Back in 2007 something drastic began to happen in the United States that was to have a profound effect around the globe. The collapse of the Lehmann Brothers Banking Corporation didn’t just take financers, economists and bankers by surprise, it took all of us a moment to swallow the information: how on earth could a banking establishment as big and secure as the Lehmann Brothers collapse? And moreover, how did we all miss it, especially when AIG was going under and nobody seemed to be noticing it.
The next few months panned out to 2008 and then in the U.S. there was all that Fannie Mae and Freddie Mac issue and suddenly we were watching homeowners being evicted from their townhouses and homes following foreclosure, and the poor folk suddenly found themselves living inside their cars!
The situation soon spread to the United Kingdom; in the wake of what was the credit crunch or the “economic downturn” house prices suddenly froze. To many that were in the middle of a mortgage term, it was like we had just had a major jolt in our car whilst driving on our way to work.
But still the prospect and fear of negative equity, falling house prices and economic housing crisis didn’t really sink in at first. In fact in the U.S. and the U.K. interest rates began to fall sharply. At first most homeowners were actually chuffed. It meant the banks and lenders who had gave you and I the cash (so readily in many cases) to buy our homes were being forced to reduce the repayment mortgage monthly fees they charged.
Interest rates came right down in time to about 0.25 per cent in the U.S. and dropped to 0.5 per cent in the U.K. The result was lower repayments (unless you were unlucky enough to have bought into a long term fixed rate plan which was at around 5 per cent or more with many mortgage companies before the credit crunch) and with lower repayments, the value of your home to the outside market began to freeze and even start to fall.
The housing market was all but grounding to a halt, on both sides of the pond and the way everyday people controlled their finances reshaped a spending revolution. In the U.K., as with most of the European Economic Market, austerity ruled the day. If you asked your boss for a rise at work, he more than likely tell you to save your jokes until Friday afternoon, if you didn’t notice the price of every item you picked up in the supermarket, you started to then and all of us were tightening the belts at every angle.
Selling your home became a bit of a crisis and as we searched around for an answer to save money, we became constantly embroiled in money saving supermarket websites, finance advice, forums hinting at the cheapest places to buy stuff online and tips on how to sell your home in a buyers’ market.
Yes, those decades when it was a sellers’ market in the housing industry had come to a big crash and the roles had suddenly been reversed. Selling your home without the use of a real estate agent (or an estate agent as they are called in the United Kingdom) seemed unthinkable before the housing market collapse which started in earnest by 2008, so why is it of such interest for us today?
Money Saving a Real Priority for Home Sellers
Saving money during times of austerity suddenly became a real issue for millions of Americans and Brits desperate to actually get off the housing ladder, rather than get on it with the gravy train rush that started just a decade earlier.
One of the biggest fees that a homeowner has to fork out when selling their home is the estate agent fee. Just how much this fee actually is can vary depending on the level of service your estate agent offers and whether it has many local competitors in the housing market game.
The housing market game of selling and buying had changed dramatically, and few saw it coming. Hardly anybody wanted to buy and sellers could only wince at the prices they would get for their property on the housing market. The result was they pretty much stayed where they were. But what about those that were forced to sell – those who faced foreclosure or eviction from their lenders, unless they sold up quick.
If you continue to fail to meet your monthly mortgage repayments, foreclosure and repossession of your home would be the sad but inevitable case. A home that forecloses will in time get sold off by the lender or bank that gave you the mortgage in the first place, so that it can get its cash back quickly.
It sounds a cruel and disheartening situation to be in but it is a hard fact of life. So in order to lessen the impact on a short sale, a homeowner would look at other ways of saving cash. And one of the first tips which spring to mind is: getting rid of that middle man – the estate agent.
Most of us will be pleased that times are beginning to change – in the economy that is – good times are back and we are starting to see house prices rising once again and the market looking brighter for many involved in the housing selling and buying business. Only, this time a new breed of potential homeowners and sellers are beginning to question the role of the estate agent. Sellers are beginning to hold estate agents to account and ask the question: what the hell do you do exactly that I cannot do for myself?
