How to sell your property in 21 days

How To Sell Your Property in 21 Days Page 1

FOREWARD

To my mum, Susie – thank you for your love, support and your “guaranteed to sell” chocolate chip muffin recipe.

To my dad, Tom – thanks for your love, patience and commercial nous and letting me bounce my ideas off you. You are truly an inspiration.


Introduction

The decision to sell, choose an agent and the sale process represents one of the most traumatic, emotional and difficult experiences we all face. This is magnified when it comes to the family home. Whether we like it or not our “home” represents our personality, our values and who we are and the myriad of memories of our family’s experiences in the home.

Therefore, I have specifically broken the book up into 2 specific sections

1. Selling the family home 2. Selling your investment property

and they are significantly different decisions.


SELLING YOUR FAMILY RESIDENCE

The Decision to Sell

In my view the decision to sell and transacting the sale should always be done prior to buying your new home. Unless you are particularly wealthy, the trauma of mortgage bridging finance and the pressure of having to sell your old home at possibly distressed values after you have already purchased another can prove to be the most disastrous economic and family-dividing decision of your life. This can lead to illogical financial decisions and can cause emotional chaos.

So, rule number 1

“Always sell before you buy”


Are you selling for the right reasons?

Are you upgrading your residence and selling because it is too difficult to renovate? Would the renovation cause too much stress in your family life? In my view, even if the decision is to ultimately not renovate your property, a clever development application approval is essential to the sale of your home. I recently interviewed potential vendors who showed me their plans prior to renovating. Although they had designed a stunning house in a good street, the street had negligible off-street parking. The vendor decided not to sacrifice any floor space for a garage or carport and built their home without either. Much to the horror of the vendors, when it came to the sale of the property, the purchaser feedback was “great house, no parking, can’t even contemplate living here”. With building and acquisition costs of $1.6 million the property is now a complete lemon.

So, rule number 2

Ensure you maximise a development application approval on your home. This can be one of the wisest investments you will make in your life. For a cost of between $10,000-$20,000, the improvement in capital value to your house is enormous and totally justifiable.

“Get that DA, it counts more than you think

But your DA should not just encapsulate your building values and ethos but appeal to the ultimate buyer of your home. Draw plans and build not just for yourself but for the majority of buyers out there. By the way, on a personal note, my mother wanted to build a federation home because she loved the architecture. Our area has very few federation homes and the style of home although aesthetically pleasing would have been an economic disaster. After much debate, we have built a Tuscan inspired timeless house and our family has lived there happily ever after.


How to choose the right agent for you

The choice of an agent represents the most significant driver to a successful property sale. The most well-presented property may not sell for all the wrong reasons.

Commission structure

In my view, the choice of a fixed fee on the commission ie 2% is fine but does not necessarily motivate the selling agent. I would discount the fee to between 1.5-1.75% and offer upside incentive. For example, set your reserve at say $1.5 million, above this, the agent is offered 10-15% of the excess above this level. This gives the agent huge motivation to sell the property above the reserve and he becomes your partner rather than your adversary which happens unfortunately way too often in the sales process.

Rule Number 3

Give the agent upside on commission to motivate him to sell above expectations and actually be your partner in the sale.

”Give the agent upside commission and let him become your partner in the deal”


Advertising

Newspaper

Expensive advertising campaigns centred around newspapers and local newspapers can be no more than branding for the real estate franchise and real estate agency. The only parties getting mileage from this are the agency but not necessarily the vendor. They normally work on a volume rebate to the agency and the whole point of the advertisement may not only showcase the property but can dually promote their brand.

Digital internet advertising

In my view, with the advent of the internet including search engine and sms technology, social networking and outdoor media, ie, electronic billboards, other mobile and digital applications is the predominant way, in most situations, in which a property should be marketed and sold. The cost at about 20-30% of newspaper advertising represents a significant saving and in my view, does not compromise the selling process.

All current statistics point toward this as the ultimate way to sell your property and how buyers engage in actually finding your property. With the constant upgrading of these technologies, it is not just the way of the future but the suggested way to currently sell your property.

Rule number 4

Don’t advertise your sale through a newspaper unless it properly showcases your home. It is expensive and may be pure branding for the agent. Always mix the internet and other digital applications to conduct and blend your marketing campaign.

