I am frustrated to have heard stories about sellers who have gone to real estate companies only to be told blatant lies.
Recently, I was told about a real estate company that was signing a potential client to a short auction program of two weeks. The agent told the client that they had to have the property listing with them for three months. Rubbish! Sounds like this real estate company had no confidence in their sale systems or auction process. An auction should be well advertised and prepared for and if the property doesn't sell on the day, the real estate company should have conditional purchasers ready to buy. Why do they need another 75 days (two-and-a-half months) to sell the vendor’s property? Bullies!
When selling your property, the main goal should be to ensure that as many eligible buyers as possible know it is on the market. This is your real estate agent’s job, and if they can’t do it (or have limitations), you should find someone else. This comes back to how experienced they are, and even more importantly, where they advertise because this determines who finds out about your property. This is where private sellers sometimes miss out.
Why does a property not sell?
I hate to be harsh, but the three main reasons property doesn’t sell are:
1. There is something wrong with the property, e.g. leaky, bad area, etc.
2. It is overpriced. A real estate agent’s job is to open the opportunity for interest to a wider range of prospective buyers; you don’t want to lose any buyers by overpricing it. This is especially critical in today’s market.
3. Poorly advertised and little exposure. This shouldn’t be the case when using an agency. You should make more money selling through a good agent (after paying commission) than you would if you had sold your property privately, because your personal advertising resources are comparatively limited.
Different types of selling techniques
This is the cheapest way. However, you do not have full advertising resources available that real estate agents use, like cheaper rates on Trade Me and other selling media. This means your property won’t be exposed to as many potential buyers. Additionally, good agents should have buyers on their books ready to buy.
This is still a good way to sell if you have more than one serious buyer. A buyer must be ready to go unconditional and able to pay a deposit. The limitations are that some buyers drop off and are unable to participate due to their inability to get finance on time before the auction, or they may have another property to sell first. Some may be willing to put in a conditional offer after the auction but others just won’t bother.
This sales technique indicates a price range to buyers, but the property MUST be priced correctly. The downside is that if the property is overpriced, you lose potential buyers who could have been interested otherwise. If it is priced incorrectly, you are unlikely to get the full potential price. “Offers over’’ is often a better way to go.
Price by Negotiation
This might annoy some buyers, but it doesn’t limit what someone might pay. Everyone is still in the running until they get ‘‘No, your offer is not enough’’. What I like to do is use this technique for a week or two to gauge a property’s true value. Then I use “Offers over’’ followed by “Deadline Sale’’, which I have found produces a multi-offer situation - a bit like an auction, but everyone (conditional or not) has a fair chance of buying. More offers = best price.
This is when prospective buyers submit confidential written offers to the agent for the seller’s consideration by a certain date. There is no reserve price (the lowest price the seller is willing to accept), but there may be a price guideline. Buyers can offer less than that, though. The vendor can choose to negotiate with any of the applicants or to decline all. Some buyers don’t like tender but it can be a great selling tool, and it is a very popular sales method for properties in Wellington.
Deadline sale is similar to tender in that all offers are handed in to the agent by a certain date. This may be a rather short period of time - maybe one or two weeks. The advantage of this sales technique over an auction is that buyers have an option of making their offers conditional. The vendor can choose to negotiate with any offer they choose. This will often be used after a property has been advertised ‘Price by Negotiation’ and all of a sudden there is strong interest by more than one buyer.
An experienced agent should be able to advise you on the best selling technique. Every property is different, and the condition, area, age and type of property will determine the best method of sale. This is one of the main reasons you hire a real estate agent.
A small plug for Property Ventures Real Estate. When selling your property, we advertise through the same media as larger companies, but we have an ‘unfair advantage’ because we also advertise to thousands of investors who wouldn’t even know your place is on the market unless we tell them. By default, we should get the best price.
We also have the most respected auctioneer in New Zealand to call the auction if this is your preferred method of sale.