In some cases, more often than not in fact, the fees an estate agent charges are extortionate and much too high. Moreover, many will offer you the full Monty service which includes a solicitor (a required body when selling a home) as well as a Home Inspection Certificate. Only most will use their own in-house solicitors and offer you the certificate ticket for home efficiency at a price double what you could have got it for had you sourced it independently.
Other estate agents will just say they will charge a 3 per cent fee of the final sale, whatever it goes for. Now, that sounds all well and good but what if you happen to be selling a one-bedroom apartment, which would normally go for around £100,000 if sold in the south eastern region of England (much less if further up north or in Scotland), the 3 per cent hit would mean you only got £97,000 of your flat value back. Furthermore, some estate agents are charging a standard fee of £3,000 plus VAT – regardless of the fee the flat eventually sells for – which hits the seller for a whopping £3,600 once VAT (Value Added Tax) is added; now that’s a poor return for a business which may sell your studio apartment in Manchester or Liverpool for just £50,000.
Can an estate agent justify these costs and can you as a seller get them cheaper elsewhere? After all, many of us plan all of our own holidays over the internet these days and travel agents will not have welcomed the internet as it means they will have had to reassess how they do business nowadays.
What Exactly Does an Estate Agent Do?
Many wrongly think that estate agents are there to sell your property, and that’s it. You’d be wrong of course; its aim is to get you to list your property with them. The pre-sale bit – when they come round to give you your quotes and estimates – is the real important bit, to them!
But hold on, isn’t the most important bit to me the actual sale of my home? Not really, not to them it isn’t. You might be surprised to learn that the commission the estate agent gets is made on getting a new property listed under its banner, rather than on the sale or the securing of that sale.
You may have noticed how most estate agents offer a free valuation of your home. This is a tried and tested method used by estate agents to get their foot in the door. They already know the value of your home. Anybody can look up (for free) on the internet how much say a three-bed semi-detached in Croydon would normally fetch and a one-bed flat in Welwyn Garden City is as easy is finding out what the postcode is and the general state of the property.
Then there is another trick the estate agents play against us; the valuation it gives us is usually about 10 to 12 per cent higher than its true valuation and is used as a trick to get us to sign up and list our properties with them.
Can you imagine if an estate agent looked at similar properties sold recently near you and picked the top five or six sellers and told you this was “average” or the “going rate?” Therefore, anyone with a one-bed apartment worth £100,000, don’t be surprised if the estate agent tells you a few of them have sold at £112,000 or £109,000 in your area and are a similar property type.
It’s more likely these properties have had vast sums of cash spent on them and are decorated to a high standard. The ones that did sell at £98,000 or slightly under your TRUE valuation are not going to get a mention from your estate agent. However, their research will have discovered these.
If you don’t believe me, try this simple trick. Get the value of your home from a website like the BBC House Price Tracker to see if your home is actually worth what you (or your estate agent) thought it was. Then check on recent sales in the biggest online home selling directories and look at the Land Registry for public records.
The next task for your estate agent is to take some photos of the home – both inside and out – and post them onto a site like Zoopla or Right Move UK. These are both huge directories and are unrivalled in Britain for sheer volume of homes up for sale. The websites are also the biggest places for potential buyers to head when looking to purchase property.
As with all property searches, you will need only your postcode, area or region and the type of property you want to sell (or buy) such as studio flat, one-bed flat, two-bed flat, three-bed house and so on. Once you get to see the results you’ll quickly begin to realize your one-bedroom flat in the south east of England you thought was worth around £100,000 and your estate agent promised you can “expect” to get around £106,000 minimum but up to £112,000 – is in fact correctly priced as you will have discovered and your estate agent has basically tried to oversell the idea in order to get you on board.
Where Do I Start Then?
So, just where do I start with selling my home without going within an office shoe of an estate agent’s shop? First, you must make your home sellable. If it needs decorating, then you will have to get down and dirty and start painting and making it modern looking.
Even if you are not the sort of person who likes hanging wallpaper, painting walls, hanging dado rails and putting down new carpets, get someone in who does do it – a professional or a keen friend. A decorated home can sell for up to £6,000 more than a home that has not been recently given a lick of paint. And I can tell you now, a decorator will not charge as much as half that to knock out just a couple of the main rooms in your home.
