First Time Buyer
Experts reveal their off market property buying and selling tips
With the latest Royal Institution of Chartered Surveyors data confirming new instructions to sell were at their lowest level in May since the end of last year, stock available to buyers remains very limited.
Demand to buy remains comparatively high, however, with the mismatch pushing house prices higher. Halifax said yesterday that UK house prices in June were up a staggering 13% over the previous 12 months.
There are anecdotal signs the shortage of homes for sale may be encouraging frustrated buyers to take things into their own hands.
Around one in 20 homes sold in the UK each year changes hands without the aid of an estate agent, saving sellers thousands of pounds in fees.
But how easy is it to find a buyer privately, and if you want to buy a home that isn’t on the market, how do you go about it?
‘Frustrated buyers looking in darker corners’
According to housing market veteran expert Henry Pryor, roughly 15% of property sales are done “off market” for a range of reasons.
“Some are trying to find a buyer without publicity and others just want to save paying an estate agent a fee,” he says.
But without involving either an estate agent or buying agent, Pryor warns “buyers are dealing in a saloon bar in the wild west”.
He says: “The stock of available properties is probably around 35% below normal as a result of the extra sales done last year and, whilst there are signs that more homes will come to market in September, some buyers are getting frustrated and starting to look in darker corners in an attempt to find a new home.
“Be warned though, consumer protection is almost non-existent and there is very little comeback if the seller has mis-described the property or has deliberately omitted to mention something important.”
Reasons to sell privately
From a seller’s perspective, bypassing the estate agent is likely to save thousands of pounds. A typical 1.5% commission payable to the selling agent on completion for a £250,000 home amounts to £3,750.
If you are approached by a prospective buyer directly, you might want to progress with a private sale, according to Russell Quirk, an independent property and housing market expert.
But he warns that seeking out private buyers without the help of an agent is likely to be very hit and miss.
“Almost the entire inventory of Britain’s homes for sale are advertised on property portals such as Zoopla and Rightmove and these websites are the exclusive domain of estate agents – you cannot advertise your home on the portals as a private seller,” he says.
How to advertise your home for sale
Pryor said he has seen properties advertised for sale on social media platforms and sites such as RadioHP, with properties offered by owners directly.
Advice from consumer group Which? suggests posting your property on local Facebook pages with plenty of good quality photographs and comprehensive information about the property.
Sites such as The House Shop allow you to advertise and sell your property online for free, as do both eBay and Gumtree.
Which? also recommends you:
• Advertise your property locally
• Place ads in local newspapers: these often have extensive property sections and will reach a broad local audience.
• Advertise in small local newsletters or publications: these will reach a smaller audience of dedicated readers.
• Put up a ‘For Sale’ sign: include a phone number and make sure the sign complies with legal requirements regarding its size (no larger than 0.5m2, or 0.6m2 if using two signs joined together). The board must have a different advertisement on each side.
Is buying a property privately a good idea?
Pryor acts as a buying agent for clients without the time or inclination to look for their next home.
“About 30% of the homes we buy aren’t listed on websites or in estate agents’ windows,” he says.
“But generally homes being offered privately by the owners themselves are risky options for unwary buyers.”
If you are tempted to buy something being sold by the owner then make sure you have a good lawyer and get a full building survey, Pryor advises.
“They will be expensive but not as expensive as if you do a deal with a guy down the pub and later find out that they don’t actually own what you thought you were buying or that you’ve paid far more than the property is worth,” he warns. “Caveat emptor – buyer beware – should be tattooed onto your forehead.”
But he adds: “It can work. Some genuine sellers opt to sell directly but be wary and always double-check anything you are told about the property.”
Quirk is firmly of the view that buying without an agent is a bad idea, suggesting there is “very little benefit to wading into the property market on one’s own”.
“If you elect to identify and purchase a home that is agent-free, you will have to look very hard to find one hidden in the classifieds or on eBay somewhere,” he says.
“Quite apart from the question of choice, home buyers in Britain get a free ride from agents in that they pay no fee whatsoever to the agent. The agent will, to varying levels of competence, liaise between the buyer and the seller on viewing appointments, the offer made and agreed and the protracted and problematic (and archaic) legal process. All for free for the buyer.
“On average a transaction takes about five months and so that no cost hand-holding looks pretty good to me.”
He adds: “Frankly, those seeking to avoid using an agent when buying a home are rather looking a gift horse in the mouth.”
How to buy a property privately
If you do want to go ahead – perhaps if you have your eye on a particular property and it isn’t on the market – there are plenty of success stories out there.
Usually, to make an approach it’s sensible not to go in all guns blazing. Putting a letter through the door expressing your interest with your contact details as a first step, and allows the homeowner to consider whether they might want to sell.
If you get to the point where it’s appropriate to give more specific details of your offer, see YourMoney.com’s guide to writing a winning property offer letter.
There are also several vital steps to take to avoid being caught out:
1. Appoint a solicitor who knows what they’re doing. You want a firm with considerable experience in conveyancing and which can provide evidence of successful previous work. They will guide you through the purchase process and should be wise to any attempts to con you out of your money.
2. Get a full structural buildings survey. It’s more expensive than a Home Report but it will show up any major defects in the property and give you an indication of how expensive it will be to rectify them.
3. Ask for an up-to-date Energy Performance Certificate before committing to an offer, and ensure your solicitor has checked the property is registered with the owner you’re contracting with on the Land Registry.
Have you bought or sold a property privately? Let us know your experience in Disqus below.