What are the advantages and disadvantages of selling a property without an estate agent?

What do I have to consider when selling a home privately?

As a real estate agency, we are repeatedly asked why it is necessary for people to have an agent to sell their property. It undeniably appears illogical for people to need one and we understand the reasons why. There is an enormous demand for housing in all Berlin districts and when this is combined with free property valuations and advertisements in the various real estate portals, one can clearly identify why using a real estate agent appears a waste of a person’s time and money.

I wrote my MBA dissertation at Henley Business School (UK) in 2008 on exactly this topic. Of course a lot has changed since then. Nevertheless, much of my research remains valid. It is indeed true that many owners can easily sell their house and "spare” working with an agent. It is even scientifically proven that the nature and amount of compensation of brokerage services stands in disagreement with the performance from the perspective of many buyers and sellers. This is often the main reason for many owners to sell their home without a broker. The second reason is the unclear performance of the broker and the hard-to-recognise added value for a seller. The third reason is the expectation that by saving the brokerage commission, you can get more money for the house than you would with a broker.

Step 1: Define your goals.

As a real estate agency, we are repeatedly asked why it is necessary for people to have an agent to sell their property. It undeniably appears illogical for people to need one and we understand the reasons why. There is an enormous demand for housing in all Berlin districts and when this is combined with free property valuations and advertisements in the various real estate portals, one can clearly identify why using a real estate agent appears a waste of a person’s time and money.

I wrote my MBA dissertation at Henley Business School (UK) in 2008 on exactly this topic. Of course a lot has changed since then. Nevertheless, much of my research remains valid. It is indeed true that many owners can easily sell their house and “spare” working with an agent. It is even scientifically proven that the nature and amount of compensation of brokerage services stands in disagreement with the performance from the perspective of many buyers and sellers. This is often the main reason for many owners to sell their home without a broker. The second reason is the unclear performance of the broker and the hard-to-recognise added value for a seller. The third reason is the expectation that by saving the brokerage commission, you can get more money for the house than you would with a broker.

Step 2: Determine the value of the house

We recommend you contact two to three local real estate agents for a professional valuation of your property. This is – at least in Berlin – free of charge. Make sure however to only contact those with good references, a good reputation (see Internet entries, press, etc.) and a professional website, and pay particular attention to their local market knowledge.

The agent should ideally have more than one employee, have their own office and have already made sales in your area. The agent should take the time to acknowledge everything in your apartment or house. The valuations of your property should be made in writing and justified. Additionally, make sure to ask the agent to contact other sellers in your area so you can gain from their experiences too.

After you have several valuations, you should have an initial idea of your property’s market value. Please note however that your property’s value is not necessarily the value determined by the agent with the highest evaluation of your house or apartment. Even if this seems the most accurate price to you, make sure to go through the advice of the other agents. What have been identified as its main selling points? Who are your potential buyers? How exactly have these factors been explained to you and can you understand them? Each broker has their own experiences and these can also lead to very different evaluation outcomes.

Step 3: become active

This is a very important step. It is at this point at which things are often overlooked which can later cost you money and become a much larger nuisance than they have to be. It is therefore important to analyse everything as accurately as possible and be realistic with your considerations. Potential buyers will scrutinize everything and look for reasons to reduce the purchase price or not to buy. So that you are prepared, go through all of the reasons why one should “not buy” your property. Only when you have considered all of these reasons, are clear about why you are selling and can take action to make it happen yourself, should you become active as a private seller.

3.1. Update your documents and prepare for sale

When selling a house you will need the following documents (this list is exemplary and may vary from property to property):

• Declaration of division (not for a detached house)
• Decision book (not for a detached house)
• Minutes of the owners’ meeting from the last 3 years (not for a detached house)
• Measured floorplan with certificiation by an architect including architectural views and technical layout.
• Current economic plan (not for a detached house)
• Overview of all modernisations over the last 10 years
• Information by the local planning to confirm that there are no issues with contaminated soils or public easement
• Current land register extract
• Official site plan of the property
• Confirmation by the house management company that there are no outstanding invoices by the vendor on the Hausgeld (not for a detached house)
• Copy of your property insurance
• Energy pass (costs about 50 € to 150 €)
• Proof of the amount of property tax from last year
• Administrator contract between the property management and yourself (not for a detached house)
• Under certain circumstances, you will need an official report by an expert (costs about 1000 € – 3000 €)

