Many home buyers are getting more motivated towards buying real estate through private sale nowadays. Forecasts of declining home prices onwards 2023 appear driving these folks’ preference to engaging the market via private sale houses.
With prices expected to trend lower, buyers can bide their time in looking for a residence. But as a buyer, you have to first grasp what private sale of real estate is to get its advantages.
Let’s then dig some more into the private sale of real estate.
- 10 Tips on How to Buy an Investment Property
- How to Avoid Becoming a Victim of Underquoting
- What’s a Private Treaty Sale and What Are The Benefits?
What is a private sale in real estate?
Simply put, auctions and real estate agents are taken out of the picture in the private sale of houses. In this case, the buyers and the sellers deal directly on a transaction. Although a seller may have an agent, you deal with them directly in a private deal.
Take it from Dr Cathy Sherry, a UNSW associate professor on property law. “There’s no legal requirement that you have to use a real estate agent to buy or sell,” she was quoted in an ABC News interview as saying.
Private sale of real estate: buyers’ steps
Prepare to take on the role of a real estate agent when going for a private treaty sale with a home seller. Below are some of the basic things to do as a buyer in such a sale.
Pick your preferred neighbourhood and comparison shop
Single out the community you prefer depending on your wants and needs. Then you can proceed browsing on home-for-sale ads in local newspapers or posts on an online real estate marketplace.
Social media, especially community groups, are also excellent sources of sales listings that could fit your requirements and budget.
You will look at comparables amongst neighbourhoods based on their pricing and square footage to narrow them down into a shortlist.
Schedule a home inspection
Meet with the seller or the seller’s agent at the property you’re eying to purchase. This private inspection is important for the obvious reason that you have to view the property personally.
Whatever photos you saw in its ad are but for starters. In a personal inspection, you’ll be able not only to confirm its appearance. You will also be able to see first-hand its orientation, block position, and its neighbours.
A home inspection will likewise enable you to work on building a relationship with the seller or the selling agent.
Conduct due diligence on the residence
You can use the house inspection to start due diligence. Ask the seller or agent not only about other comparable properties in the neighbourhood. Also, inquire about the local housing density and demographics.
Other things to probe deeply include the official records of the property such as those relating to its title, tax records, and warranty. Check too why the property is being sold and what the seller’s timetable is.
Find out also about the other prospective buyers of the property. It will be good to know their demographic or whether they’re investors or households looking for a home.
Estimate the property’s value
Your due diligence and first-hand observations should enable you to confidently estimate the property’s value. Call the seller or the agent to confirm the listing’s asking price to explore possibilities if it doesn’t match up with your estimate.
In the conversation, show how well-acquainted you are with the marketplace. Impress on them that you can shop around for the best private sale in real estate.
Present an offer carefully
Before spelling out your offer in figures, ask the seller or agent first about their offer process. This clarification is important because you will be signing a contract of sale once you make an offer to buy.
The offers processes can vary from state to state, so it’s important to check. Generally, it is important to specify in the contract a buyer’s right to get a reply from the seller for the offer to be in force.
The date of the offer’s expiry is also important to be specified in the contract.
Sellers’ concern to consider
In presenting a buy offer, you will also need to look at the seller’s concerns. Likely, they’d be asking: “How long after real estate contract expires can I have a private sale in Australia?”
Make sure that the terms and conditions of your offer are kept as simple as possible for the seller. Your offer might be rejected if the seller finds it too complicated, and you’ll miss out on a private sale in real estate.
Advantages of buying private sale houses
You can gain plenty of benefits when you push for a home purchase via a private sale in real estate. The pressures and conditions of buying in an auction are lifted off your shoulders. These are a few of the benefits of a private sale treaty.
Unlike in an auction, going for private sale houses lets you put forward an offer below the asking price. You can also negotiate with the seller accordingly, often with no time limit for the negotiation.
You are also free to make a conditional offer, like an offer subject to building and pest inspection or your financing application. Most sellers of private sale houses also advertise their asking prices and offer flexibility on the sale date. As a result, the selling process becomes more open.
Cooling-off periods are also the norm in private sales of real estate. This means that even after signing a sales contract, you may still be able to withdraw from the purchase. For residential properties, the cooling-off period is typically three business days.
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