“Don’t always rely on the newspaper and cross-sell digitally”


Other selection criteria

Although the agent may have a good reputation, are they maybe too busy to handle your property? In my view, any agent who is working on more than 5 listings in any month can’t properly cope or service a vendor with the demands of a sale process.

Rule Number 5

Pick an agent who is hungry, motivated and not over- loaded but whose agency has a good market profile.

“Pick me, Nick Loewy, 0408 112 803”

Any agent who works in a prestigious agency is capable of handling your sale probably up to a $5 million level. Otherwise they would not retain their position in that agency.

Don’t forget the sale process is to introduce and consummate a buyer. A good agent will facilitate and close this process.

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We have now started the process, picked our agent and are ready to make the next big decision.

Private treaty or auction?

Auction

In my view, the choice of an auction should only be undertaken if the current clearance rates are above 50% but probably closer to 60%. The auction process can unnecessarily devalue the worth of a property if it goes off the rails with “no bids” and can cloud the true worth of the property. Real estate agents can unnecessarily push to list a property for auction to recover their costs and to increase their profile at the number of listings they have at auction.

In the wrong economic phase and at low clearance levels as above, this can be an economic disaster.

Private Treaty or Expression of Interest

Private Treaty

In a poor clearance market with a long time needed to clear a property, this is the way to dispose of a property. In these circumstances, the agent should pre-market and have initial interaction with potential purchasers to establish the price range and market interest and then with the appropriate feedback have the ability to advertise the property for sale with a set price.

Expression of Interest

Where the vendor wants to market the property but doesn’t want to set a low or excessively high floor on the price, this is an appropriate way to market the property.

Rule Number 6

Don’t be pushed into an auction in the wrong economic climate when clearance rates are low.

“Don’t be pushed into choosing the wrong disposal method to sell your property”


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Setting your reserve for auction

Do your homework when your property is about to be sold. Ask for comparable sales in the last 6 months in your area. Make sure you negate negative feedback from your agent over the campaign as they will try to soften you up over the duration of the campaign as a means to reducing the sales price, ie “that second bedroom is too small, the house has no light, that bedroom needs a larger ensuite”. Pick a reserve that is fair and realistically values your property including any flaws the property may have. If you pick an excessive high price, the agent will not work the auction as hard with an unrealistic price. Pick a price that is market fair. If there are 2 to 3 bidders around or close to your reserve, put the property on the market. In most situations they will outbid each other and usually above the reserve. The key to any auction is to sell on the night. If a sale is not made on the night, potential purchasers may disappear, economic or major events may occur overnight, ie, 9/11, Wall Street crashes or a war.

Rule Number 7

If selling by auction and you are at or close to your reserve don’t be greedy, sell on the night.

“Be strong and pick a reserve that is realistic and sell on the night”


When to sell and the length of campaign

In the Eastern Suburbs, the months of September to the end of March are the ideal times to sell your property. Sydney and the Eastern Suburbs especially, hibernate in Autumn and Winter. Properties close to and at the beach get a premium in summer. Avoid campaigns and auction dates which stretch over public holidays or long weekends, religious holidays and significant sporting events. Don’t market a property between December 8th (my birthday) and January 31st. Sydney dies and we are all at the beach, having coffee and a dip or away on holidays. Only desperadoes sell during this period. I also strong advise never to sell during an election campaign as given the uncertainty of the outcome it can lead to a buyer’s strike and no confidence until there is resolution in the outcome.

In terms of the length of the campaign, this should never be more than 4 weeks.

Rule Number 8

The best time to sell in Sydney is September to March. Avoid winter campaigns. Have a short, sharp campaign.

When the sun shines, sell.


Stylists

Don’t be afraid to use stylists and hire furniture. Work on the premise that purchasers are usually devoid of imagination. For the cost of $3000-$6000, the premium obtained from the altered style of your residence, can be a final push to nail the buyer.

Placing a large vase of flowers in a prominent place during inspections can only make your home more attractive. The same applies to a lovely homely smell, such as muffins baking or coffee brewing. Brew coffee and put on the cooktop just before open times and make (or buy) a batch ofmuffins and warm them up just before you open the front door so the smell permeates your home. (Find the perfect recipe at the end of this book) – our “guaranteed to sell your home” chocolate chip muffins.

