2023-02-16 | Selling property without an agent – is that really a good idea these days?
Can I sell my house without a real estate agent?
Many friends and acquaintances keep asking us why they need a realtor to sell their house. After all, they say, there is an enormous demand for housing. Since the market evaluation of one’s own house by one or more estate agents is usually free of charge, and an advertisement in the various real estate portals can also be booked as a private seller, estate agents would actually be superfluous.
I wrote my MBA dissertation at Henley Business School (UK) in 2008 on this very topic. Since then, a lot has happened, of course. Nevertheless, many statements are still valid. It is correct, many owners can easily sell their house themselves and “save” the agent. It has even been scientifically proven that the nature and amount of the broker’s compensation is in discrepancy with the performance from the point of view of many buyers and sellers.
This is often the main reason for many owners to want to sell their house without a broker. The second reason is that the broker’s performance is unclear and it is difficult for a seller to see the added value. The third reason is the expectation that by saving the broker’s commission, more money can be gotten for the house than with a broker.
What do I need to consider when selling a house privately?
Step 1: Define goals
The most important thing for you as a seller are your personal goals. First of all, this has nothing to do with the real estate market, but with your stage of life, your financial circumstances and your plans for the time after the sale.
What are the reasons for a sale and what do you want to do afterwards?
- Do you need a different type of property in a different location? Apartment instead of house or house instead of apartment? New job in another state or even abroad?
- Are you retiring soon or already are and want to have money at your disposal?
- Would you like to make a profit on the sale of your property and reinvest it in a new property?
- Are there alternatives to selling your home? Such as refinancing, renting, remodeling, etc?
This is where you should invest the most time and be clear about your specific personal goals. Often the goals contradict each other. How can you reconcile them?
Step 2 : Determine the value of the house
We advise a professional valuation by local brokers. This is – at least in Berlin – free of charge. If you want to do so, feel free to contact 2 or 3 brokers. Besides good references (see internet entries, press, etc.) and a professional website, pay special attention to local market knowledge and the reputation of the broker.
The broker should ideally have more than one employee, have his own office and have already made sales in your area. The realtor should take enough time in your home to look at everything carefully. The appraisals of your property should be in writing and justified. Also ask the agent to contact other sellers in your area. This may also allow you to obtain the experiences of the other sellers.
After you have several appraisals, you should be able to get an initial idea of the market value. Make sure that the broker who “determined” the supposedly highest price for you is not necessarily correct. Even if you would like it to be, of course, go through the arguments of the other colleagues as well. What speaks for your property, what against it? Who are your potential buyers? How exactly have these potentials been explained to you and can you understand them? Every real estate agent has his own experiences. These can lead to very different evaluations.
Step 3: Become active
This is a very important step. Things are often overlooked here that can cost real money and nerves later on. That’s why it’s important to analyze everything as carefully as possible and to look at the situation realistically. Potential buyers will look at everything very carefully and look for reasons to reduce the purchase price or not to buy. Please go through all the reasons why they “should not buy” your property. Only when you have gone through everything, are clear about the benefits of the sale and can act if necessary, should you become active as a private seller.
3.1. update documents and prepare them for the 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 single-family house)
- Resolution book (not for single family house)
- Minutes of the owners’ meeting of the last 3 years (not for single-family house)
- Dimensioned floor plan with stamp of the architects and also views, sections of the property
- Current business plan (not for single-family houses)
- Overview of all modernizations of the last 10 years
- Information from the register of contaminated sites and building encumbrances
- Current excerpt from the land register
- Official site plan of the property
- Confirmation from the property management that there are no outstanding house payments (not for single-family houses)
- Copy of the insurance of your property
- Energy certificate (costs approx. 50€-150€)
- Proof of the amount of property tax from the last year
- Property management contract between you and the property management (not for single family houses)
- You may need a proper expert’s report (costs approx. 1000€ – 3000€)
3.2. Prepare the exposé
The following points are exemplary, the order is not chronological:
- Be sure to have professional photos taken of your property (cost between 200€ – 500€).
