How To Sell Your House Privately In NZ 2022?

Selling your house privately in NZ may seem daunting at first, but it’s a big deal! It may be the largest financial decision you have ever made.

But there are a few moving parts that you need to be aware of before making that almighty decision to push forward.

Don’t stress, we are here to help.

What if over the next 15 minutes you got the entire ‘Selling private scoop‘ from start to finish 

This 4000+ word guide will show you:

• Why 20% of kiwis sell privately 
• Everything you must know about a private house sale
• Your obligations as a seller
• Different methods of sale  
• Determining the perfect sale price
• Prepping for market
• Different species of private buyers 
• The critical paperwork 
• Private house sale epic process A-Z 

By the end of this guide, you will feel confident in knowing the steps toward a successful private house sale.

 

The Six Main Reasons why Kiwis Sell their Properties Privately

Selling your house privately as we know it, can save you a lot of money. It’s no secret that the classic ‘Do It Yourself’ mentality of Kiwis has a big part to play outside of the open market. 

Now we will take a look at the main drivers behind the New Zealand private house sale.  

 

ZERO Real Estate Agent Commissions

Agents charge anywhere from 1% – 4.5%

A 750K sale equates to $7,500 – $26,250 in fees alone, not to mention the marketing costs and auction fees (if any).
By way of private sale, you can eliminate 100% of these costs and recover that extra gain for yourself. More money in your pocket, not theirs.

 

Secret Squirrel Sale

There are times and situations when sellers prefer not to make their property business public. These situations can sometimes be sensitive (death, divorce, bankruptcy) meaning the private house sale that’s kept under the radar can certainly meet these sellers’ needs. No need for a sign out the front, a public listing, or the nosy whispering neighbors.

 

Time is of the essence

Believe it or not, some people need a result and they need a result yesterday!
The benefits of selling a house privately in NZ allow the sellers and buyers to act with urgency because no barriers are stopping or slowing anyone from executing a deal.

Let’s use a Real Estate agency as an example: It will take (approximately):

• 1 week to organize all the paperwork and marketing material
• 3-4 week campaign is run with 4-8 open homes
• Offer is negotiated 1 – 2 days
• Conditional period 10 – 15 working days
• Settlement 2 – 4 weeks

          TOTAL 11 weeks

A deadline or auction may seem like the finish line but remember you still may be a few weeks away from receiving the money for your property.

None of this is needed off-market, firstly there isn’t a need for a marketing time frame nor 4 weeks of open homes. Most of the off-market buyers are in a cash position to act quickly and settle within 7 days (if needed) which could save you 2 months.

 

Disliking real estate agents

Not all agents are bad and not all agents are incompetent. There are however a number of sellers that just prefer not to deal with them.

Most of the time these sellers have been rubbed the wrong way in the past or as mentioned earlier the DIY kiwi attitude takes over and they strongly believe agents are not needed. 

There’s no right or wrong answer for this, the truth is, it’s more common than you think. For the people that prefer not to deal directly with the buyer, they can get their lawyer to negotiate on their behalf, Easy. 

 

Try before you buy and sell

For the same reason, you may request more than one painting quote before hiring a painter, the same applies to private house sales. It doesn’t cost anything to request an offer nor does it require the lengthy preparation or planning as it would going to the open market.

Requesting is a good way to test the market at no cost or effort, at the end of the day you are not obligated to accept anything until you are satisfied with the price, terms, and conditions.

 

A Future with Certainty

If you know what you want then it doesn’t need to be complicated.

Let’s say a private buyer comes along and makes you an unconditional offer at a level you are satisfied with, that offer is then sent to the solicitors and they complete the transaction.

An unconditional offer is a surefire way to cut all that time and cost when selling your home and in some cases be your best-case scenario.

Truth is some sellers, certainty is more important than a potentially higher offer that may or may not happen due to the conditions within the contract.

 

What You Must Know When Selling Your House Privately

 

You have to disclose any information you may be aware of that is relevant to the buyer and especially any issues that may influence their buying decision.

Below are some common issues that need to be disclosed:

• Weather tightness issues (Leaky homes, monolithic cladding)
• Unrepaired earthquake damage (Foundations that are out of level)
• Title issues (Extensions that have not consented)
• Murder, homicide (Not so common, but must be disclosed)
• Surrounding unitary developments (The neighbor might be building a 4-story house that’s going to block your view)

This doesn’t mean you have to advertise that information, it means you must disclose it (and preferably in writing) otherwise you could end up in court.

 

Selling your House Privately after you have Dealt with a Real Estate Agent

 

Let’s say you have listed with an agent and due to poor performance, you decide to take the sale into your own hands.

Then a private buyer comes along who’s wanting to deal with direct
(effectively cutting out the real estate agent and saving you the fee)
you might want to tread carefully.

