Real Estate Agents are expensive and there is always a question on back of every seller’s mind if they should sell their property without employing services of an agent thereby save on commission fee. It is comparatively easier these days to advertise your property on the internet given the fact that numerous websites offer services that allow owners to list their property for a nominal fee.
Given the current technological scenario is it advisable for you to use services of a real estate agent or should you try and sell your property on your won? This is a very important question not to be taken lightly. Your property is a huge asset and the decision you make will have a huge impact on your finances.
I have written series of articles to help sellers with various aspects involved in selling a property to achieve maximum price.These articles will be of great value if you decide not to use services of an agent. There is no reason as to why you cannot do it on your own. However, knowledge is the key to successful selling of your house or investment property.
How to achieve the Best Sale Price for your Property?
This is perhaps the most important factor on a person’s mind when they put their property up for sale. It is natural for you to expect best possible price for the property. But ask any agent and they will tell you that there is no magic formula and a property will only sell at a price dictated by the market forces. According to them no one can sell a property more than its market value in the prevalent market. If this is the case then why use a realtor?
The truth is that there is that there is no fixed sale price but a broad range between which a property sells.A competently marketed property will hit the upper bracket whereas a property that is not exposed properly to prospective buyers will sell way below its market value.
To achieve the best price for your property you have to generate huge buyer interest, get them to view the property and then explain them advantageous features of the property. If the buyer is an investor you have to explain them not only return on investment but how they can add value to the property by making few simple changes.
Selling a property to achieve the best possible price is a process. Let us examine this step by step.
Why is it Important to Value a Property Correctly?
If you under price or over price a property it can cost you thousands of dollars. The best opportunity to sell a property is when it first comes on the market.
If your asking price is too high, you could close out the most important ingredient of real estate selling – a combination of qualified prospective purchasers who are looking for properties in your price range at the same time. If you over price your property then it will fail to attract prospective buyers. Your property can sit in the market for months until the price is lowered. Such properties become stigmatized. Even if price is lowered to the right value few weeks later it still may not sell because an impression is created that the seller is unrealistic.
Overpricing also will lead to purchasers having higher expectations of your property. This leads to their disappointment and your lost opportunity. Buyers quickly reject properties they perceive to be overpriced. This can greatly extend the selling period. While a prospective buyer might submit a lower offer, many buyers are embarrassed to make offers that are substantially below your asking price so unrealistically priced properties tend not to receive offers.
If you under-price your property it will sell very quickly but then you would have sold your asset for much lesser money than it is worth. It is therefore very important that you price your property correctly based on market conditions.
How to Determine True Value of a Property?
How can you determine what is the true value of your property? One method is by paying subscription for Property Guru or RPNZ to obtain recent sales figures of properties sold in your area. This will give you some idea of comparable sales but may not be accurate as the published sales figures are 3 to 4 months old and market may have moved. In addition you cannot arrive at correct value of your property simply by looking at raw data because each property is unique. Properties differ in location, character, construction material, land area, built up area, quality ofchattels, up keep and zoning.
The value of property is also determined by zoning and what future development is possible on the property. You should also find out if any zoning changes are likely to take place in your area that will affect the price of your property.
Character of an area is always changing because of development in the vicinity. This can impact value of your property both positively or negatively. You can get this information from the Council or an experienced real estate agent in the area.
It can take years to understand local markets and these can change extremely fast. It is very difficult and takes a lot of time for someone with experience to determine value of property correctly.Through expert local knowledge, your agent can establish a realistic appraisal for your home based on its location, age, size, features and market variables such as interest rates, demand and the availability of financing. Avoid the temptation to be excessively influenced by the experiences other people have had in the sale of their homes/ Properties.
Another method for you to determine the property value will be to get a professional appraisal done but this can cost a lot of money. There is also risk for appraisal to come at a lower value than your expectation. If you have knowledge of the local area and figures of recent sale you will be able to present your case to the appraiser to modify his report. You can enlist help of a professional or a real estate agent to help the appraiser and also challenge an appraisal if it comes in low.
How Best to Market Your Property?
Choosing a marketing plan that ensures your property is exposed to the maximum number of buyers is critical to achieving the best price.
A well planned campaign targeting the right buyers will help ensure that those who are attracted to inspect your home are not disappointed.
Marketing brings buyer leads that are crucial for successful sale of property. This requires knowledge of cost effective ways to advertise to generate buyer interest. An uninformed person can waste thousands of dollars in advertising and generate very low quality leads. Advertising should be focused on target markets by demographic and geographical area. This requires knowledge and skill on where to advertise so as to get best bang for your bucks.