- Have a floor plan for sale – preferably furnished – drawn up (costs between 50€ – 150€).
- Consider whether it makes sense to carry out 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 an appealing real furniture (costs between 3500€ – 25.000€). This will increase the sale value.
- If the house is inhabited by yourself, make sure to clean and tidy it very thoroughly.
- Write the texts for the exposé exactly and truthfully. Always mention the negative aspects as well as the positive ones. Write these texts emotionally and with a lot of care.
- The use of simple inspection videos, virtual 360° walk-throughs and other modern marketing tools could be well worthwhile.
3.3 Target group analysis and marketing method
Where do your buyers come from and how do they find your house:
- Have you thought about your potential buyers? Where do they come from? Is your house possibly interesting for international buyers? If so, think about marketing to foreigners and how to reach them (online, international agents, ads in newspapers, networks, videos, virtual tours, etc.).
- For some houses, marketing online or offline can also be negative. Does this apply to your house?
- Choose the best real estate portal in your city. In Berlin, this is https://www.immobilienscout24.de/.
One real estate portal is enough. You will find the local online interested parties as long as you advertise on the best portal (costs approx. 100€ – 250€).
- Talk to your neighbors, design mailings if necessary and put a sign on your house (cost approx. 500€ – 1500€).
- Is there a local newspaper or free magazine in your area? If so, place one or more advertisements there (cost 150€ – 750€).
- Make sure that no “free rider” offers your house on the Internet or elsewhere. Be sure to have the exact same messages communicated in the different forms of advertising (location, price, size, amenities, etc.).
3.4 Sales technique, viewings, assessing the quality of prospective buyers:
- Here it is important to react promptly and professionally to the inquiries of the prospective buyers. Speed of response, type of exposé and communicated facts are elementary for the quality of your prospective buyers.
- Many customers will ask you to sell “commission-free”. What is the reason for this and why does the buyer have an advantage?
- Have you increased the purchase price by the broker’s commission? What leeway in price have you given yourself? Do you start lower in the exposé as the purchase price and let the bidding process negotiate the price upwards or do you start higher? Or do you go for the fixed price?
- Do you want to have many customers at one viewing or just one? Do you want to make individual or group appointments with customers? How much time do you invest per visit? Who will do the visits with you? What are the pros and cons of each sales technique? How do you secure your house and its inventory during a viewing against theft, etc.?
- How do you select a prospective buyer? How much equity should he have and what proof of financing does he need to provide?
- How will you deal with the bids if you quickly get the exposé price offered? Are these bids valid? What do you do if the customer puts time pressure on you? What do you do if the bids are below your exposé price? What do you do if they are way above?
- How much time do you want to give the client to secure financing and review the documents? How do you ensure that you don’t lose the other prospective buyers if the buyer bails?
3.5 Closing / Notary Date:
- Remember: until after the signature at the notary, all agreements are not binding in practice in case of doubt.
- Once you have decided on a buyer and agreed on both the price and the condition of the house for sale, you should choose a notary office together with the buyer. Please keep in mind that the costs of the notary’s office lie with the buyer (in Berlin) and the buyer also has the right to choose the notary. However, you can also be liable for the notary’s costs.
- Before the notarization, please have the buyer’s equity or proof of financing shown to you. Think about the timing of the transfer of encumbrances and benefits and the transfer of ownership.
3.6 Settlement of the sale:
- The notary now handles the sale. He secures you as the seller and the buyer, so that the house can be handed over step by step.
- Please hand over the keys to the buyer only after full payment has been received by you.
Not sure whether to sell your home with or without a realtor?Weigh the advantages and disadvantages of a private sale.
What customers does a broker reach that you can't reach yourself and what security does a broker offer you and what is that worth to you?
Which services, if any, do you want to receive from a professional and which can you provide yourself? What makes sense and what does not?