Private house sale, how to proceed?

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657 posts

Ultimate Geek

#3124804 7-Sep-2023 20:37

Geektastic: Like the Curate’s egg, agents are good in parts.

A good one is excellent and well worth the cost. The hard part is finding a good one…

We have previously worked with an agent who wasn't great. She was desperate to make the sale go through, no matter the price. When the conditional buyer had completed his due diligence he came back with an offer $150k lower than what he had originally offered. Our agent was begging us to take this offer, giving all sorts of reasons such as our house wasn't worth the original offer, that this was more realistic, the market was bad and we wouldn't find another buyer, our property had too many rocks - literally every reason under the sun to try and convince us to take it. We held firm and said we would rather walk away than reduce the price. The buyer then came back with an offer $50k lower than the original. We said, how about we split the difference and reduce the price by $25k and then we'll go unconditional. The buyer accepted. If we had listened to our agent we would have missed out on $125k - which was money we needed to get into our next house.

My advice is to find a successful agent who isn't an arrogant arsehole. There are a few of them around. We worked with one who had sold something like $150m worth of property in the previous 12 months - so he didn't really need our commission, it was chicken feed to him. But he was the nicest guy, didn't put any pressure on us, was patient and gave us plenty of his time and gave honest feedback on the property, the market, etc. If anyone needs a good agent in Auckland, I can recommend him, PM me and I'll give you his name.

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Handle9

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#3124862 8-Sep-2023 05:13

timmmay:

An agent works for you, their job is to get as much for the house as they can.

An agent works to get a deal. $20k for you is worth ~$200 for them. They don't care much about the price just that it sells.

Handle9

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#3124863 8-Sep-2023 05:19

The process of buying/selling privately is pretty straight forward.

You agree on price/conditions, engage a lawyer to draw up the contract on the standard template and sign the deal. It's exactly the same as buying through an agent.

If you have a buyer and can agree on a price you are most of the way there. The most important thing is to be confident in what the house is worth and what you can live with on pricing.

eracode

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#3124866 8-Sep-2023 06:17

Handle9:

The process of buying/selling privately is pretty straight forward.

You agree on price/conditions, engage a lawyer to draw up the contract on the standard template and sign the deal. It's exactly the same as buying through an agent.

If you have a buyer and can agree on a price you are most of the way there. The most important thing is to be confident in what the house is worth and what you can live with on pricing.

Except not if the buyer wants to arrange bank finance. At normal loan-to-valuation ratios, banks do not usually require a Valuation Report if there’s an agent involved - but are likely to need one if there’s no agent.

This is because the vendor and purchaser could be ‘cooking the books’ on price to scam the lender - so the bank needs to be sure that the agreed price accurately reflects the market value. When there’s an agent involved, the banks see the agent as a steadying independent actor - plus the banks are relying on the law and rules governing agents’ behaviour.

A price arrived at in a ‘willing seller + willing buyer + agent’ situation is usually accepted by the bank as being market value. Not so much when it’s a Sale by Private Treaty with no agent involved.

Sometimes I just sit and think. Other times I just sit.

Goosey

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#3124867 8-Sep-2023 06:20

Sources tell me Auction sucess rates and people attended have softened in performance here in ChCh.....even traditional sales methods have softened / property is taking longer to sell...

for every agent saying its a great time to buy, theres another agent saying its a great time to sell....

Handle9

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#3124868 8-Sep-2023 06:33

eracode:

Handle9:

The process of buying/selling privately is pretty straight forward.

You agree on price/conditions, engage a lawyer to draw up the contract on the standard template and sign the deal. It's exactly the same as buying through an agent.

If you have a buyer and can agree on a price you are most of the way there. The most important thing is to be confident in what the house is worth and what you can live with on pricing.

Except not if the buyer wants to arrange bank finance. At normal loan-to-valuation ratios, banks do not usually require a Valuation Report if there’s an agent involved - but are likely to need one if there’s no agent.

This is because the vendor and purchaser could be ‘cooking the books’ on price to scam the lender - so the bank needs to be sure that the agreed price accurately reflects the market value. When there’s an agent involved, the banks see the agent as a steadying independent actor - plus the banks are relying on the law and rules governing agents’ behaviour.

A price arrived at in a ‘willing seller + willing buyer + agent’ situation is usually accepted by the bank as being market value. Not so much when it’s a Sale by Private Treaty with no agent involved.

It's somewhat more complex than that. If the LVR is strong and the value relative to other sales in the area are fine the it's not a big deal. If you are more finely balance it can require a valuation. When we bought privately no valuation was required due to the factors above.

Finance on a sale through an agent can also require a valuation, it's very situation dependent.

Regardless the sales process is the same, finance is a problem for the buyer and banks generally don't like vendors reports for this sort of thing.

eracode

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#3124869 8-Sep-2023 06:45

Handle9:

It's somewhat more complex than that. If the LVR is strong and the value relative to other sales in the area are fine the it's not a big deal. If you are more finely balance it can require a valuation. When we bought privately no valuation was required due to the factors above.

Finance on a sale through an agent can also require a valuation, it's very situation dependent.