Decorating your home will pay itself back; and moreover, it could do so many times over. One recent apartment in Surrey, near south London was placed on the market for a £120,000. The one-bedroom flat received no interested parties as clients were not satisfied with the walls that needed plastering, the carpets replacing and the entire flat begging for modernization. One potential buyer offered £98,000 which was rejected out of hand, as was a later offer of £105,000.
The flat was redecorated professionally over a period of three months and cost the owner at least £5,000 but new doors were fitted along with a new bath set, kitchen units and modernization took place throughout this tiny apartment in Croydon.
It went back on the market at £122,000 and was sold within six days on it being relisted. In fact it actually received £124,500 as there were three potential buyers battling against one another. If you do the maths, you will discover the decoration may have taken time and money, but it nailed the sale and every penny paid out to the decorator was reimbursed through the flat sale.
In reality, it is the kitchen and the bathroom that need to be tidied up and cleaned (preferably professionally) as these are the rooms that sell homes. You don’t need to buy an entire new kitchen and bathroom unit, just make sure you repair any broken bits (plugs, drawers and counter tops) and paint over that 1960s wood panel!
Set the Price
Once you have made up your home and cleaned it as much as possible, it’s time to set the price. You will not have to ask a professional for a house valuation. This has already been mentioned, and finding out the true value of your home is easier than you might have imagined.
It is good to know that it has not always been like this; estate agents will hate us for saying it but selling your home or flat yourself with no help from the estate agent is easier today than it has ever been. Much of the ease in selling your home is down to the internet, so anyone not online in any way or without access to a network should think about getting on line before you can progress.
We have already learned that some estate agents are guilty of inflating valuations, if only to get you to sign up and come on board with them. The keen temperament of the estate agent is overwhelming once you have signed up with them, but you just watch them cool once you are on the books and your home is up for sale.
Doing Your Own Research
Getting online and going in to get your hands dirty is surprisingly easy and rewarding. Within less than 10 minutes you can log into Rightmove.co.uk and nethouseprices.com and wonder how you never managed to stumble across these sites in the past. They both provide dynamic tools to evaluate nearby houses similar to your own.
But remember to look at the houses and properties that have sold and not so much the ones that have been grossly overpriced and sat around on the market for several months without a buyer.
A Description of Your House or Flat
In actual fact, writing a description of your home is ten times easier than it is to produce your resume (CV). The estate agent will simply knock this up in a matter of minutes and you don’t need to be a genius to do this.
There is no need to write a glowing report or description about your home, and it does not have to be lengthy either. A potential buyer will not want to read through endless amount of glorified drivel. A few short lines like, “This much-sought after region presents a recently modernized maisonette with fitted kitchen and bathroom. The apartment is located in the quiet Pin Green district of the town.” And that’s about it.
You may want to tell potential buyers about garages and sheds (outhouses) that come with the tenancy and you will need to disclose any service charges and ground rents that the local council pass on to leaseholders (these charges are not paid by freeholders).
Get The Photos Right – A Great Image Means Everything!
This one is important; an estate agent often takes a great deal of time and care with photos and the angle is vital too. It’s actually difficult to get a good picture of a small kitchen but estate agents are used to it and it won’t take you long to collect a sample of decent photos of inside and outside your property.
If you live out in the countryside then get a shot or two of those rolling landscapes, farm views and country lanes right outside your home. The immediate area where you live means a great deal to a potential buyer.
If you have a studio flat in a small block of flats then don’t waste images on your bathroom sink and toilet, just take some of the modern fixtures and fittings in the living room to make it look homely and warm. If the kitchen is fairly large or very small always take the image from the top corner.
In all cases the communal living areas should be shown at their best time. This means AFTER the refuse collection team have cleaned the gardens up and swept around the outhouses and sheds. You should never include personal belongings in your images such as a clothes horse with washing drying and someone’s knee sat down in an armchair. No pets should be in the shots and you can refrain from using an image of yourself pointing to any fixtures or features that you want the viewer to specifically look at.
Once you have got all your images uploaded to your PC or tablet and the description sorted out and checked with proof reading, you can now go ahead and list the property. As a private seller, you are classed in the business as a “for sale by owner” seller. The big guns such as Right Move, Zoopla and Prime Location are not going to welcome you here, I’m afraid. These portals are the exclusive areas where estate agents can advertise and they will have paid handsomely to do so.
