% thereafter. Some agents even charge the 4% through to $350,000. They will also generally charge you an administration fee of $500. This fee covers a basic marketing package but you will generally be expected to pay for media advertising outside your set package.

So say you sell your home for $400,000. You would expect to pay out $13,500 in commission. Of this half goes to the firm and half to the agent. If another agent introduces customers to the property then the 50% that is set aside for the agent is split between the selling agent and the listing agent. For this scenario we will assume that the listing agent is also the selling agent. They will receive $6,750 for the sale as their share of the commission.

If your home was sold for $420,000 the commission to the agent would increase to $6,950 or an extra $200, whilst you would get an additional $19,600. As we can see the additional income is hardly enough to motivate the agent. The incentive for the agent to get the best possible price for your home is not really reflected in their commission, a speedy sale and fast turnover of listings is more important.

The agent does have access to buyers and a thorough knowledge of the property market (hopefully), but most of the agents in the market today have elementary training due to widely accessible entry requirements within the industry.

Sell your House Online

With the internet being used as a major marketing tool for real estate sales, it is easy for people looking to sell to do their own market research. The internet is also a great tool to use when attempting to market your property on your own or even sell your house online. Sites such as eBay and TradeMe are cheap to use and easy to set up. It’s possible for you to have your property advertised in a matter of minutes. The number of real estate agents that use these sites to market properties or for online house selling is testament to its marketing power.

Can You Sell a House Without an Agent?

Short answer: Of course you can! Real estate agents do not hold any special powers that enable them to deal with property that the average person does not have. If you feel you are capable of selling your property then chances are, with a little help from some associates, you probably can sell your own house.

With the widely accepted use online house selling now, it is possible to market your own property yourself for a fraction of the costs it would cost you to employ an agent. You know your home better than anybody and can use this information to your advantage. You can set up open homes at times that suit you and can deal directly with the people who are looking at your property. You are sheltered from the real estate banter that so many people hate.

On the flip side, there are people out there that do not want the hassle of dealing with people, spending time answering questions and have to sit around and watch strangers walk through your home commenting on your favourite holiday snaps that hang on the wall. For these people, employing a real estate agent is probably the better idea.

How to Sell your House Privately

A good property solicitor is worth their weight in gold. They can draw up sale and purchase agreements, offer advice on what clauses to put in the contract and also help answer any questions that you may be unsure of. If selling a home for the first time, employing the services of a trusted solicitor is recommended. Generally speaking, most people will employ a solicitor to help out with the sales process even if it is just to control the discharge of mortgage security.

The financial implications of selling a house privately as well as sell tips and advice and more information on how to sell your house privately will be addressed in future articles.

When you are making an important decision, such as buying an investment property, there is nothing worse than feeling overwhelmed or out of your depth. One thing that can cause things to start whizzing over your head is the use of jargon and industry-specific language. Unfortunately, the banking industry loves these terms, and the world of property purchasing and investment is full of them! A good property investment tip is to brush up on some of these banking terms and definitions before entering in any discussion where you need to be fully understanding what you are getting into.

Here’s a few banking terms and definitions to get you started:

Lending Priority:

The priority relates to the right a mortgager has over what is retrieved through the sale of the property. To avoid hassle later, a lender will often set out a higher priority than they have lent in case the customer wants to borrow extra in the future.

Consent to Second Charge Mortgage versus Deed of Priority of Land

Consent to Second Charge Mortgage

A consent to second charge mortgage occurs when a customer wants to take a second mortgage out on their property with a different lender. The original lender needs to agree to this first, and is registered on the land title as a memoriam of priority. It results in a formal agreement between the two companies. It sets out how much priority each lender has over the land.

Deed of Priority of Land.

This occurs when the customer already has two mortgagers but the priority on that mortgage needs to change. If one of the lenders lends more money to the client then that priority needs to be renegotiated between the two lenders. This is an informal document, but binding document and it supersedes the original ‘Consent to Second Charge Mortgage’.

Lending Covenants

Lending covenants are terms that Banks and financial institutes may include in loan documents should they think them necessary

Some popular lending covenants are:

LVR (Loan to Value Ratio) Covenant

This means that lending must remain below a set percentage of the property’s value.

Interest Cover Covenant

This means that interest cover on debt must be higher than a set figure, for example, 1.5x.

Revaluation Covenant

This is where the bank can stipulate that a new valuation is required at the customer s cost, at any point in time.

Also, Investment Property Tips has a Property Investment Glossary for you to look when you need to brush up on other property investment and banking terms and definitions.