A lot has been said about the risks involved in being a private home seller, but not as much about the risks to the buyer in purchasing directly from an owner – although these are also considerable.
For a start, there is a much greater risk of non-disclosure of defects. Private property sales, unfortunately, fall outside the ambit of the Consumer Protection Act and private sellers can thus include a voetstoots clause in their sale agreements.
This basically means that once they sign an offer to purchase, the buyers in such transactions are basically accepting the property ‘as is’, and will have very little recourse against the seller for any defects that may later become apparent, except if they can prove that the seller knew about these defects and deliberately concealed them – and if they are prepared to spend time and money on a court action to claim damages.
The difference when buying though a reputable estate agent, is that the agent will ensure that the seller fills in and signs a comprehensive “defect disclosure” form that becomes part of the sale contract, so there is much less chance of buyers coming across any nasty surprises at a later stage.
Estate agents are also bound by a Code of Conduct to protect the interests of both buyers and sellers, so although there is still doubt as to whether agent-facilitated sales fall under the CPA, most agencies no longer include a voetstoots clause in their sale agreements, the property lead said. Secondly, there is a much greater risk of losing your deposit.
Unwary buyers signing a private sale agreement may be in danger of losing their deposit in one of two ways, the first being that they are persuaded to pay it into the seller’s private bank account and the seller then absconds with their money. “
Alternatively, if the sale agreement is not drawn up properly and does not give them sufficient time to obtain a home loan, for example, or to sell an existing home in order to be able to afford the new one, they may find they have forfeited their deposit in a cancelled sale.
If you buy through a reputable agent, though, any deposit you pay will be held in the audited trust account of an agency or an attorney, and you will earn interest on this money until the property is transferred. In addition, the sale agreement you sign will be correct and legally compliant.