New Post Advanced Search

Private sale of house advice

edited 16 September at 10:11AM in House Buying, Renting & Selling
14 replies 256 views
poppystarpoppystar Forumite
380 posts
Ninth Anniversary 100 Posts Name Dropper Combo Breaker
✭✭
edited 16 September at 10:11AM in House Buying, Renting & Selling
I’m the executor for an estate and have been approached by a potential buyer for the house. I haven’t yet engaged agents but have had valuations.
This could be a good solution but I am nervous about going ahead without an agent as I haven’t sold a house for decades.
What steps should I take? What are the potentials pitfalls of selling privately? Any help or experience gratefully received. Thanks.
«1

Replies

  • edited 16 September at 10:23AM
    AdrianCAdrianC Forumite
    33.3K posts
    10,000 Posts Seventh Anniversary Name Dropper
    ✭✭✭✭✭
    edited 16 September at 10:23AM
    The main function of an EA is to market the property. They also act as a middle-man for negotiations. Once an offer is agreed, their role is simply to do the occasional bit of communication and smoothing.

    Sounds like you don't need any of those.

    BUT... Could you get a better price by marketing the property more widely? Would that increased sale price more than cover the EA fee? How much extra value is worth how much delay? As executor, you have a legal obligation to the beneficiaries of the will to maximise the return. If you are both executor and sole beneficiary, then it's a simple circle to square. But otherwise...
  • edited 16 September at 10:43AM
    eddddyeddddy Forumite
    10.3K posts
    Tenth Anniversary 10,000 Posts Name Dropper
    ✭✭✭✭✭
    edited 16 September at 10:43AM

    Are there other beneficiaries of the estate? They might be suspicious that you haven't got the best price, if you sell it to the first person that approaches you, rather than having it advertised on the open market.

    In fact, are you sure you've been offered a good price?  Is it from a credible, proceedable buyer - or are they a 'dreamer'?

    If you want, you could leave that offer on the table and let an agent market for maybe 2 weeks, to see if you get a better offer.


    Back to your question... An estate agent would do sales progression like...
    • Check the buyer's proceedability
      • Have they got a property to sell - if so, what's it's status?
      • Check bank statements for deposit
      • Check mortgage AIP
    • Chase the buyer to... instruct a solicitor, apply for a mortgage, arrange valuation, arrange surveys
    • If surveys / searches / mortgage valuation show problems and buyer wants to reduce offer or walk away - negotiate with buyer
    • Moniitor the chain below (if there is one)
    • etc  


    Edit to add...
    If the buyer is sensible, honest, committed to buying, and knows how the process works - probably no sales progression is necessary.
    But if, for example, the buyer is an inexperienced 'First Time Buyer' they might need a lot of being told what to do next, reassuring, being told when they're being unreasonable etc.
  • poppystarpoppystar Forumite
    380 posts
    Ninth Anniversary 100 Posts Name Dropper Combo Breaker
    ✭✭
    AdrianC said:

    BUT... Could you get a better price by marketing the property more widely? Would that increased sale price more than cover the EA fee? How much extra value is worth how much delay? As executor, you have a legal obligation to the beneficiaries of the will to maximise the return. If you are both executor and sole beneficiary, then it's a simple circle to square. But otherwise...
    Am exec and beneficiary so there is no one else with a vested interest.

    The EAs I’ve spoken to have been remarkably consistent in their valuations and expectations so I have that as a guide. As for future prospects they are all warning of doom and gloom in the near future re prices. I guess I’m not sure without an EA how you keep the sale moving forward. (Maybe I’m overestimating what an EA would do?)  
  • AdrianCAdrianC Forumite
    33.3K posts
    10,000 Posts Seventh Anniversary Name Dropper
    ✭✭✭✭✭
    poppystar said:
    I guess I’m not sure without an EA how you keep the sale moving forward. (Maybe I’m overestimating what an EA would do?)  
    Once the sale is agreed, "moving forward" is mostly up to the solicitors.
  • poppystarpoppystar Forumite
    380 posts
    Ninth Anniversary 100 Posts Name Dropper Combo Breaker
    ✭✭
    eddddy said:

    Are there other beneficiaries of the estate? They might be suspicious that you haven't got the best price, if you sell it to the first person that approaches you, rather than having it advertised on the open market.

