You know the 3 P’s of buying property – Position, Position, Position but what about selling property? Are there common principles that also apply to selling?
Many purchasers subsequently become sellers so it is not unusual for us to assist clients in both roles over time. Therefore, this issue is dedicated to the specific concern of vendors and, in particular, what it takes to sell a property.
Very often vendors believe they are at the mercy of the market when selling their property. In other words, they don’t think they have any real control over what happens and they cannot influence the outcome of their sale. However, in the majority of cases nothing could be further from the truth!
Selling a property is not unlike selling a business. In fact, the average sale price of a business in Australia (of around $200,000) is far less than the cost of an average home – yet most of us take a far too passive approach to selling our home or investment property.
Some vendors also think that if their property doesn’t sell in good time then it must automatically be the agent’s fault. Of course, your agent is fundamental to the successful sale of your property but it’s you rather than the agent who has the greatest underlying influence over the sale of your property.
After many years and thousands of transactions over the years, I’ve identified the main criteria of selling a property. I’ve now summarized these into the 10 ‘P’s of successful property marketing:
· Prepare, and be decisive – your property is either on the market or it’s not. Everyone sells for a reason so you need to be clear about your goals and when you wish to achieve them. You can’t be half hearted about this decision. Your agent is your business partner in this transaction so advise him/ her of your plans up-front as these will often affect how you market your property and may also influence the final terms of your sale contract.
This is not the time to play your cards close to your chest as it can only work against you.
It’s not uncommon for the vendor (and not the purchaser) to get cold feet in the final stages of negotiations when they realise they are still emotionally attached to the property. Interesting.
· Price – get at least 3 appraisals from local, respected agents to help set your list price and marketing strategy. Ask how the agent came to their price opinion, and what they have sold in this price range recently.
Don’t be over-optimistic or greedy with your list price. As tempting as it is, don’t necessarily be seduced by the agent quoting the highest estimated selling or list price. Agents that consciously “buy listings” this way are not your friend and you will only be disappointed in the final result. (N.B. Recent legislation may also help reduce this problem.)
· People – choose a professional agent that you trust and can work closely with (see above). A good agent will identify your target market and formulate a specific marketing strategy. So, how do you find a good agent? Referrals from friends and neighbours can be a good start but, whatever the method, interview them as if you were taking on a business partner (rather than just an employee) because that is exactly what you are doing!
In most cases, your best agent will work and may even live in your area as they can confidently advise purchasers not only on the features of your property but also on the characteristics and advantages of your locality.
· Presentation – spend the necessary time and money on some TLC but don’t over-capitalize. If your property doesn’t have a natural advantage, wherever possible, create a unique selling feature or “wow factor” to make it attractive and memorable to buyers. However, don’t fool yourself into thinking that the more you spend the more you’ll get back in a better sale price. In fact, the opposite is often true. Listen to your agent’s advice as to where to spend your time and money to maximise your results.
This also goes for your furniture and personal effects. You’ve heard the adage, “sometimes less is more” so remove clutter from in and around your home and store it off site. Again, your agent should help you but the old standard of “If in doubt, chuck it out!” also applies here.
(Tip – there are property stylists who have a real flair for making over properties for sale. You don’t need to spend a lot to transform the look and feel of a property but their advice can make a huge difference to appeal and marketability of your property. Contact us for more details.)
1. Planning – You’ve selected the right agent; you’ve decided on a marketing strategy; and you know what you need to do around your property to maximise its potential. Some properties take longer to sell – ask agents in your area what the average time is in your marketplace at the moment. Remember, a well planned auction campaign will still be a minimum 4 weeks. Then there’s the time to settle a contract which can be anything from 30 days to 56 days or longer.
All these steps take time and, in total, it could be as much as 4 – 6 months from decision to sell to settlement. Therefore, plan ahead to give yourself and your agent sufficient time to achieve the best results possible.
· Promotion – invest sufficiently in appropriate marketing and advertising. You can’t sell a secret. It’s your property so it also means that you should use your money to promote it. Don’t rely on agent paid advertising as it could encourage them to sell at any price to recover their money.
Consider that if an agent is spending their money by paying for your advertising, then they are likely to give your money away just as quickly because they are not a strong negotiator. Saving a small amount on advertising may end up costing you a great deal more on your sale price by having a poor negotiator represent you. That’s not what you want, is it?
It makes sense to effectively promote your property in any market but it’s even more true in today’s subdued market. Your agent will recommend the appropriate mix of newspaper, property signage, real estate window cards, internet, open homes, etc. You may choose not to employ one or more of these tools but be aware that modern property marketing uses a coordinated mix of these strategies to achieve a sale. The one you exclude may well have been the one that sold your property more quickly.
Also, an open or multi-listing will work against you. A single agent/ agency working for you is much better than many agents competing against each other for your sale. They will end up confusing the market or, most likely, not work for you at all as no one agent is assured of being paid for their time and effort. Sole and exclusive listings are by far the most successful.
· Patience – is a virtue. Give your agent and their marketing strategy enough time to create interest in the property but also be prepared to listen to what the market is telling you.
· Positive attitude – this ‘P’ also includes staying pleasant. There is no doubt that selling, in particular, a home can be an emotional roller-coaster. Keeping the house tidy, preparing for open homes, waiting for offers, negotiating the terms of contract – it can all be quite strain. Nonetheless, it’s imperative to remain calm and focused as possible as any negative sentiments will impact on your ability to think clearly and negotiate the best sale price and terms possible. This also includes maintaining a positive relationship with your agent as you need to work together as a team.
This is another reason why choosing the right agent in the first place is so important. Be careful not to personalize or become emotionally involved in any negotiation with the purchaser. As an agent said, “You do not have to live with the buyer afterwards but their money may keep you warm!”
· Pliable – or flexible. You’ve done everything right but you’ve still not sold your property. Well, there’s a time for sticking to your guns and there’s a time to make a change. If whatever you’ve done isn’t working then it maybe it’s time to change tack in one or more areas of your strategy.
For example, a reasonable offer received in the early stages of your campaign often proves to be your best offer. If you intend to buy again soon then it’s even less critical to hold out for a top price as buying back in the same market means you should also repurchase at a similar fair price.
· Perception – this is the mood or sentiment of the general real estate market and, importantly, the state of the local market you are in. This is the one thing that vendors have virtually no control over but properties continue to be sold in every market and every part of the economic cycle. Don’t forget that perception also contributed to the strong market of 2002/ 03 so it can also be your friend. If you take control over the other P’s you can minimise the impact of any negative general market sentiment.
· Pro-active – You might call this the 11th point but it’s really just a summary of the above. Remember, you don’t have to be a ‘victim’ of the market. As the above 10 points demonstrate, there is much you can do to actively contribute to the sale of your property. Address them with the required level of enthusiasm and you will give yourself the best chance of success.
Good luck, we trust your sale goes well!
I would like to thank Wayne Slager of Your Loan Adviser for allowing me to reproduce this article.