Selling privately without an agreement with a real estate agent can save you money on commission, but the real estate transaction is complicated, so you need to know what you’re doing and understand the risks.
Summary of important things to know
You should disclose any information you are aware of that may be relevant to the buyer, including issues. Otherwise you could find yourself in court. You do not need to advertise the information, but potential buyers who have indicated an interest in making an offer may need to be told.
Get a lawyer or conveyancer to draw up the sale and purchase agreement.
Once you have signed a sale and purchase agreement, you need your lawyer or conveyancer to hold the buyer’s deposit in their trust account.
If you sell your property privately and you also have the property listed for sale with a real estate agency, you may need to pay commission depending on the terms of the agency agreement.
Choosing to sell privately
If you sell your property privately, you will save on the commission you pay to a real estate agent, and you may have more control of the sale and negotiation process because you will be dealing directly with potential buyers. Also, you know your own property best, so you can tell potential buyers directly about its best features.
If you list your property with a real estate agency and then sell it privately while the agency agreement is still in place, you may need to pay commission depending on the terms of the agency agreement. Also, be careful if you have previously had an agency agreement. If an agent introduces a buyer and you later sell privately to that buyer, the agency may still be able to claim commission for the sale.
The real estate transaction can be complicated, so make sure you know what you’re doing and understand the risks.
Your legal obligations
When you’re selling a property, you need to share all relevant information about it to buyers. What is relevant will vary from property to property and may include, for example:
- weather-tightness issues
- boundary issues
- unconsented alterations to the property
- the impact of proposed developments
If you knowingly fail to disclose any of these issues, you may be in breach of the terms of your agreement with the buyer. This means the sale could fall over or the buyer could seek compensation and take you to court.
Whatever the situation, honesty is the best policy. There is no need to advertise the information, but potential buyers who have indicated an interest in making an offer may need to be told.
Verifying your identity
To help protect New Zealand’s reputation and economy from money laundering and the financing of terrorism, before conducting certain activities, real estate agents, lawyers, conveyancers and banks must confirm your identity under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (the AML/CFT Act).
Your identity will also need to be confirmed if you are selling a property on someone else’s behalf.
Your identity may be verified by using:
- Primary photo identification, for example, a passport, a certificate of identity or refugee travel document or a firearms licence.
- Non-photo identification such as a birth certificate or a citizenship certificate, accompanied by a supporting form of photo identification such as a driver's licence, an 18+ card, or an international driver’s licence.
- A New Zealand drivers licence supported by evidence such as a bank card, a gold card, or an IRD letter.
In certain circumstances, an agent (with whom you do not have an agency agreement) may need to obtain and verify identity information about you if you deposit $10,000 or more in cash or by cheque into that agent’s trust account.
Even if you are selling privately your lawyer or bank will need to confirm that you are who you say you are. You can read more about this on the Department of Internal Affairs (DIA) website.
Choosing a lawyer or conveyancer
Make sure that your lawyer or conveyancer is clear about the work they will do for you, and agree on the fee.
Your lawyer or conveyancer will need to verify your identity and will ask you for the required identification. If the property is being purchased by a company or trust, verification may take longer.
Read more about choosing a lawyer or conveyancer here.
Valuing your property and setting a sale price
You will need to work out what your property is worth and the price you’ll be willing to accept.
Read more about finding out how much your property is worth here.
Choosing a sales method
There are several methods of selling property in New Zealand, and you’ll need to choose the one that suits you.
Learn more about the different methods of sale here.
Drafting and signing the sale and purchase agreement
The sale and purchase agreement sets out all the agreed terms and conditions of the sale.
Your lawyer or conveyancer should prepare the sale and purchase agreement if you are selling privately. They should also check it before you sign. You can also purchase them from the Auckland District Law Society (ADLS) or find a digital sale and purchase agreement online.
When you and the buyer are in agreement, you both sign the sale and purchase agreement, and it becomes legally binding.
Learn more about sale and purchase agreements here.
When you have signed a sale and purchase agreement, you’ll need your lawyer or conveyancer to hold the buyer’s deposit in their trust account until the sale becomes unconditional.
Read more about deposits here.
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