1. If you sell within the agreed timeframe under the Agency agreement whether it’s, your buyer or not you will be liable for the commission to be paid.
2. If you sell the property once the timeframe of the agency has lapsed and the buyer has made contact with the real estate agent, then you will also be liable to pay the commission.
3. If the agency has lapsed and the private buyer has not made contact with the real estate agent then you are free to sell privately with zero obligations to the Real Estate Agent.
4. If you have private interest from another party before entering into the agency you can exclude these people from being ‘clients of the agent’ and therefore not have to pay the agent’s fee if sold to this party.

 

You Can’t Sell Your Property if it’s a Secret

 

You’re wanting top dollar for your private property sale, so the right people need to know it is for sale, where do you start?

• Google “private house buyers” look locally 
• Call these companies and book appointments
• Posting on social media channels to get people talking
• Word and mouth, start telling people you’re looking for a buyer
• Posting your property on TradeMe ($400)
• Creating a private sale signboard and putting it out the front of your house

When listing online, high-quality photography is going to grab attention, and a professional photographer would be highly recommended.

It’s all about building awareness and getting the word out there. Before you know it you’ll be at the negotiating table.

 

3 Most Common Methods of Private Sale

Price by negotiation, deadline, or price.

Let’s take a closer look into each to determine which strategy is going to work best for you.

 

Price by negotiation or (PBN)

This method calls for buyers to make offers and welcome negotiation on price and terms. As you have not provided the market with a price, expect to receive a wide range of offers. Some of which may be lowball, others may be higher with further terms ie:
(Subject to sale of their current house).
PBN essentially sidesteps ‘shooting yourself in the foot by pricing it too low or too high and ultimately letting the market decide the true value of your property.

 

Deadline

Similar to PBN but creates an environment where those interested parties have to submit their best offer by the deadline (Just a date and time).

You then have the power to choose the most suitable offer to negotiate with.

The deadline creates a FOMO “fear of missing out” which makes for higher than normal offers from the buyers that want your property.

 

Put a Price on it

Let the buyers know what it is that you expect and see how the market responds. As mentioned, with Price By Negotiation you have to be extremely careful not to price too low (or you will sell yourself short) and not to price your property too high.

More on that soon.

For a quick result, the best way forward is to be upfront. Private buyers will know exactly what to work with when assessing the property and comparing it to others.

Another point to add is that by providing a price you will create an anchor in the buyer’s mind which could ultimately sway their offer based solely on your expectations.

 

Determining your sale price

 

You may already have a figure in mind, but before you move forward let’s take a look at some of the crucial steps private sellers miss before selling their homes.

Keep in mind that it’s not going to be you who decides the market level interest, it’s going to be where the buyers see the value.

Your job is to navigate the negotiations to a point where you reach the highest price, and/or best terms possible. Without harming your campaign.

 

Research

 

Valuation sites online: Homes, QV, Oneroof, Realestate.co.nz
These platforms are where your potential buyers will be gathering information about the value of your property.
Remember these sites will not consider any defects or renovations that your property may have.

 

Comparable Market Analysis:

 

Get a Real Estate agent to do a “CMA” for you.
It’s free of cost and the agents have access to software that the general public does not. This allows them to pull all of the data from recent sales in your area.

A CMA will be more accurate than a valuation website, however, you will need to engage a real estate agent.

 

Valuation

 

A property valuation is undertaken by a registered property valuer who is certified by the Valuers Registration Board.

It is an independent assessment of the value of your property based on many different factors and should be a non-biased opinion based on data.

This comes at a cost anywhere from $600 – $1000 depending on what company you use.

Overpricing your property will scare buyers away and underpricing will minimize the net sale proceeds in your hand, you want to avoid either. Take the time to conduct a little research before selling your property privately to maximize your result.

 

Preparing your home for private sale

 

How do you get your property ready for a private sale?

It’s no different than selling your car, a clean car will be more appealing than a dirty car and some decent photos will trump poor ones but how far do you take it?

Typically off-market buyers are not so emotional, more on these shortly.

However, before your appraisal, a tidy house is going to be helpful but a deep clean is not going to make much of a difference in the buyer’s eyes. Pretty self-explanatory this one, remember to tidy up.

Listing your private sale on Trademe requires you to upload photos, hiring a professional is going to be better than your photos from a phone. If you’re looking to save money some sharp photos featuring all aspects of your property will do the job.

You’re going to come across a wide range of interested parties for your off-market property, to best prepare you for each one, let’s cover the motives and some easy questions to ask these private buyers throughout the process.

 

Developers

 

You may or may not know that your property is situated on favorably zoned development land.

Punch in your address to your local district plan to find out, if medium or high-density zoning is what you’re looking for.

Developers are in the business of buying land, building the property, and selling it down for a profit.

Developers may not be that interested in the house, more so the land and so their offers tend to be on a per square meter rate.

Here are some questions to ask when dealing with developers:

• What is the going square meter rate in this area? (To gauge an idea of their pricing)
• How long do you require for settlement? (Some developers need 12+ months)

 

Investors

 

Investors are in the business of buying, selling, renting, and renovating all sorts of properties.

