What is the best time of the year to sell ones’ property?
Many will say winter is a bad time to sell because it’s cold and wet and there’s no colour in the garden. But a well presented home can still look good no matter what season we are in.
It is true that there are fewer properties on the market in winter compared to the warmer summer months. But this does not necessarily mean winter is a bad time to sell. On the contrary you may find marketing your property in winter can present some good opportunities.
If you are selling in spring, your property is one of many on the market. The competition with a larger number of properties for sale may reduce your chances of getting a high price. A smarter time to be selling is when there are fewer properties on the market competing with yours. This may well be during the winter months.
Real estate sales is an all year round business. People sell for many different reasons. They may get married, divorced, deceased, have babies, transfer interstate or overseas or they may move to be closer to a certain school. No matter what time of the year, people sell and buy property, dictated by their particular circumstances.
Because everyone’s personal and financial situation is different the best time to sell your property is when it suits you. Don’t worry about the seasons. There are buyers ready to buy at all times of the year.
And if selling during the winter months fits in with your plans, this could be to your financial advantage.
It is every home sellers dream to sell their home quickly and for the best possible price.
But how can this outcome be achieved?
The most common mistake many sellers make when selling is they discover the true market value of their home only after they are talked into signing up for an expensive advertising campaign. If the price they want is not reached during the marketing, the seller is locked in. They either sell for less than they had originally hoped to achieve or they pay for an expensive advertising campaign that did not result in a sale.
Understanding some of the factors that affect how quickly and at what price your home may sell can save you from wasting thousands of dollars on a failed advertising campaign:
The location of your home is vitally important and will play a major part in how quickly it sells and the price you receive.
But the most important determining factor whether your home sells is not location,it’s price! That’s right, the price is the main reason your home sells or not. Just imagine that you have a well presented home in a sought after area with a price that is more than any other comparable home in the area. Is anyone going to buy it? No, buyers may not even inspect it. You can advertise it on the front page of the Herald Sun if you like and it’s still not going to sell if it’s overpriced. But if you price the property competitively it will attract genuine interest and will sell. It will sell for a better price than what an overpriced and overexposed property that’s been on the market for months will end up selling for.
Some other factors that can affect the sale of your home are its street appeal and its presentation when buyers step through your front door. Does your home have that WOW factor to win the hearts of buyers? Also renovated bathrooms, and updated kitchens with open living areas that flow to an outdoor entertainment area, can greatly enhance the appeal of your home. But ultimately it will still come down to price.
If you want the best possible price you must be realistic about the true market value of your home in today’s market. The final price you’ll receive will be what a good agent can negotiate from a genuine buyer.
What is the right amount to pay for a sale?
When it comes time to sell, many people will select the agent on the price they quote and the fee they charge. How much and how much? How much do you think our property is worth and how much do you charge? And the good news is, if you want an agent that will quote you a high selling price and low commission rate, you will find one. Actually, you will find plenty.
In NSW, real estate agents fees are deregulated, so the commission rate is an agreement between the two respective parties. As a property seller, if you felt that all agents would offer the same level of service and all buyers would be prepared to pay the same amount for your property, you would rightly choose the cheapest agent. But the reality is, not all agents will offer the same level of service and not all buyers will offer the same price for your home.
In a snapshot, the cheapest agent is the agent who leaves the most money in your pocket after their fees and expenses have been deducted from the sale price.
An agent who charges 1% or $10,000 on a million dollar property sale is cheaper than the agent who charges 3% or $30,000 on the same sale. The 3% agent is only cheaper if they achieve a price of more than $1,020,000.
In theory, this is very simple – select the agent who leaves the most money in your pocket. In reality, the property seller needs to make value decisions about the agents before the property is listed, before the agent has begun marketing the home and before the agent has begun negotiating. The seller is in the unenviable position of having to put a value on a service in advance of the service being delivered.
Whether you like it or not, when you employ an agent to sell your home, they are negotiating your financial future. The right agent is an asset and the wrong agent is a liability.
