The 3 most common pitfalls when selling your home
Selling a home is something most people only do every 7 years on average and the market changes so rapidly that you can be forgiven for rushing in to list your property without fully considering the best way to do it. Any property will sell if the owner is prepared to sell it at any price however naturally we would like to maximise the potential in our asset and have the sale take place in a timely manner with a minimum of stress. We're talking about tens of thousands of dollars and sometimes hundreds of thousands of dollars between an okay result and a phenomenal result.
It has been what is known as a 'sellers market' for quite some time now and anyone paying attention to the sales will have noticed that just about everything is selling for what seems like a pretty good price. How do we know what a good price is? Usually we look at what has been sold recently and compare our property with the sold ones and benchmark off the comparable sales. In a highly competitive rising market where there are more buyers than sellers, low interest rates and a positive sentiment, surprisingly good results can occur that are outliers in the spectrum of property prices and all of a sudden, the market is seen to have reached a new high point. So it's not so easy to really say what a good price is until you break down the elements of what creates the price. The value of your home is not a fixed number. It is fluid and can vary depending on who is buying it and the value the buyer feels they are getting. This value is not a arbitrarily selected number like a price can be but instead is created and built by the owner of the property and their chosen agent and is your 'value offering'.
We all want to feel that we have obtained a great result for our home, however the strong market dynamics of Melbourne's property market has led to an attitude of complacency within vendors and agents alike. Some property owners believe that no matter what, their home will sell, and this is probably true for the most part right now as a blind monkey with one hand tied behind their back could sell a property in the current climate. Let's take a look at the 3 pitfalls to avoid if you are not content with just an okay result and instead wish to strive for the best.
1. Choosing the wrong agent
Never before has there been so vast a choice of agents and agencies for sellers. As the market heats up and properties sell easily, more budding agents join the industry and find that selling properties is a cinch! It is easy to think a quick sale or a seemingly good price has been brought about by a skilful agent. Like in all industries there are those in their occupation that are good and some that are not so good. Just because the not so good ones in the real estate industry are selling properties in a hot market does not mean they are suddenly as good as the agents that have a proven track record throughout the tougher times. When the market turns around again, the difference between the good the bad and the ugly of agents will become increasingly evident and many more properties will simply not sell until a good agent is put in charge of a sale.
Agents have to be a master of many skills if they are to be an effective representative of you as their client. They firstly have to be a good enough administrator to get the process moving and have things go smoothly. It's no good if the ads do not appear on time or are incorrect or they are running late to appointments. Then they have to be a good customer service person. Buyers are spending up on a big ticket item and require attention and service. If they don't feel that feeling they expect in buying their new home, they can just as easily get turned off and lose interest. Your agent has to be extremely trustworthy. Your biggest asset is in their hands and they will even have the keys to your home. And you're thinking, "my best friend doesn't even have the keys to my home." So you need to know you can completely trust this person. This person needs to genuinely want to help you win in your endeavour.
In addition to these skills, the best agents to use are the best negotiators. These professional individuals have established systems in place to facilitate a competitive environment between buyers. They know how to attract and retain the best buyers in the market at any given time and have the ability and experience to draw buyers in to your home. Ordinary agents will still get buyers to inspect your property because in a strong market, you just can't keep them away however the last thing you want to do as a seller is to put the wrong agent in front of the best buyer. What happens next between the buyer and the agent will have the potential to either unwind all your hard work to date or it will be the moment when a genuinely good result is created. A skilful agent knows how to handle the many different situations that can arise during a negotiation to protect the sellers best interests. What sadly happens instead most of the time is a compromise by both parties and the sale still goes ahead but at a price that is less than what could have been achieved by a good negotiator. The art of negotiation is unfortunately often lost in the frenzy of a bullish market and sellers still feel like they did pretty well. In this market, never before have buyers wanted more to find some way of buying your property for a steal and your agent is the gatekeeper of your asset. They are there to defend your price and discover on your behalf how far the buyers will push your price so choose your agent wisely.
2. Inadequate marketing
In these times, marketing budgets are frequently cut and the sale of the property suffers the death of a thousand cuts. A strong market is a time to really go for it as a seller. When your competitors are cutting corners and 'saving' a thousand dollars here or there on the marketing this is your opportunity to make your property stand out and shine. Marketing needs to do two things; it needs to makes your property look fantastic and it needs to make what you have to offer reach as many potential buyers as possible. How expensive your marketing is will determine how extensive it is. A good agent will develop a marketing strategy for your home that will maximise the use of the budget you allocate to get you buyers that would otherwise not have found your property.
Marketing does not always have to come at a cost to you either. Decent and well-established agents will have a system around retaining the buyers they have already met that allows them to communicate what you have to offer. It is quite often the buyer who has been looking for a long while and has become frustrated with their search that will pay you the best price. Sometimes we can secure an excellent result before paying for any marketing at all although often it may be prudent to expose the property publicly to make sure there are no better buyers out there.
You get what you pay for in marketing so be cautious of agents offering 'free' marketing. If the agent has spent their own money on your sale, they will be motivated to sell the property but be less focussed on the actual result and more interested in just putting the deal together to recover their money spent instead of pushing for that extra 10, 20 or $50,000.
3. Selling too soon
Am I serious? Surely selling quickly is a good thing?! It might be a good thing, but we are concerned with selling too soon, meaning before before we've had a chance to determine the interest level and what sort of price we can get. This market can move so rapidly that a good result from a few months ago might not be the best benchmark any more. In some suburbs in Melbourne, it is common that propertied are snapped up within days on the market. Now of course, properties can sell that quickly; but when a whole lot of them in one suburb are being sold in a few days, this indicates that prices are going up. Demand is clearly through the roof! So agents would instead be better off slowing things down a bit and working through the demand of multiple buyers to help their loyal clients really determine their home's true value. In this way the seller will have no regrets after they have moved on and never have to wonder "What if?".
It's easy to rush in with excitement in selling your property while you are in the midst of thoughts of your next home however the way you handle this process will determine your financial future so the decisions along the way should not be taken lightly. Take a pragmatic look at what you are trying to achieve overall and try to see the situation as a potential buyer of your property would. Remember that although you are moving away from your present abode, the new buyers will be moving towards it with different eyes. They will often have been searching for months through less expensive homes and gradually inching their budget higher towards a home like yours. And YOU HAVE IT! The ONE they have been waiting for! This is not about taking the buyer for every last dollar they have, this is about presenting your home in it's best light to show off it's best features, then allowing every buyer that is out in the market every opportunity to see your home and to compete for it in a fair and equal way. In this way justice is done for all parties to the transaction and everyone feels like they have had a win...
...Except the buyers that miss out! They don't exactly feel that way, but if they have been given every opportunity to increase their bid, then they too will feel that they were involved in a fair exchange and will not resent the process.
For all real estate related information or advice, contact the author Simon Wendt, Licensed Estate Agent at Hockingstuart Mentone on 0407 040 706.