Wednesday, June 17, 2015

Selling a house

One of our main life philosophies is to be as open and honest as we can, which applies to pretty much everything... But it would be fair to say this is not the standard operating model of the real estate industry. Because we had a house when we discovered this new project, we had to quickly work through how to sell a house, and we have a few things that we thought worked well and some that we'd change next time around.

Agents vs private sale
We chose to use an agent, though one with a flat fee (and a lighter service, which was fine with us), rather than a commission-based agreement. We thought that their knowledge and negotiation skills would be well worth the price we paid. Certainly they possessed both of the aforementioned qualities but next time (which hopefully won't be for quite a long time) we'll probably do it ourselves.

The main issue was that we wanted to be upfront about everything, and their perspective on what this meant didn't quite align with ours - see the bit about the paperwork below.

For plenty of people using an agent would be the right choice, so I'm not recommending against it - just spend plenty of time talking to them first to make sure you're on the same page.

Preparing the house
This is the obvious bit, but it can be pretty time consuming. Well worth doing though - people can be turned off by the smallest things so safest to give it a good tidy up before the photos get taken.

We had a couple of jobs that weren't quite finished that we rushed to complete when we knew we were selling - the big one was painting our bedroom. We also put a few things into storage (the main thing being a double mattress we had leaning against a wall) and made sure everything was shiny and clean before each open home (no mean feat with a baby smearing things on any available surface).

Preparing paperwork
This is where we'd really do things differently next time... And where our path differs from the mainstream.

For our recent sale we wanted to get a builder's inspection to make available to potential purchasers. The agents advised us against it, largely because a potential buyer would still probably get their own due to liability issues with using ours. Unfortunately, though this is true, when our first potential purchaser got their inspection they freaked out at [what we consider to be] very minor defects and pulled their offer.

We don't mind them not buying our house (we want the new owners to be completely happy) but it caused a huge amount of stress having the house under offer for two weeks and then having it fall over - not least because we had necessarily set up our move to the new house (including family flying in to help us shift). And because we then had a failed offer based on building inspection the defects had to be declared and we had to get our own inspection anyway (because you can't share the report the other people paid for) - so we didn't save any money. 

So I would recommend getting one in advance -  the $600ish can easily make itself worthwhile (that's about the holding cost of the average Wellington house for one week - so if having it makes your house sell one week quicker you've made your money back) and save lots of stress.

We did get the LIM ourselves, as that is completely usable - makes much more sense for the seller to get it once than for every potential buyer to get one. They are about $400.

I'm tempted to get a valuation next time too, make it available and then just ask for offers at the valuation level. Still not completely sure but I quite like the transparency of that, and hopefully would reduce the need for negotiation.

Setting a price
Though it's not necessary, we decided from the outset that we wanted to list the house with a price, because the tender process seems wildly unfair. We'd heard stories of people unknowingly putting tenders $50k above the main cluster of bids just to get their "dream home," and while you could claim that having a willing buyer therefore makes that the market price, I tend to think that actually real estate agents lead people to believe things that aren't necessarily true. Obviously there are lots of variables in agents - but the process being so secretive opens it up to abuse. And auction didn't appeal either (though at least it's more transparent) - I don't like them for buying houses so didn't want to sell ours that way.

To set a price you do need to have a good idea of what the market price is, but fortunately because I'm a crazy lady I'd been tracking all the house listings and sales in our suburb for about a year.

There are a few ways to get this data but the best that I've worked out (for free) is as follows. Firstly, I record all the new listings (noting key credentials, like number of bedrooms and bathrooms, parking, size and general condition). To get sales data, I scroll to the bottom of the new listings on Trademe (I have a saved search for the suburb) and record the addresses and sales amount for the listed "Recent sales information" - usually three addresses are provided per listing.

This does require some time - a few minutes for each listing - and it takes a few months for sales of houses you've recorded details for to show up. There's also no guarantee you'll see data for a particular house. But it provides a pretty good picture of what houses are actually selling for in your area - the number I thought was about right from this data was what we were paid.

We listed it with a slightly ambitious number, which gave us a little room to negotiate if needed. The offer that resulted in the sale was $5k below that and we accepted it without any qualms - no negotiation needed.

Have you ever sold a house? What do you wish had been done differently?


  1. I love your fair and open approach with the prospective buyer - so much better than the lies and greed that tempts other people when they enter into the biggest financial commitment of their life. All the best from Sydney!

    1. Aw, thanks Tobias! We did of course want to get a fair price, but I always try to remind myself that the people buying are just like us and treat them as we'd want to be. I think it's easy to lose sight of that, especially with the language real estate agents use.