Property buyers and sellers should carefully weigh the perceived benefits of a private sale, and be well informed. Here are some tips.
Buying property privately
Home buyers who try to negotiate a private sale with a seller in the hope of getting a reduced price on the property may find, to their regret, that they are mistaken. An owner selling his property privately has most likely taken into account the amount that he would save on agents' commission and included it in the price.
Estate agents normally act on behalf of sellers in property transactions, however agents are also bound by a code of conduct, which affords buyers a certain amount of protection against one-sided contracts.
There are potential pitfalls when buying privately. An untrained eye may easily overlook hidden defects, which may require expensive repair at a later stage. Buyers run the risk of not knowing the loopholes in a sale agreement when it is not understood properly. A buyer also has little recourse when the seller absconds with fittings such as blinds, carpets and even stoves if there is no provision for such things in the offer to purchase. Unwary buyers signing a private sale agreement may be in danger of losing their deposit if the sale is cancelled. Contracts may contain unrealistic requirements regarding the period allowed to secure a loan or to effect transfer, which may place the deal, and the buyer's deposit, at risk.
Buyers should thus carefully weigh the perceived benefits of a private sale. They should ask themselves whether they really are saving money and whether it is worth running the risk.
Buyers should keep in mind that trained estate agents, especially those who are area specialists, will help them to make informed decisions by supplying pertinent information and should protect the interests of both seller and buyer not only during the sale but during the whole transfer period.
Selling property privately
Selling your home privately could sometimes save you money in the short-term by cutting out the estate agent's commission, but on the other hand it could prove to be quite costly in other ways, i.e. your time or advertising costs. Without the assistance and knowledge of a reputable estate agent, you have to coordinate everything yourself, like:
Advertising your property in various media. This could become very costly. Estate agents have long-term relationships with property magazines and guides, whereby they get good advertising rates because they advertise in bulk.
Bearing the risk of the deal falling through with certain buyers - a few times - before it eventually goes through with a qualified buyer. Reputable estate agents will "qualify" a buyer (ascertain whether they can afford your property, and will get finance for your property) before the transaction progresses too far and too much of your time is wasted.
Drawing up an offer to purchase agreement and making sure that you as well as the buyer are well protected in all aspects of the sale. A good estate agent will look after your interests, as his client, but will also make sure that the interests of the buyer are looked after. Clauses in an offer to purchase agreement can be very intimidating. This is where the expertise of an estate agent can possibly save you money in the long-term.
Appointing the transferring attorneys. Estate agents may not force you to use any specific attorneys for the transfer, however they have good relationships with attorneys they work closely with and could suggest an attorney to you, if you do not already have an attorney in mind, who does conveyancing.
This article originally appeared in Property Power 11th Edition Magazine. To order your copy at the discounted price of R120 click here.