Putting a value on the agent
The best way to weigh up agents fees is to put a value on what they do. Draw up a checklist of what constitutes value in a real estate agent. It is common to think an agent comes along & lists your home, makes a few phone calls, finds a buyer and gets paid 2% of $1 million. If real estate were that easy, it would not have such a high attrition rate.
Real estate agents have two roles, find interested buyers and negotiate the highest price/best terms from each buyer. If the agent can achieve this without putting stress on the seller, even better, i.e. even more valuable.
80% of all buyers now conduct their property search on the internet. Another 10% will be passive buyers that are on agent’s databases or call agents when they see a signboard on a house they like. Finding buyers is so simple there is now almost no value to it. Any value subscribed to finding buyers is not in the strategy, but in the time invested by the agent.
If you feel that you can negotiate better than the agents you have interviewed and you have the time available, have a go at selling it yourself. List it on a few of the main media websites, get some brochures and a signboard done up and the buyers will come.
The number 1 reason people that who attempt to sell privately fail is they overprice the property.
Chris Williams of Harris Partners told Property News that he was shocked that home sellers still spend up to $10,000 in newspaper advertising and then pay a real estate agent commission on top. Chris said, “If the advertising is going to sell the house, why do you need the agent?”
When the agent extracts money upfront for advertising, all the risk is with the seller and the upside is with the agent.
“Real estate agents commissions are hefty enough without the home owner being lumbered with the risk of the campaign on top. The agent is rewarded with a hefty commission when the property sells and the seller gets a big bill for advertising when it does not sell” added Chris.
Many who appreciate the power of the internet in real estate marketing are baffled as to why agents still spend so much money in print and newspapers. The answer is to increase their profile in the community and the second is because the seller pays as the agent profits through rebates.
Some consumers know and accept this and some consumers don’t know and wouldn’t accept it.
If consumers make a mistake when selecting an agent and deciding upon fees it is that they underestimate the importance of negotiation in the process.
Most agents spend excessive amounts of money looking for buyers and then use flawed negotiation strategies such as public auction to close the sale process.
It is during negotiations that agents become an asset or a liability to your campaign. Whilst you may have felt good when you found the cheapest agent at the time of listing, that good feeling won’t last if your soft cuddly agent is negotiating your financial future with a hard-nosed buyer.
The skill level of the agent will be reflected in the final selling price and terms. The softer the market, the tougher your agent needs to be. Any agent can look stellar when 3 buyers want the 1 property. But what if there are 3 properties and 1 buyer?
Easy losses, hard wins
‘Loose lips sink ships’ is highly applicable when it comes to an agent negotiating with a buyer. Agents that disclose information offer the buyer ammunition. What surprises many buyers is how easily the agents divulge what should be confidential information. Details such as the number of offers the sellers have received, the sellers lowest price, the price level of other offers, the owners are getting divorced and want to sell quickly, they have bought elsewhere, deceased estate and it goes on. All this crucial information can work against the sellers should it become known to a buyer.
The best way to test an agents negotiating ability is to ask them to cut their commission rate.
It is easy to lose out in a real estate negotiation and hard to win at the best of times. An agent that runs at the gums can cost you plenty. The “gift of the gab” does not automatically qualify someone to negotiate the sale of your most prized asset.
Many buyers make an opening offer to see how the agent reacts. Many are pleasantly surprised at the response or the information that falls out of the agent’s mouth.
In these instances, the seller has a massive liability on their side. The agent.
Ironically the best way to test an agents negotiating ability is to ask them to cut their commission rate. The agent’s response to being asked to drop their fee will give you a sense of how the agent handles price objections. Do they just role over and say, “Ok, sure that seems fair”? Or do they hold firm with strength, pride and belief that their track record of quality service and results demands they are worthy of a fair fee.
When you ask an agent to reduce their commission rate, you are witnessing the agent negotiate their own money. In watching the agent negotiate with their own money, ask yourself, do you want them negotiating with your money? If the answer is no, don’t hire that agent at any commission rate.