In all cases, it is important to select the web marketing, social media, newspapers, magazines and target areas that contain the widest audience for your type of property. The value of the internet as a marketing component is now beyond question. Nine out of ten purchasers begin their search for a new property online. Advertising on the internet will also reduce your advertising budget.
A right marketing mix is important to attract buyers.
The more buyers who know your property is for sale, the greater the opportunity you have in achieving a premium price.
Why Copy Writing is Important?
Copy writing is a very important skill. A well written headline can generate buyer inquiries where as a poorly written advertisement will generate no inquiry. Length of advertisement is restricted by words or space. You have to give exciting but limited information in your advertisement so that a person is excited to either email or call you by phone. The aim is to get a person to view the property. If you give too much information in your advertisement then a person may not contact you. It takes minimum 5 to 7 contacts with a person before a lead can be motivated to make an offer on the property. This is why it is important to get a lead to email or call you so that you can follow up.
If you are not confident then you can hire services of a copy writing professional. Most experienced real estate agent will have developed skill of copy writing because they do this on daily/ weekly basis.
What Advertising Materials are required?
You have to prepare flyers, information memorandums, website advertisements, newspaper/ magazine ads, sign boards etc. Videos and high quality photography is a must to attract buyers.
Pre-paring advertising materials that are professional requires skill and can consume lot of time,money and effort. Mass printing can be expensive. In addition there is delivering effort and costs. You have to load advertisement and pictures on to several websites. At times you may like to translate advertisement materials into other languages like Chinese to increase your reach. In case of flyers you have to either post them or place them physically in letter boxes. You can hire someone to do the job but it will cost money.
Real estate companies have bulk advertising rates for videos, photography, website, newspaper/ magazine, sign board advertising etc. As individual buyers you will pay anywhere from 50% to 100% extra.
How to Use Social Media?
Social media is very strong these days. It is a great marketing tool but it has to be used correctly. Your friends and colleagues will turn away from you if you start advertising your property or selling any product to them using social media. The trick to generate interest through social media is to share information that is of value or fun. The information that you are sending should be linked to your website that is marketing your property. This is an in offensive way of marketing your property.
If you have a website or a blog then social media marketing can be very effective. You should use social media posts on Twitter, Facebook, YouTube, LinkedIn and Pinterest that point to your blog or website.This is a great way to generate traffic to your website and indirectly get people to view the property you are selling. Your website should have landing pages to capture email and telephone numbers of prospects so that you can drip feed them details of your property.
You can also place targeted paid ads on social media to drive traffic to the page on your website that is marketing your property. These ads can be targeted demographically or geographically. Social media marketing can be very effective only if you know how to use it correctly. Alternately you can hire a professional to do the job.
Information Marketing is Key to Selling Your Property
The key to selling your property is information marketing. Have you ever wondered why we Google so often? It is for gaining information to solve a problem that we may have. It may be to find the cheapest air ticket for a holiday you are planning or a medical issue about which you may wish to learn more. You may be lonely and looking for a bit of romance to perk up your life or simply find which bank is offering the cheapest interest rate to fund your property.
Same is true when you market your property. Buyers want information regarding your property to know if it is suitable for their needs. Does it fall within their budget? They want to know information regarding schooling, transportation, recreation, shopping, weather, crime rate, financing the purchase, values of property in the area, rentals, capital gain, add value potential, return on investment. The list is endless.They have limited time and want to know as much as possible about the property even before they decide to view the property.
There is a process to giving the information they need. The first step is to perk up their interest regarding the property through a short advertisement with attention grabbing headline. Once a buyer has become interested the aim is to get his contact details so that you can contact them on regular intervals and drip feed information regarding the property. It takes anywhere from 5 to 10 contacts to elicit an offer from a buyer. You have to build a relation of trust through emails and telephone calls with a buyer before they become serious about your property.
Apart from a flyer that gives basic information about the property you will need to prepare a document that real agents call an information memorandum which gives detailed information about the property to a prospect. When a buyer gets more interested they will request for Certificate of Title, LIM report, Building report, tenancy schedule, zoning information, development that is possible on your property, copy of the leases if property is rented, area information like schools, transportation, shopping areas, entertainment etc. You have to be prepared to forward the information and answer any related questions.
