Selling a home privately is fraught with risks that included overvaluing the property and falling prey to "fantasy buyers", a property business player said on Tuesday.

"Horror stories abound of people who have been ripped off during the property transaction," said Property24 MD Richard Gahagan.

Sellers often thought they could increase their profit by selling privately, while at the same time trying to convince the buyer that he or she would pay less. This was not always the case.

"Fantasy buyers" made offers on properties they had no intention of buying. Once the homeowner had removed the house from the market and turned down other potential buyers, the buyer either disappeared or could not qualify for home finance.

"Similarly, the legal ramifications of the sale of property in some circumstances, for example in a deceased estate, can be quite extensive."

Other pitfalls included buyers who signed an offer which was subject to a previous offer they had made, but had not disclosed this to the seller.

"This leads the seller to believe his sale is secure and, on the strength of this, he has gone ahead and made an offer on his next property, only to find that the offer falls through - often just after his own offer has been accepted."

In addition there were the costs involved, which required understanding the complexity of VAT and transfer duties, conveyancing fees and capital gains tax.

Inexperienced sellers also ran the risk of overpricing their home in a market that become tougher and "more realistic".

"If a property is incorrectly priced in this market, it will not sell, and will become tainted after being advertised for months on end."

Perceptions that there was something wrong with the property - apart from its inappropriate price - was one of the most dangerous things that could happen in the current market.

Gahagan said that on average a professional agent would spend about seven hours negotiating with a seller, and be involved in negotiation process with the buyer for up to 32 hours.

"A home owner is neither equipped or experienced enough to handle this phase in the context of a private sale. With their emotional attachment to the property, their lack of objectivity is likely to compromise the success of the deal even further."

Gahagan however cautioned that while using an estate agent minimised risk, the board which regulated the industry was "relatively toothless".

"Although real estate agents trumpet the fact that they have Fidelity Fund certificates and are governed by the Estate Agency Affairs Board (EAAB), property market watchers know that the certification means little and the EAAB is relatively toothless."

Sapa

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Sapa

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