Whether you like it or not, a real estate agent has massive responsibility when they take the keys to your home and begin marketing it. People are surprised to learn that you can decide to become a real estate agent on a Sunday and be legally qualified to sell houses in just over a week. The pathetically low entry level to the industry means that it is littered with people that should not be there. It is the home sellers job to work out who they are and avoid listing with them.
It is a dilemma most property sellers face when it’s time to sell.
Your well meaning family and friends have absolutely no effect on how the market values your property. What your property is worth in any given market is determined primarily by the law of supply and demand.
Unfortunately there is no exact scientific formula that covers all properties in all market conditions, which you can use to calculate your property’s worth.
There are however a number of factors that come into the equation in determining the value of a property – such things as the size location and orientation of your land, the size and style of the house, the age condition and presentation of the property, the quality of your fixtures and fittings, how unique and desirable the property might be to the current buyers in the market, the economic climate and more.
Ultimately it is the potential buyer’s assessment of these factors that determine what a property is worth – but because every buyer wants to buy for less, the only other dynamic that can have an impact on what price you get is your agent’s ability to get the highest price from the buyer. Selecting a skilled agent can help you maximise your property’s perceived value through their skilful negotiation.
In order for you to calculate the likely selling price of your home you need to have access to data from recent sales in your area. Armed with this information you can draw comparisons between your home and other similar properties that have recently sold in the area.
Up to date information on sales data in your area are readily available on the internet. Real Estate agents subscribe to various property data service providers and have access to much of the available data.
For an agent to provide you with an accurate estimate of the likely selling price of your property, they should base their estimate on the latest sales information.
When a vendor puts their property on the market they more or less work in partnership with their agent to present and market the property for the best price possible.
When the property is occupied by a tenant the sales process may be a little more complicated.
Most tenants are co-operative and very helpful but even the most accommodating tenants can sometimes be tested by the additional demands that come with living in a property that is on the market.
The law requires that once a property is on the market tenants must allow the marketing agent to show prospective buyers through the property, provided the tenants are given 24 hours notice.
The tenants can take comfort knowing that their lease cannot be broken. The landlord has no legal right to break the lease, neither does the prospective new owner, but once the lease expires the new owner is not obliged to renew it. If the new owner intends to occupy the property they must give the tenants no less that 60 days notice to vacate.
Although every property is different, from an ideal marketing perspective, it is better for a house to be on the market without tenants occupying it.
However if you have a tenant with beautiful furniture and the property presents well you may be better off marketing the property with the tenants in it rather than vacant.
The presentation of the property can make a big difference to the price your agent can achieve. If your property is predominantly land value or requires a major renovation then the presentation may not make much difference to the price you receive.
Many vendors can’t afford to have the property sitting vacant during the sales campaign, because it may take three to four months by the time it settles. So there is a financial advantage in selling with tenants because there is no loss in rental income.
That is why most vendors choose to sell with tenants rather than vacant.
Is it necessary to have a property inspected by a professional when buying and how much does it cost?
For most people, buying a home or an investment property is the biggest investment they will ever make.Yet many enter into a contract to purchase giving little thought to checking out the property.
When people buy a second hand car they usually have a mechanic check it out for any body or mechanical faults or defects.
Doesn’t it make good sense to have a much more valuable acquisition such as a home also checked out by an expert before buying?
A building and pest inspection report will usually cost somewhere between $500-$700. This is a small price to pay to be fully informed and confident that the property you are buying is sound and free of any major structural defects or termites. This would go a long way in eliminating any unpleasant surprises later.
I believe that it’s only a matter of time before it will be legally necessary for all vendors to provide potential buyers with an independent building and pest inspection report. This may become a required inclusion in the Vendors Statement (Section 32), given to buyers before buying.
This report should be conducted by authorised and accredited licensed building and pest inspectors.
The building and pest inspection report will be the equivalent of the roadworthy certificate for a used car. It will be the “Building and Pest Inspection Certificate” for a house.
In the Australian Capital Territory it is currently compulsory for all vendors when selling to provide a building and pest inspection report with all contracts of sale. This report allows all potential buyers to make an offer to purchase after having been fully informed about any defects or maintenance issues.
As I have previously stated this should become an Australia-wide practice.