However, there are two websites we can direct you to right away:
In a country like Denmark the “For Sale by Owner” concept is very used and you will find many sites in Denmark that service home owners who want to market their home. The best is probably Selvsalg. The site is free and delivers you real estate listing to other sites too.
On these two sites private sellers are flogging their own homes and bypassing the estate agents. What’s more many potential buyers and serial buyers or investors have got to know all about these sites, and often land a bargain. That’s because you the seller saves money by not using an estate agent, and those savings can in part be passed on (to some extent) to the buyer. So with some good deals out there for the buyers, there happens to be a big audience of visitors.
There is a small fee to be paid to the website owners however. But the savings you will have made over and above what you would have paid for an estate agent are dramatic, to say the least. The cost of the services start at under £50 and a deluxe package is around £150.
Listed? Now What?
Now is the time to get those people out there to come and scour around your property and buy it! Doing your own promotion should not just be limited to the websites you placed the home earlier, but think about social media. Put a link to your listing on Twitter, create a Facebook status and include all the photos you took, put the house on YouTube (you can include a real nice video here), put it on Google Plus and then do it all over again the next day.
Soon you will have several people emailing you asking if they can come and have a browse. You may be busy in this part, showing folk around your home and answering questions like, “When was the boiler last replaced”,” What is the local neighbourhood like?” and “Is there easy access to the outside using a wheelchair?”
You will be bombarded with questions, receive curious potential clients and you must expect a few timewasters. As any estate agent will tell you, it is part and parcel of the job; you’ll not be able to weed them out or tell them to buzz off, you must go through the motions, show them round and wait for the next batch of visitors.
Some of the timewasters will have similar properties for sale themselves and will just be curious as to what this flat looks like on the inside, it’s no skin off their nose if they don’t commit to buy. It’s a free market and anybody can shop, we can all pick up goods on the supermarket shelves and then replace them having had no intent to buy – so you can expect the same in the house selling game.
A small bit of advice about letting strangers into your home: you should have a partner or friend with you as it can be a little daunting if three or four potential house buyers are bombarding you with questions and gripes every two or three seconds.
Viewings can take place at weekends or evenings should you be at work during the daytime. It is worth giving your email address to potential buyers rather than your mobile phone number, if only for security purposes.
If you have ever held a car boot sale (garage sale in the U.S.) then you will be more than painfully aware of those who insist of haggling. Haggling is a form of trading that has been around since the days of Jesus Christ when it would take place in the bazaars and market places around the Middle East. It happens at a boot sale, when some nauseating gentleman will offer you 20p for the lovely yellow vase you have out on the table which you have labelled up for 50p.
Often a haggler will not miss that 30 pence in money but just loves the barter and trade of haggling and feels a sense of victory if he manages to bag that small bargain and save, what he considers a paltry 30 pence! Don’t you just hate those folk? Now, suffice to say the same thing will happen in the estate agent selling industry.
Only here, the room for negotiation must see you get tough! You are acting as the estate agent remember? There is no room here for you to be a shrinking violet and get bullied by someone who wants to knock five per cent of the value of your home.
Unfortunately, it is possible you’ll get those who will say things like, “Well come on, the boiler is on the way out and I will have to re-bleed all the radiators – plus the garden is in a bit of a state? Surely you are not going to get any more than £95,000 for this place, good luck to you if you do, but I doubt it’s going to happen. Now please consider my final offer, it will still be valid for another 24 hours, and you will be a fool to overlook it!”
Oh dear, selling your home sounds like a daunting prospect all of a sudden. But you will be pleased to know these bullying prospective buyers are a rare breed and they are not likely to negotiate discounts on flats or small apartments. Just stick to your guns and drum up a reserve price in your head. Let’s say you will not go any lower than £99,000 on your £105,000 listed property; any offer than goes below the 99k mark is to be rejected out of hand.
However, under no circumstances must you reveal to any of your bidders what the reserve price is. Reserve prices are secret to all – even failed bidders! And most of all – good luck! One quick alternative I want you to consider if you are still apprehensive is online estate agents; these agents are a fraction of the cost of the high street realtors because of low overheads.