You may have on an average of up to 20 to 40 inquiries depending upon how well you have marketed the property. You will need to send basic information regarding the property to the buyer when they first contact you.A third of them may request for additional information. It is important to keep tag of all inquiries and send information expeditiously. The prospective buyers will also phone you at all odd hours seeking clarifications on information you have sent them. This may be relating to title of the property or something in the LIM report that they do not understand. You will have to be prepared to answer all queries.This will need patience and effective communication on your part.
Preparing and sending information about the property is an arduous task. You have to be accurate about the information you send to a buyer so that there are no legal issues later on. It is important that you consult your solicitor or a real estate professional if you have any doubt.
How Staging Can Increase Selling Price of Your Property
How you present your property to a prospect is of utmost importance. A well-presented property can fetch you extra tens of thousands of dollars. Whereas an ill presented property can turn off buyers. This is especially important when selling residential houses where emotional appeal pays a huge role in the selling process.
For every dollar you spend on staging your property you should be able to increase the price of your property by atleast 5 to 10 dollars. This needs skill and knowledge. If you spend too much money then it may result in diminishing returns. You can hire a professional to do the job or an experienced real estate agent can help you on how best to present your property.
A well-presented property says “welcome”. It doesn’t have to be a showroom but it should appear to be a comfortable place to live.
Your property will be just one of many on the market at any given time. You therefore need to present your property as appealingly as possible. Presentation counts. Experience shows that vendors who make an extra effort usually achieve a quicker sale and, in many cases, a higher price.
The property selling process typically starts several months before a property appears on the market. It’s necessary to look at a home/ property through the eyes of a prospective buyer and determine what needs to be cleaned, painted, repaired and tossed out.
Ask yourself, if you were buying this property, what would you want to see? The goal is to show a property which looks good, maximises space and creates as much demand – as possible.
Conducting Open Homes
Conducting open homes professionally is an important part of selling your property. You have to clean up your property, mow the lawns, and trim the hedges for the best visual impact. There should be no cooking smell or bad odder of any kind. This can put off many buyers.
The house should be presented uncluttered. Everyone in the house must leave with the exception of the person who is showing the property. There should be no pets because some people may feel uncomfortable.
You have to be appropriately dressed to show the house and answer all questions. You should also have information broachers handy to distribute to buyers with your contact details so that they can contact you for further information. You should also have pen and register handy to jot down each buyer’s details and any information they may need you to send.
Prompt follow up action is very important after an open home. Your property is competing against several other properties in the area. Buyers drift off if there is no proper follow-up.
Here are some tips on how to maximise the effectiveness of your property’s presentation.
While you’re cleaning, think about each room and what type of furniture really needs to be in it. Rooms look smaller when they’re crowded with sports equipment, excess furniture and general clutter. Clear out anything that’s not needed to create a feeling of spaciousness. And don’t forget your cupboards – keep them neat and not too full. This creates a perception that your home has plenty of storage space.
When buyers look at a home, you want them to look at the features of the home, not your personal pictures. You want buyers to picture themselves living in the home, not someone else living there.
Make sure that all minor repairs are completed. Sticking doors and windows, loose door knobs, faulty plumbing, peeling and cracked paint or faulty fly screens may affect your sale.
Let plenty of light into your home. Nothing improves atmosphere more than brightness. On a dull day, it is advisable to switch lights on prior to the arrival of prospective purchasers.
A warm, comfortably heated property on cold days, adds a feeling of cosiness. On a hot day, don’t forget to turn on the air conditioner or fan (or simply let the breeze flow through).
Avoid staying inside the house/ property while a buyer inspects. Buyer’s sometimes feel they cannot openly discuss concerns with your agent in your presence. Golden opportunities may therefore be lost.
Should it be necessary for you to remain at home, be courteous but don’t force conversation with a potential buyer. The prospective purchaser wants to inspect your property – not pay a social call. However, should you be asked questions about the property, the neighbours or the district, answer them truthfully, concisely and directly.
As a general rule it is advisable to turn off radio and television sets during inspections as they can be very distracting. Keep your pets out of the way (preferably out of the house) and clean and stow pet food bowls (other than water of course). Let the agent and buyer talk, free of disturbances.
Negotiating and accepting offers are perhaps the most difficult part to handle if an agent is not involved in the deal. Let me explain.
In any buyer/seller relationship, it’s normal for the seller to ask themselves “I wonder if I should have asked for more?” On the other hand, the buyer may question whether they could have paid less. Direct negotiations often lead to a deadlock. A third person who is neutral to both parties can help narrow the gap between buyer and seller. Using solicitors to close a deal is at times counterproductive because not only are they very expensive as they charge by the hour but try and protect their clients (which is their job) to the extent that that a negotiated deal becomes impossible.