    In fact, are you sure you've been offered a good price?  Is it from a credible, proceedable buyer - or are they a 'dreamer'?

    If you want, you could leave that offer on the table and let an agent market for maybe 2 weeks, to see if you get a better offer.


    Back to your question... An estate agent would do sales progression like...
    • Check the buyer's proceedability
      • Have they got a property to sell - if so, what's it's status?
      • Check bank statements for deposit
      • Check mortgage AIP
    • Chase the buyer to... instruct a solicitor, apply for a mortgage, arrange valuation, arrange surveys
    • If surveys / searches / mortgage valuation show problems and buyer wants to reduce offer or walk away - negotiate with buyer
    • Moniitor the chain below (if there is one)
    • etc  


    Edit to add...
    If the buyer is sensible, honest, committed to buying, and knows how the process works - probably no sales progression is necessary.
    But if, for example, the buyer is an inexperienced 'First Time Buyer' they might need a lot of being told what to do next, reassuring, being told when they're being unreasonable etc.
    No beneficiaries with interest so no worry there.

    It is early days of the approach so negotiating the price is my first challenge! 

    I realise i need to assess assess their credibility. Obviously I will ask if they have property to sell, about any chain etc. I don’t see how I can do financial checks though?

    My only reluctance to put it with an estate agent at the same time is that all I’ve spoken to so far seem to have a clause that you still need to pay them even if you find the buyer yourself whilst they are under instruction. I will however go that route if the offer is lower than the valuations I have had.

    Great list of EA tasks, very useful, thanks.

    If offer etc is good would it be normal to ask for a deposit of some sort? On what terms?

    I think the buyer may be clued up - not sure if that is good or bad for me?!

    thanks again
  • GDB2222GDB2222 Forumite
    17.6K posts
    Part of the Furniture 10,000 Posts Name Dropper
    ✭✭✭✭✭
    Financial checks - you do the same as an agent would. So, if they are buying with a mortgage, you ask to see their agreement in principle. If they are paying cash, you ask for copy bank statements. This is all very divorced from polite conversation, and possibly rather embarrassing! 
    No reliance should be placed on the above! Absolutely none, do you hear?
  • edited 16 September at 11:28AM
    eddddyeddddy Forumite
    10.3K posts
    Tenth Anniversary 10,000 Posts Name Dropper
    ✭✭✭✭✭
    edited 16 September at 11:28AM
    poppystar said:

    My only reluctance to put it with an estate agent at the same time is that all I’ve spoken to so far seem to have a clause that you still need to pay them even if you find the buyer yourself whilst they are under instruction. I will however go that route if the offer is lower than the valuations I have had.


    If that's really correct - it sounds like they are 'Sole Selling Rights' contracts. I would try to avoid those and go for an agent that offers 'Sole Agency' contracts (with 'No Sale, No fee').

    With a 'Sole Agency' contract...
    • No fee is payable to the EA if the buyer is introduced before the contract starts - like the buyer you're talking about
    • No fee is payable to the EA if you find a buyer privately - even if they are introduced during the period of the contract

    Either way, you make it a condition of the contract that no fee is payable to the EA if 'Mr A' buys the property.  And read the EAs' contracts thoroughly - some EAs have nasty terms hidden in them.


     If you trust your private buyer, you don't need to check their bank statements etc. It's up to you.

    But there are quite a few people who let their dreams get in the way of reality, and convince themselves that they can afford a property, when they can't.

    (I accepted an offer on a property a year or two ago. Then, when the EA said they needed to check bank statements, it became clear that the buyer didn't have the money. Just lots of promises that they'd get the money in a month or two. It never happened.)

  • princeofpoundsprinceofpounds Forumite
    8.8K posts
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    ✭✭✭✭
    poppystar said:
    My only reluctance to put it with an estate agent at the same time is that all I’ve spoken to so far seem to have a clause that you still need to pay them even if you find the buyer yourself whilst they are under instruction. I will however go that route if the offer is lower than the valuations I have had.
    There are two basic types of single agency contract - sole selling rights and sole agency. SSR means that they must be paid if a house sale is agreed during their contract, regardless of whether they introduced they buyer. SA means that they get paid only if they introduce a buyer as a result of their own marketing. They will often offer SSR as a 'default' because it gives them more protection if you happen to stumble across a buyer yourself. Sometimes they will offer a slightly cheaper price to persuade you to move that way.

    http://www.bloomfieldgrey.co.uk/blog/the-difference-between-sole-agency-and-sole-selling-rights-agreements

    But if you want to proceed with this buyer you have found, you'll need to have an SA contract AND to have specifically excluded this buyer before signing. You will not have to pay commission if this buyer completes. Most agents will accept this quite happily if it means winning an instruction, unless they are absolutely at full capacity already. 

