After asking "How much can I borrow?" and getting your mortgage pre-approved, you're ready to go house-hunting. The next choice that awaits you is how to buy the property. Will you go to auction and bid against other hungry buyers? Or will you go and buy directly from the owner in a private sale?

If you're going with the latter, there are various pros and cons that you should be aware of before embarking on this journey. 

The argument for

If you're a new home buyer and you've just taken out your very first home loan, chances are you're not an expert on the market. Nor have you ever been in a position where you have to negotiate for the price of a home. When bargaining with a real estate agent experienced in the property market and armed with the skills of persuasion, you're outmatched. 

Buying directly from the owner, however, means you're likely to be on more equal footing in negotiations. You may even be able to drive the price down to a lower level than the seller was set on.

Along with this, having actually lived in the house and the surrounding area, the seller can be a much richer source of information about the dwelling you're planning on spending the next few years of your life living in. If there are repairs and maintenance you need to know about, the seller may be more knowledgeable, and if you won't have to try and get as much information as you can about the local community, from an exceptionally busy real estate agent.

Finally, if you choose not to buy through auction, you can avoid a high-pressure environment that can lead you to making a costly bid.

The argument against

For one, you're no longer dealing with a professional trained in the basics and bigger complexities of real estate. The seller may not have the more technical data that a real estate agent would, such as zoning details. The real estate agent can also keep all the necessary paperwork and legal steps on track, as they understand the process and its steps.

There's also no guarantee that homeowners will be more honest about the details of their home than a real estate agent. In fact, they may even miss out crucial information accidentally, because of their unfamiliarity with the process. 

So think hard about whether buying a house for sale by the owner is for you.

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DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.