In negotiation there is a saying that he who blinks first loses. Supposing if you as seller take a tough stand and the buyer does not respond to your price then there is no one to break the ice. If after waiting for two to three days you contact the buyer then your position in negotiation is greatly weakened. Similarly a buyer is hesitant to approach you with a counter offer as he is afraid that his bargaining power will be reduced.
If the buyer is an experienced negotiator then this can work to the detriment of the seller. There are many professional property investors in the market. They are always on lookout for private sale by vendors. This is because they feel that in a private sale situation they are at a great advantage against an inexperienced vendor who may not understand full value of his property and easy to manipulate during negotiations.
The art of negotiation is crucial to success of the deal. Knowing the right time to stand firm, and when to yield, requires experience and a heightened ability to sense the buyer’s intent and level of motivation. In negotiation you can trade terms of the deal for price or vice versa. This requires skill and problem solving approach. An experienced real estate agent can be of great help in negotiating a deal. As a seller he can give you feedback on the financial status and motivation of prospective buyers. He can act tough on your behalf without compromising your position on the deal. As per law agents work for the vendor and therefore it is an advantage for you to employ their services especially during negotiations.
The buyers also discount commissions when they make an offer during a private sale. They make calculations on how much fee a vendor will be saving and make an offer after subtracting the commissions. This defeats the basic purpose of not using an agent which was to save on commission fee. You do all the work without any reward.
You may save a commission by selling a house yourselves, but trying to sell a house without an agent may actually cost you more money than the commission you will save. In addition you will land up in doing all the hard work that an agent is supposed to do; no help with marketing, contracts, negotiations, inspections, appraisals, etc.
People will claim they saved thousands on selling their home and they sold it in one day without an agent. There is a reason they sold it in one day, they left a lot of money on the table! An experienced real estate agent could have more than made up for the commission they charged by pricing a house right and working for the seller’s best interest.
Real estate agents are experts in marketing, educated in the sales process and know how to value a home. Agents are not paid just for the time they spend selling your house. They are paid for all the licensing courses and continuing education they must take. They are paid for their experiencing marketing homes and getting the most money possible for a seller.
You may not save as much as you think when you sell a house yourself
It is almost always better to use a real estate agent to sell a property instead of selling it yourself. A real estate agent will make you more money on the sale of your home/ property, even though they charge a commission. I know many professional investors who have their real estate license and they still use another real estate agent to sell their property for them. Those investors know that another agent has the time needed to sell the property and the market expertise in the area where the property is located. Before you try to sell a house on your own, consider if it is worth the time it will take to understand the process and if you will actually save any money.
Here is a great statistic from USA for people who try to sell a home themselves versus use a real estate agent;
For Sale By Owner (FSBO) Statistics
- FSBOs accounted for 9% of home sales in 2013. The typical FSBO home sold for $184,000 compared to $230,000 for agent-assisted home sales.
- FSBO methods used to market home:
- Yard sign: 36%
- Friends, relatives, or neighbours: 28%
- Online classified advertisements: 16%
- Open house: 14%
- For-sale-by-owner websites: 13%
- Social networking websites (e.g. Facebook, Twitter, etc.): 7%
- Multiple Listing Service (MLS) website: 7%
- Print newspaper advertisement: 7%
- Direct mail (flyers, postcards, etc.): 1%
- Video: 1%
- Other: 2%
- None: Did not actively market home: 32%
- Most difficult tasks for FSBO sellers:
- Understanding and performing paperwork: 18%
- Getting the right price: 13%
- Preparing/fixing up home for sale: 12%
- Helping buyer obtain financing: 3%
- Attracting potential buyers: 3%
- Selling within the planned length of time: 7%
- Having enough time to devote to all aspects of the sale: 6%
A real estate agent knows how to handle state contracts
Speaking of contracts, have you seen your state contract recently? In Colorado the state contract is 17 pages long and that does not include the four addendums and disclosures that need competed as well. A real estate agent knows exactly what to look for in a state contract, what is customary for the seller to pay and what is customary for the buyer to pay. In Colorado it is customary for the seller to pay for title insurance and many other costs to be split by the buyer and the seller. There are many costs that the buyer customarily pays. If you have no agent to guide you on what is normal for a seller to pay and what is not, you could easily pay many more costs than you should.
A real estate agent knows title companies, lenders and other agents
A real estate agent knows the market and they also know people in the business. They can help a seller find a title company with the lowest fees and best service. They can help the seller find the best contractor if repairs are needed before the listing or after an inspection.