Are you having a hard time selling your property? Mr. Chris Kwan, our guest Barrister and Solicitor, has broken it down for you.
Vendors be ready
Firstly one must decide what the appropriate direction is.
For instance, whether to use a real estate agent, or to sell by the vendor himself is an important decision. This depends on one’s own experience but most people have never done this before. There are services around which provide assistance at a price for DIY, or one can simply pick up tips from friends and the internet.
The second decision is advertising and this will depend on one’s budget.
The last piece of the requirement is to ask whether one is really motivated to sell or merely considering selling.
The former usually applies to those who have bought a second home and needs to sell in order to pay for the second home. The good news is almost everyone can be a buyer provided the price is right, so the game is to know your buyer and how much he or she can afford.
Vendor’s expectation vs buyer’s
As a vendor for your own property, you do not have the luxury of showing a range of properties to your potential buyer. You can either meet his expectation or not. If not then you have to decide whether to negotiate or move on. Therefore, one has to do a bit of homework to find out how much your own property is worth and to persuade the potential buyer its current and potential value.
Potential buyers are price savvy too and have done their homework as it is so easy today to find out past sales price on a property, and current valuation. Just google the address, and its property information and past sales prices will all be available on various websites.
Buyers may not be so clear as to the potential value or current value which opens up a wide knowledge gap for you to fill, for example, informing the buyers the work and renovation you have done.
If you have agreed with an agency then they will advise the range of price for you. Remember to read these agencies’ contracts very carefully as they usually have exclusivity clauses even after termination, although by law it is not enforceable once notice of termination is given. Exclusivity clauses means, you, the vendor, is obliged to pay commission even though the buyer has nothing to do with the agent.
Dealing with agents
When using agents today, they are likely to ask you to pay upfront for advertisement. In practice, there is nothing to stop you from advertising on the same websites save for the fact that they will charge you a higher fee. By virtue of their profession, agents usually advertise having local knowledge of the many properties, their relationships with their owners and more importantly, pride themselves as savvy in identifying the needs of each buyer.
There is a foolish suggestion that only real estate agents are licensed to sell properties and owners are prohibited by law. The fact is that vendors can sell their own properties without a license as long as they are NOT carrying a continuing business of selling properties for profit. In New South Wales, Australia, under the Property, Stock and Business Agents Act 2002 — Section 3, “real estate agent” means a person (whether or not the person carries on any other business) who, for reward (whether monetary or otherwise), carries on business as an auctioneer of land or as an agent. As long as you don’t fall under this definition of “real estate agent”, then you need not have a license whatsoever.
Tips for ‘open home’
If you own a property in Sydney, from recent data, it seems the prices are unstoppable but clearly this overconfidence must be tempered especially when a lot of uncertainties still linger like last night curry. For example, Australia has imposed some property restriction on foreigners (even residents in NSW must show they have stayed in the last 200 days), and the big four banks are not lending to foreigners especially for apartments or making it onerous to do so.
But even with such demand, if you decide to sell by auction, you should give yourself about 8 weeks between listing your property and the date of the auction. Any less and you may find that potential buyers will not have enough time to view the property and carry out the necessary due diligence required for them to make a confident bid. Conversely, you don’t want to put off buyers by having your auction months away either.
It seems obvious but first impressions count. When you are conducting a viewing (‘open home’), make sure your home is tidy and looks its best. Open the curtains and let the light in. Show off any special features, ie if you’ve just had solid oak flooring put in, don’t forget to mention it. Why not put a pot of coffee on just before your morning viewing? If the sun is shining through the windows and there is delicious smell of fresh coffee wafting round your home, you are off to a good start.
Another way is to ask a specialist such as home stylist or property stager to give you an idea on what improvement you can make to your home. The typical improvement includes kitchen and bathrooms, both are usually most neglected. Those receipts can be shown to the prospective buyers and used by them to claim tax deductions.
Sale by negotiation or auction?
When it comes to selling a home, it is not disputed that not everyone is an expert in negotiating the price. So you can leave it with an agent, or through auction. The auction system allows buyers to compete with others rather than seller convincing the buyer. This means one must be able to attract as many potential buyers as possible. However, if your buyer asks you about doing a deal prior to the auction, then this is good! It shows they are keen. Don’t come across too desperate even if you have been trying to sell your home for months. Simply explain that you have other viewings you still need to honour and that if they would like to make you an offer, you will happily think about it. Should you receive those ’24 hours offer’ (good for 24 hours only), you should either reject or accept immediately (if it is good). It is likely because the other side is trying to test how sticky you are to your price.
Remember the whole point of auctioning your property is to achieve the highest price possible by letting all the interested parties fight it out. Unless you are desperate to sell before your auction date, I recommend that you stick to your auction. If all else fails, the interested buyer will probably bid on it anyway. So you have little to lose by auctioning it.
As I mentioned before, each auction requires the vendor to set a reserve price. Make sure you set a sensible reserve price. If you receive an offer of $200,000 before the auction, amend your reserve price to this figure. Do not keep it at $250,000. If you end up getting more than your reserve price then great. If you end up getting way more than your reserve price then even better. But the main thing is that you have a legally binding sale at the end of the auction once the bid price is over the reserved price.
Whether you are using an estate agent, selling privately or using any combination of both, there is no harm in carrying out some simple marketing yourself. But be careful because many agency contracts have exclusivity clauses. So you may wish to speak to your agent first and to make sure that they know that you are also advertising for sale through other channels. Or that they do not have exclusivity.
The argument that is often suggested is that without exclusivity, agents are unlikely to put in their best effort. This is a lame excuse, as the truth is how to reach out to potential buyers who are motivated to buy. This depends on the location of your property, the size and the price you are offering. In most cases, affordability is the most important factor. The only difference is that agents after years in the market already have a list of purchasers while you do not.
Get buyers attention
To market your property is like anything else, simply sending an email to those that you know at your office or even on Facebook. Selling a property requires publicity and the more the better. This is no time for being shy.
There is no need to rewrite all the details, simply copy and paste the URL of your property advertisement into a 2 or 3 line email. Ask these people to forward the email to anyone they think might be interested. This will take you a minute or two and won’t cost a penny and it might just attract the notice of the eventual buyers. The best buyers are usually those who live in your neighborhood or knows someone who lives there, which explains why estate agents love to advertise themselves and your property in the same signboard.
Lastly in NSW, before you can advertise your property you need to prepare a contract. It is a standard contract and a standard copy can be obtained from the law society or real estate institute. KhaiKwan Lawyers is a law firm that specialises in property conveyancing amongst many other legal matters. Standard conveyance fees apply.
Chris Khai Kwan
Barrister & Solicitor, High Court Australia
Principal Lawyer, KhaiKwan Lawyers