Posts Tagged ‘auctions’
Common Mistakes Made by Property Sellers
Friday, July 3rd, 2009
When selling your home or investment property, there are some common traps that many people fall into. To help you to get the best price for your property, we list some common mistakes that will cost you dearly.
Mistake #1. Pricing your Property Too High
Naturally as a seller you want to get the best possible price for your property. What happens if you set a very “optimistic” price on your property when you list? You do it with the best of intentions, thinking that no matter what price you list at, people will offer lower than that. But there ARE problems with this.
a. Buyers that might have been interested in your property otherwise will now think it is overpriced. Rather than make an initial enquiry, they will call about some other property. Many people will lose interest in your property before they even see it. If they had seen it, they just might have “fallen in love with it” and been willing to offer a premium on it over the true market value.
b. Your property may go “stale”. After a couple of months, buyers will notice your property has not sold. Many will be thinking “there is something wrong with this property”. This will only make it harder to sell.
c. Buyers usually ask, “How long has it been on the market?” We can’t lie about this. Think about how you would think if you heard that the property YOU wanted to buy had been on the market for 6 months! Would you offer close to the listing price? Of course not! You might well think, “For six months no one in the world has been willing to offer this kind of money for this property, and neither will I!”
d. When people DO come to see your overpriced property, they will have high expectations. If they are disappointed, they won’t be likely to buy. Again this works against you.
e. Agents will use the high price on YOUR property to sell OTHER PROPERTIES that they are listing. So you end up helping other people sell, while your property stays unsold.
f. The MOST interest for your property comes AT THE BEGINNING of the marketing campaign, when the listing is fresh and new. Everyone who wants to buy in that area and who has been scouring the major real estate portals will see that there is a new property. You want to make the most of that. The price needs to be attractive enough to get people calling up. Wait too long to list close to a fair market price, and your buyers have bought elsewhere, or they may have made a decision to ignore your property. Ideally, you want a bidding war on your property. This is easier to achieve if you start with a lower asking price, and many people are attracted to check out your property. Properties can be sold ABOVE the initial listing price too! Remember, too, that you don’t have to sign offers that buyers bring to you via your agent, even if they are at full list price!
g. If there are similar properties to yours listed for less, it is those properties that will be looked at first. Put yourself in the buyer’s shoes. Remember, real buyers are intelligent people also, who have gotten to the point where they can evaluate what represents value for money to them.
h. In a soft or falling market, if you list too high, you might be chasing the market down. If you really want to sell, eventually you will drop your price some. But by then, others have dropped their price even further. It would have been better for you to get realistic and professional advice from the start, and being guided by it.
In order to help our sellers price their properties correctly, we will provide a comparative market analysis showing past sales of similar properties in your area, and also taking a look at the listing prices of similar properties that are currently for sale. This will greatly help in providing you, the seller, with an informed opinion based on facts.
Mistake #2. Failing to Prepare your Home Properly
a. To achieve a great price, your home needs to be clean and attractively presented to all potential customers. If your property looks dirty or uncared for, you could EASILY lose thousands of dollars on the deal.
Make sure the lawn (if any) is mowed and trimmed, the garden is weeded, the floors, windows and walls are clean, the house is uncluttered and so on.
b. Make sure that the house is in good repair. If there are obvious problems, have them fixed. People will pay a premium for a property in which there is “nothing left to do”.
c. Always consider giving your house a fresh coat of paint on the inside before selling, if it may need it. Don’t leave that one for a home renovator to do – it is a relatively easy job, and one that can add many thousands of dollars of value to a home easily.
b. Smart vendors are using the services of professional HOME STAGERS. These people are experts in decking out your property with little finishing touches that make it look really classy and valuable. These services cost money, but can return much more to you.
Mistake #3: Dealing with Unqualified Buyers
If someone doesn’t have the finance to buy your property at a price acceptable to you, and is not likely to be able to get it, then they may be “lookers” but not “buyers”. Don’t make the mistake of signing a contract with someone who is unlikely to get the finance through. That would take your property off the market at a time when QUALIFIED buyers may have been willing to see it and make good offers on it.
Mistake #4: Believing everything Agents Tell You
I wish I could say that all agents are honest people who have your best interest at heart, but time has shown that this is not the case. Of course, there ARE many good agents out there. But you can’t go on first impressions and branding alone. Because lots of money is involved, some agents will allow themselves to BE DECEIVED (by their franchise trainers), so that they can DECEIVE others more convincingly.
a. You need to be careful when considering listing with an agent that he is not attempting to “buy the listing” by over-quoting you on the value of your property. If you fall for it, you will pay later, please see Mistake #1.
b. If agents want you to spend a lot on newspaper or magazine advertising, ask them what percentage of properties that they have sold were sold to buyers who came through such means. Sometimes a modest newspaper advertising campaign advertising OFIs or a small display ad can be useful. At other times the sole beneficiary of such advertising is the agent.
c. Beware of auctions. Unless it is a crazy rising sellers market, auctions can be expensive (the advertising costs and high agents commissions) and disappointing. They don’t always get a result either. At the time of writing, the auction clearance rate in Queensland is around 39%. For auctions to work, there needs to be more than one person quite keen on your property who is fully prepared to bid, with finance and building/pest issues already resolved in advance. That will limit the number of potential buyers who can go for your property. With less buyers competing, the result can be a lower sale price.
d. Some agents will tell you “We have a buyer for your property” in order to get the listing. Amazing! They have a buyer who has not even seen your property! Often all the agent means by saying “we have a buyer” is that they have a buyer’s database of people who want to buy in your suburb within a certain price range. And by the way, that database may be well out of date. Usually a proper internet marketing campaign on realestate.com.au and domain.com.au at the right price can attract a buyer. So it can be a case of “fake it til you make it”. If an agent says he has a buyer right now at a price you can accept, and you feel good about the agent, test him or her by offering just a 3 day exclusive agency agreement. Why should they object to that if they REALLY have a buyer for YOUR property right now?
Mistake #5: Failing to Negotiate a Fair Agent Commission
Is is written in Part 7 of the Form 22a official PAMD listing document:
The Property Agents and Motor Dealers Regulation 2001 sets a maximum amount of commission chargeable by your agent for residential property.
You have a right to negotiate an amount lower than this amount of commission. In any other transaction, other than residential, the fees and services are not regulated.
Did the last agent you spoke with about listing your property show you that clause. Do you remember reading it? Its worth taking into account.
Once your property is listed at a fair price, and put on the right websites, it can sell fairly easily. You don’t need to pay top dollar to agents if all they will do is dress nicely and open the door for potential customers. The difference between a capped commission agent and a full priced franchise agent can range from $3000 to $15000 or more! Make sure you are getting value. Value means obtaining a price higher than what you would have gotten yourself, or saving yourself valuable time by means of letting the agent handle the sale for a reasonable fee.
Now I am of the view that agents may well deserve the maximum allowable commission in certain cases. Where the property is in some sense unique, or high end, or difficult to value, an experienced and knowledgeable agent may well be worth even MORE than he is allowed to be paid under the Act. The results are what counts. But in many cases, where properties are of a similar nature, I don’t believe you need to be paying that maximum rate.
If you pay the maximum allowable commission simply because the agent you are dealing with is part of a big franchise group, you may well just be GIVING AWAY money. And somewhere in that hefty commission there may be the difference between a deal going through and a deal NOT going through.
Happening Real Estate is happy in most cases to work for a flat fee of $5500 or less including marketing, when we get an Exclusive Agency. In some cases, we will accept a higher commission when the value offered to the client is significantly greater. We are generally willing to conjunct with other agents also in such cases also.
