Private house sales have become increasingly popular in the last couple of years, with a number of vendors moving away from traditional property portals and choosing to go off-market when it comes time to sell their homes.
For homeowners who choose a private house sale, there is the option to fly completely solo via the local community, word of mouth, and social media, or via an estate agent’s internal marketing channels and closely guarded contact list of existing buyers. Alternatively, a hybrid or online estate agent will also offer the full sales service for a much lower fee or an even more affordable DIY approach. This sees the vendor managing all of the marketing, viewings, and negotiations with buyers themselves but saving even more money in the process.
Off-market sales went up by over 40% between 2019 and 2021, and it’s easy to see why. The opportunity for a discreet sale, the potential for a higher sale price, and savings on estate agent fees (approximately 1-2% of the property price) are all very tempting, However, with extra legwork and quick decisions required, selling privately might not be for everyone.
Why are we seeing an increase in off-market sales?
The property market in the UK is booming in the wake of the Covid-19 pandemic, fueled by the temporary reduction to stamp duty rates, a need for more working-from-home space, and the mass exodus of people from city center offices and flats in search of outdoor space and a more rural setting. Along with this increase in both property sales and house prices, there has been an increase in those choosing to sell their homes off-market. As the pandemic continues, many people fear the health risks associated with conducting numerous in-person viewings in their homes, a problem that can be alleviated by selling privately.
The appeal of pre-vetted and approved buyers is also a factor for those looking for a quick sale with minimal negotiation. This was once the preserve of more wealthy homeowners, but recent figures show the average house price for properties sold privately decreased by £100,000 from 2020 to 2021, indicating growing popularity among a wider range of sellers. Indeed, many vendors are keen to sell quickly to avoid losing out on their next property, or a favorable selling price if predictions of a fall in house prices in the next few years come to fruition.
How to sell your home privately
The process of selling privately can be done one of two ways, with an estate agent or totally independently. Many sellers choose to approach an estate agent who will then share the listing with their close circle of trusted buyers, resulting in potentially higher offers from hand-selected clients. Vendors can capitalize on these selective buyers who are willing to pay more to avoid a bidding war.
Others choose to forgo the estate agent altogether, marketing the property themselves as well as organizing viewings and negotiations. This requires a lot more work from the seller as well as some sales knowledge and will mean a much smaller reach in terms of the pool of buyers they can market the property to – since individuals are unable to list on online property portals like Rightmove and Zoopla – but can offer substantial savings agent’s fees.
What are the benefits and drawbacks of an off-market sale?
For many sellers, the potential savings that an off-market sale could give them is one of the main benefits of choosing to forgo the open market. There are other advantages, however, including the discretion that an off-market sale offers. Sellers might not wish to have photos of their home on the internet for the world to see, and wealthier or high-profile vendors may want to avoid speculation about a change in circumstances that has brought about the need for a sale.
If the seller is working with an estate agent the pool of potential private buyers is pre-approved and will only include serious buyers, which also reduces the risk of deals falling through and the need for renegotiation. An off-market property is also more likely to attract those buyers who are looking to buy quickly and avoid lengthy negotiation, who may be willing to pay more to avoid a bidding war.
Another big advantage of an off-market sale is that it allows the seller to assess the market before they advertise their property more widely. A growing trend is for sellers to advertise their property privately for a high asking price to discreetly test the water. Often the property is snapped up at an inflated price, but if not, the vendor still has the chance to advertise on the open market at a later date without having to openly drop the asking price. Going off-market means there is no record of the original asking price online or on property portals, keeping the seller’s negotiating position intact. Statistics show this approach has paid off for many sellers, with 31% of sellers achieving more than the asking price by going off-market. In the first quarter of 2021, 20% of property sales in London were sold off-market, but an additional 12% were advertised privately before being launched onto the wider market.
Of course, this can go the other way. Without the chance to test the value of the house on the open market, sellers may miss out on several buyers entering a bidding war and pushing the price of the property up. So it can become a choice between securing a quick, straightforward sale or the chance to capitalize on the volatility of the current housing market in which demand is outstripping supply.
So, how do you know if a private sale is for you?
Whilst recent figures show that an increasing number of people are choosing to sell off-market, the decision to sell privately isn’t one to be taken lightly. You need to consider the additional work required to manage the listing yourself if you go for the DIY approach and you may need to be prepared to move more quickly than you would like if you are seeking a buyer from an estate agent’s existing pool who has funds in place and is ready and keen to move at the drop of the hat.
If you’re thinking of selling privately, the first step would be to reach out to local estate agents and get their expert advice; they will have insider information about your specific location, the potential buyers who are interested in the area, and the asking price you could hope to achieve. You can then decide whether the exposure and convenience of the open market are more suited to your needs, or if the discretion and potential speed of a private sale is the best option for your property.