Depending on the type of investor will determine how they will make an offer.

A buy-fix and hold investor is looking for a rental return, whereas a buy-fix flip investor is looking for a short-term profit margin.

Some questions to ask these buyers are the following:

• How much Due Diligence do you usually require? (To gauge an idea of how quickly they can make a decision)
• Are you in a position to make an unconditional offer? (To see if they can provide a no strings attached offer)

 

General public

 

These buyers come in all different shapes and sizes (Trademe buyers), some key questions to ask, to qualify them are:

• Are you pre-approved for bank financing or will your offer be subject to finance?
• (As Is Where Is Sale) Are you aware that this property is as is where is and is not insurable until it is fixed? Ie: banks won’t approve lending on this.

 

Documentation

 

Selling your property privately will require important paperwork. Keep in mind that the more you provide and disclose, the easier it is for buyers to make a decision. Some paperwork is entirely up to you as to whether you provide and/or pay for it. 

 

Sale & purchase agreement

The S&P is the legally binding contract that stipulates everything about the transaction from purchase price to special terms.

In most private house sales the buyer will draft and submit an offer for your review, once all parties have come to an agreement the contract is signed, initialed, and sent off to the lawyers.

If you’re selling privately on Trademe it would be helpful for you to provide an already drafted Sale and Purchase agreement. Your solicitor can do this for you.

 

LIM report

The “LIM” or Land Information Memorandum is the document that outlines all particulars about the land under all of the district plans departments on that given day it is provided.

The LIM is a living document that can be changed at any time. Offers you receive may be subject to a satisfactory LIM report therefore providing one in advance ($300 + GST) will help you move the ball down the field with prospective purchasers.

 

Building report

A formal report produced by a qualified builder will outline all of the defects throughout a property. Again, offers may be subject to a building report which is a handy tool for buyers to use as negotiation leverage.

A building report will cost approx $600+GST and is optional for sellers, if you provide one you essentially are front footing any issues that may or may not pop up later down the line.

 

EQC scope of works

The Earthquake Commission of New Zealand rolled out a rapid response campaign in the aftermath of the 2010/11 earthquakes to assess damage to homes throughout the affected region.

Under the government regime EQC would cover up to $100,000 + GST to assist with earthquake repairs and the scope of works would outline all necessary damage that had to be repaired.

This campaign was rolled out swiftly and poorly, the majority of the claims disregarded any foundation issues by not assessing them properly or in some cases not at all.

EQC hired just about anyone to undertake the mammoth task of clearing their books as quickly and as cheaply as possible.

Ex truck drivers were carrying out building assessments with no prior building qualification or experience, and vulnerable homeowners (Especially the elderly) were pressured to sign off their “Fletcher managed repairs” without knowing that the foundations hadn’t even been looked at.

Most purchasers will request an EQC scope of work but most of the content isn’t even worth the paper it’s written on. If the property is earthquake damaged and there is no engineering or building report provided the purchaser will most likely need to undertake their evaluations as they can’t rely on the EQC scope of works.

 

Engineering Report

Particularly on Earthquake damaged properties, an engineering report is a far more accurate assessment of the structural integrity of a property.

If you have a report it’s recommended you pass that on to prospective purchasers.

 

Body Corporate Rules & fees

If your property is part of a Body Corporate the body corp rules and fee schedule must be provided along with a Pre Contract Disclosure Statement. 

 

What’s the Process of Privately selling your house in NZ

 

Your journey to privately sold starts by listing your property and letting buyers know you’re in the market to sell.

Once they have carried out viewings and received all of the information it’s time to receive offers now this is where the fun begins.

Choose the most attractive offer and begin negotiations.
Just remember price is not the only metric of an S&P there are terms, conditions, and settlement dates.

Get to a point in the negotiations where you can agree on all points in the contract, the S&P is then signed, dated, and sent to the solicitors.

The following day marks the first day of conditions (If any) for your purchaser to carry out.
For example, if they have 5 working days to undertake a building report it will be your job to ensure they can get access to complete their due diligence.

If for any reason the purchaser doesn’t confirm and cancels the agreement, you now have the chance to deal with the other offers or backup offers.

Once all of the conditions have been met by the purchaser and vendor the agreement will be officially unconditional, meaning the sale will be settled come settlement day.

A pre-settlement inspection is carried out by the purchaser before their settlement day to ensure everything at the property is in good working order and nothing is out of the ordinary. Should there be something wrong ie: all bathroom ware has been removed, then it will be up to the solicitors to reach a solution in order to settle.

Show me the money.

Settlement is payday and in return, your solicitor will hand over keys to the new owner.

Congratulations you have just sold your house privately in NZ. Don’t forget the champagne!

 

Billy �

 

Your Property Solutions

www.yourpropertysolutions.co.nz