3.2. Prepare a brochure

The following points are exemplary and the order must not be followed chronologically:

• Be sure to take professional photos of your property (cost between 200 € – 500 €).
• Have a floor plan – if possible do this with the furnishings included (costs between 50 € – 150 €).
• Consider whether it would make sense to make minor renovations to your house, such as painting walls, repairing floors, etc. (costs from 500 € – X €)
• If the house is empty, you should think about furnishing it (cost between 3500 € – 25.000 €). This will significantly increase the sales value.
• If you currently live in the house yourself, be sure to keep it tidy and clean thoroughly.
• Compose the texts for the brochure precisely and truthfully. In addition to the positive aspects, always mention the negative aspects. Write the texts from a personal viewpoint and with great care.
• The use of simple viewing videos, virtual 360 ° viewings and other modern means of marketing could well be worthwhile.

3.3. Target group analysis and marketing method

Where do your buyers come from and how do they find your property?

• Have you thought about your potential buyers? Where do they come from? Could your house also be of interest to international customers? If so, think about marketing to foreigners and how you can reach them (online, international brokers, advertisements in newspapers, networks, videos, virtual tours, etc.)
• For some houses, marketing online or offline can also be negative. Does that apply to your house?
• Pick the best real estate portal in your city.
  One real estate portal is enough. Interest locals will find you if you advertise on the best portal (costs about 100 € – 250 €).
• Attach a ‘For Sale’ sign to your house (costs about 500 € – 1500 €).
• Is there a local newspaper or a free magazine in your area? If so, you can place one or more advertisements there (cost € 150 – € 750).
• Make sure that no “free rider” offers your home on the internet or anywhere else. Make sure you communicate the exact same messages in different forms of advertising (location, price, size, features, etc.).

3.4. Sales technique, viewings, assessment of the quality of the interested buyers:

• It is important to quickly and professionally respond to the requests of your prospective buyers. The speed of your reaction and the type of brochure with which you provide them with are fundamental to gaining interest from the kind of quality prospective buyers to whom you want to sell to.
• Many buyers will find your property attractive because you want to sell “commission-free”. What is the reason for this and why does the buyer have an advantage?
• Did you increase the purchase price by the commission? What scope in the price did you give yourself to play with? Do you start at  a lower price in the brochure than the purchase price and let the bidding process negotiate the price upwards or do you start at a higher price? Or do you stick to the fixed price?
• Do you want to have just one viewer or multiple viewers at a viewing? Do you want to make individual or collective appointments with the prospective buyers? How much time do you spend with each person per viewing? Who will do the viewings with you? What are the advantages and disadvantages of each sales technique? How do you secure your home and its contents during a visit e.g. from theft, etc.?
• How do you select a prospective buyer? How high should their equity be and what proof of funding should they provide?
• How do you want to deal with the bids when you are suddenly offered the price in the brochure? Are these bids valid? What do you do when a buyer puts you under pressure? What do you do if the bids are under your brochure price? What do you do when they are far above?
• How much time do you want to give the customer to secure the financing and to check the documents? How do you ensure that you do not lose the other prospects, should the buyer jump?

3.5. Graduation / Notary appointment:

• Remember: until after the signature at a lawyers, all agreements remain unbinding.
• If you have chosen a buyer and have agreed on both the price and the condition of the house in which it is to be sold, you should select a notary office together with the buyer. Please keep in mind that the costs of the lawyer are with the buyer (in Berlin) and that they also have the right to select the lawyer. You could however also be liable for the costs of the lawyer.
• Before the certification show the equity or the proof of financing of the buyer. Think about the date when the property will legally change ownership and the date when you hand the property over.

3.6. Processing the sale:

• The lawyers now handle the sale. They will safeguard you as the seller and will also safeguard the buyer so that the house can be handed over step by step.
• Please hand over the keys to the buyer only after the full payment has been received.