    You may find your bargaining power on fees is a bit weaker if you disclose you have a potential buyer already. Not much you can do about that, and it's fair enough in the sense that the agent will put work into creating the listing etc. whilst already aware that their chance of winning the transaction is already much lower than normal. Or, they may ask you to stump up some non-refundable marketing costs instead, to lessen their risk. Despite that, it may be worth marketing it at some point, just in case the current buyer fall through for some reason. 

    If the potential buyer is offering a price close to multiple agent valuations (which are unlikely to be on the low side), then I'd probably not worry about instructing an EA right away. I'd agree to sell it to them and give them a chance to start the transaction by instructing solicitors, surveys etc. That provides evidence of intent to proceed. But if they start to drag their feet or negotiate too hard on price, you can credibly threaten to open up marketing; that's a useful thing to have in your back pocket.

    Deposits come into play (in England I presume?) when you exchange contracts, which is actually what commits the parties to the sale, not before. At that point, your solicitor will ask for a cash contribution to their escrow account, typically 10% of the purchase price although this is negotiable, to help guarantee completion. Before that, the evidence you have of willingness to proceed is, as stated, the buyer spending money on surveys, solicitors etc. Basically, after exchange, you are 99% home and dry whereas prior to exchange nobody is committed to anything.

    The buyer being clued up isn't a big deal, as long as you know the basics of how to sell property. You need reassurance on the price - only marketing the property for a long period and getting offers will get you a true sense of demand, but multiple EA valuations would be sufficient for most people. You need reassurance on how the transaction proceeds - your solicitor should advise you on that. For a seller, it's not that hard - you'll probably need to permit a building survey and/or a valuation survey. You will need to answer some standard questions, and perhaps some specific enquiries; your solicitor will guide you through that. Much of the paperwork is public domain and your solicitor will source it, but you may get asked for some more specific documents, particularly if you have done lots of major alterations on the property.

    For inheritance, there is the whole probate process to give you the power to dispose of the asset. Have you gone through that? I presume it's all below the inheritance tax threshold.
  • poppystarpoppystar Forumite
    380 posts
    Ninth Anniversary 100 Posts Name Dropper Combo Breaker
    ✭✭
    If that's really correct - it sounds like they are 'Sole Selling Rights' contracts. I would try to avoid those and go for an agent that offers 'Sole Agency' contracts (with 'No Sale, No fee').

    With a 'Sole Agency' contract...
    • No fee is payable to the EA if the buyer is introduced before the contract starts - like the buyer you're talking about
    • No fee is payable to the EA if you find a buyer privately - even if they are introduced during the period of the contract

    Either way, you make it a condition of the contract that no fee is payable to the EA if 'Mr A' buys the property.  And read the EAs' contracts thoroughly - some EAs have nasty terms hidden in them.

    Thanks very useful information on terminology and advice.

    The main reason it isn’t with an EA yet is it has been difficult to get the terms and conditions information out of them in advance. All but one have said initially that they go through that info when you sign up. I’ve had to point out that I don’t sign things before reading them in depth and that doing that when they are there doesn’t work for me. It doesn’t help my trust in them that they are not upfront about the details. None have used the terminology above either so I feel better informed to deal with them now. Thanks.
  • theoreticatheoretica Forumite
    7.1K posts
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    ✭✭✭✭
    I think it rather depends on who the offer is from.  Someone who knows and likes the house, or wants to move close to family?  A developer who sends speculative letters after reading obituaries?
    It might be interesting to ask estate agents - 'I have an offer on the table for X - by how much could you beat it in a month.' 

    But a banker, engaged at enormous expense,
    Had the whole of their cash in his care.
    Lewis Carroll
Sign In or Register to comment.

Quick links

Essential Money | Who & Where are you? | Work & Benefits | Household and travel | Shopping & Freebies | About MSE | The MoneySavers Arms | Covid-19 & Coronavirus Support