The primary reason for selling a home by private sale is to avoid paying out thousands in sales commission to a third party like a real estate agent. Private selling has taken hold in some areas namely Nelson and Tasman. The private sale strategy doesn’t always work out for the vendor however. The property might remain on the market for months, not sell at all or sell for a lot less than the vendor believes it’s worth. This is what happened recently to an Auckland property owner.
NZHerald reports an Auckland property owner turned down offers presented by real estate agents in favour of a private sale via a ‘no reserve’ auction. The offers were between $1.8 – $1.9 million and the vendor believed his property could achieve up to $2.4 million. However at auction the property sold for just $1.45m, that’s $350,000 less than the lowest offer presented to him prior to the auction. The owner was naturally very disappointed with the outcome.
So what happened? The owner chose to sell his high end property privately rather than use a real estate agent. By taking this option he missed out on the relevant sales market knowledge and experience an agent would bring to the process and also their network of buyers. Assumptions were made too including assuming the number of views of the listing website page meant a high number of actual interested parties. In retrospect had the vendor accepted one of the pre-auction offers he would made $300,000 more than he did with his private sale.
Taking the property to auction with ‘no reserve’ was a big risk and discussion on PropertyTalk suggests this is where the vendor went wrong.
This blog article was written for PropertyBlogs by Mobilize Mail.