Regardless the sales process is the same, finance is a problem for the buyer and banks generally don't like vendors reports for this sort of thing.

Yep I’m aware of all the complexities and minutiae but I was keeping comments general otherwise we go down a rabbit hole and lose the main thrust. That’s why I said ‘for normal LV ratios’. In those general circs, agent > no valuation required, no agent > valuation required.

Not sure that you mean by ‘banks generally don't like vendors reports for this sort of thing’.

Sometimes I just sit and think. Other times I just sit.

Handle9

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#3124872 8-Sep-2023 06:54

eracode:
Handle9:

It's somewhat more complex than that. If the LVR is strong and the value relative to other sales in the area are fine the it's not a big deal. If you are more finely balance it can require a valuation. When we bought privately no valuation was required due to the factors above.

Finance on a sale through an agent can also require a valuation, it's very situation dependent.

Regardless the sales process is the same, finance is a problem for the buyer and banks generally don't like vendors reports for this sort of thing.

Yep I’m aware of all the complexities and minutiae but I was keeping comments general otherwise we go down a rabbit hole and lose the main thrust. That’s why I said ‘for normal LV ratios’. In those general circs, agent > no valuation required, no agent > valuation required.

Not sure that you mean by ‘banks generally don't like vendors reports for this sort of thing’.

Generally reports supplied by the vendor (valuations, builders reports etc) wouldn’t be accepted for finance due to the conflict of interest.

eracode

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#3124875 8-Sep-2023 06:59

Handle9:

Generally reports supplied by the vendor (valuations, builders reports etc) wouldn’t be accepted for finance due to the conflict of interest.

You’re right but I didn’t mention anything supplied by the vendor. I’m talking about a Valuation Report addressed to the bank prepared by a Registered Valuer acceptable to the bank - and paid for by the borrower.

Sometimes I just sit and think. Other times I just sit.

Handle9

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#3124877 8-Sep-2023 07:05

OP mentioned getting a valuation.

eracode

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#3124878 8-Sep-2023 07:13

Handle9: OP mentioned getting a valuation.

… which is a good idea to help them get a feel for the current market value of their house in the absence of ‘advice’ from an agent. Maybe all that is needed for their private use if no bank is involved. However if there is a bank, the valuation will need to meet the bank’s criteria - and as you say, a valuation commissioned by and addressed to the vendor wouldn’t cut it.

Sometimes I just sit and think. Other times I just sit.

David321

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Ultimate Geek

#3124881 8-Sep-2023 07:37

OP here, we are thinking of getting our own valuation, and asking the buyers to get one also from another company, (their bank will probably require one anyway). From there we would have two valuations to compare and could possibly meet in the middle if we both agreed that was fair. Or we could get them to get their valuation first as they will require one anyway, and ask them to show us, and see how that look to us.

On a side note, does anyone know the going rate for a valuation these days? (Christchurch area)

_David_

eracode

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#3124882 8-Sep-2023 07:40

David321:

OP here, we are thinking of getting our own valuation, and asking the buyers to get one also from another company, (their bank will probably require one anyway). From there we would have two valuations to compare and could possibly meet in the middle if we both agreed that was fair. Or we could get them to get their valuation first as they will require one anyway, and ask them to show us, and see how that look to us.

On a side note, does anyone know the going rate for a valuation these days? (Christchurch area)

All good stuff. I’d go with your idea of getting their valuation first and see how you go from there.

Sometimes I just sit and think. Other times I just sit.

BlargHonk

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Master Geek

#3124898 8-Sep-2023 08:18

eracode:

Handle9:

The process of buying/selling privately is pretty straight forward.

You agree on price/conditions, engage a lawyer to draw up the contract on the standard template and sign the deal. It's exactly the same as buying through an agent.

If you have a buyer and can agree on a price you are most of the way there. The most important thing is to be confident in what the house is worth and what you can live with on pricing.

Except not if the buyer wants to arrange bank finance. At normal loan-to-valuation ratios, banks do not usually require a Valuation Report if there’s an agent involved - but are likely to need one if there’s no agent.

This is because the vendor and purchaser could be ‘cooking the books’ on price to scam the lender - so the bank needs to be sure that the agreed price accurately reflects the market value. When there’s an agent involved, the banks see the agent as a steadying independent actor - plus the banks are relying on the law and rules governing agents’ behaviour.

A price arrived at in a ‘willing seller + willing buyer + agent’ situation is usually accepted by the bank as being market value. Not so much when it’s a Sale by Private Treaty with no agent involved.

We bought privately but the bank said that as the price we were offering was within a certain band around their QV estimate of the properties worth, then they didn't require a valuation.

eracode

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#3124904 8-Sep-2023 08:26

BlargHonk:

We bought privately but the bank said that as the price we were offering was within a certain band around their QV estimate of the properties worth, then they didn't require a valuation.

Despite my earlier comments, that does make sense and is good to hear.

@David321 Armed with this info, if they haven’t already done so, maybe your buyer should talk to their bank with cards on the table and get the bank’s view on all this.

Sometimes I just sit and think. Other times I just sit.

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