Choosing Whether To Sell Your Home Privately

by : michael sterios

When faced with the daunting task of selling your home you will need to make a decision on whether to sell it on the open market through an estate agent or sell it privately.

Selling your home privately usually entails offering buyers a generous discount from the price that an estate agent could achieve on the open market. Because of this it may appear as though selling your home privately does not make financial sense.

However, a closer look at the situation may reveal that selling your home in a short space of time for a reasonable discount makes perfect sense.

Selling Your Home at a Discount

These days there are hundreds of companies and individuals who offer to buy property from people who are looking for a quick sale. Most of these businesses make offers in the region of 75-90% of the market value of the properties. In return they offer to buy the property quickly and in some cases they pay for costs such as legal fees.

At first glance this may seem like financial suicide. However, if you calculate how much money it can cost to sell your home on the open market the discounted price may not seem so low after all.

Selling Your Home through an Estate Agent

First of all there is the estate agent's fee. This fee is payable upon selling the property and is usually around 2% of the final selling price in the UK. This can account for a significant chunk of the final selling price and raises the question of whether the value of the fee should have been discounted from the market price initially in order to trigger a fast sale on the private market.

In addition to the estate agent's fee you will be liable to pay for legal costs. These costs are charged for work relating to transferring the title of the property as well as carrying out searches and are usually higher for leasehold property than freehold. This is because the solicitor will be required to do more work when transferring ownership of the lease.

If there is a mortgage secured on the home you are selling then you will be liable to keep up with the repayments while the property is still in your possession. If you have vacated the property and do not have a tenant paying you rent, you may find yourself paying funding the mortgage payments on the property you have for sale as well as paying rent or making mortgage payments for the home you have moved in to.

Finally, you will be required to continue to pay for council rates and utility bills while your home is on the market. If the property is vacant you may be able to secure a discount on the council rates.

Weighing up the Options

Instead of attempting to sell your home on the open market in order to achieve the highest price possible you may be better off accepting a discounted price upfront. If you sell your home quickly at a discounted price you will not be liable to pay for all of the costs detailed above.

Additionally, if you accept an offer from a business that specializes in buying property quickly, they may also pay for your legal and survey fees. Of course, if they relieve you of your home quickly, you will also not be liable to make further mortgage payments and will not have to continue paying for council rates and utilities while your home languished on the open market.

All of these additional costs combined can account for a few extra percentage points off the open market price of your home. When added to the estate agent's fee the outgoings you are likely to pay by selling your home on the open market could total between 5-10% of the open market value.

Finally, your home may not achieve the advertised price originally set by the estate agent. It is likely that you will have to provide a discount of around 5-10% in order to secure a sale.

From this, it is clear to see that the discounted prices quoted by companies offering to help you sell your home quickly may make financial sense after all.