Rule Number 9

Use stylists if required, don’t save on the costs – you will get the money spend back on the sale.

“Maybe your taste is not everyone’s taste – make it universally beautiful”


Length of an Agency Agreement

We have done everything now to sell your property and complete the sale process. But what if the property doesn’t sell? Give the agent no more than 45 days exclusive to sell the property after auction date. Ensure this is in your sales agency agreement. Agents who have 3-6 months after the sale to exclusively market the property don’t deserve the property for a period after 45 days. They lose motivation after this period and the property becomes sterile and can lose value. If the decision is made after 45 days to remarket or take off the market, you are not stuck with a long-term dysfunctional contractual arrangement.

Rule Number 10

Don’t sign exclusive clauses with agents past 45 days after auction day or private treaty listing.

“Don’t sign exclusives for periods greater than 45 days”

If the property still doesn’t sell after this period then all I can say is you have not read my book!


Selling Your Investment Property

All our ten golden rules are valid for the sale of your investment property however I will provide some additional advice and golden rules for investment properties that can also have applications for the sale of your home.

Avoid long-term rentals

Is the property rented for a long term and you decide to sell?

This is not a wise choice. If your property appeals predominantly to a first home or other owner occupier, you are discounting 80% of the market and possibly only appealing to investors.

The solution!

Don’t renew a long-term lease prior to any contemplated sale and preferably sell with vacant possession. Any owner-occupier can move in straight away and avoid further rental costs waiting for the tenancy to end. The above also avoids any potential capital gains tax issues for the purchaser if the property is rented upon purchase for the owner-occupier. If an investor is interested in the property he may ideally want to renovate prior to re-letting so vacant possession is the ideal solution in all circumstances.

Rule Number 1

Empty your investment property prior to sale


Do Minor Renovations or Touch-Up?

An added coat of paint, repolishing floorboards or laying new carpet, refurbishing bathtubs or minor kitchen improvements represent money well-spent. I again reiterate purchasers on the whole lack imagination and an investor is invariably time-poor. This cost although not necessarily a value-add to price, can accelerate the purchaser’s spend investment decision in that the property is neat and tidy and is ready for occupation by either an owner-occupier or renter for investment purposes.

Rule Number 2

Do minor renovations that make it cosmetically attractive to purchasers at little cost.


Choosing Inspection Times

Don’t choose a time that you know will be detrimental to the property sale. For example, if you only get the afternoon sun, choose an afternoon and not morning inspection time. If the resident next door plays the drums every Saturday from 10.00-11.00am, don’t choose that time for prospective buyers to inspect your property.

Rule Number 3

Pick an inspection time that facilitates the property’s best features.


Best 10 Features

I always get my vendor’s to list the 10 best features of their property. This allows me to focus on these good features when marketing a property. I also get my vendors to list the 10 worst features of the property so we can both together devise a strategy to defend issues that arise from potential purchasers thereon.

Rule Number 4

Liaise with your agent to get the 10 best and 10 worst features to help map out your marketing campaign.


Large Strata Levies

If you own a unit and are aware that a large strata levy is approaching this can be both a positive and a negative.

Negative – If the works represent, for example, work to repair concrete cancer in the building with no added value, I would strongly consider selling the property before the minuting and striking of the levy.

Positive – A levy to build new balconies for the units, for example, even if it is $15,000-$20,000 per unit but can add a potential $50,000 to $100,000 to capital value of the property.

Rule Number 5

Market your campaign around large levies and balance your time for sale whether they are positive or negative issues that result from the striking of the levy.


“GUARANTEED TO SELL YOUR HOME” CHOCOLATE CHIP MUFFINS

Ingredients:1 cup self raising flour ¼ cup caster sugar ½ cup milk 20g butter, melted 1 egg 150g dark chocolate, roughly chopped Icing sugar, to serve

Method:1 Preheat oven to 180°C fan-forced. Grease a six hole, 1/3-cup capacity muffin pan. 2 Place flour and sugar in a bowl. Add milk, butter, egg, and chocolate, stir until just combined.3 Divide mixture evenly among muffin holes. Bake for 15-20 minutes, or until a skewer inserted into the centre of muffin comes out clean. 4 Stand in pan for 5 minutes. Transfer to a wire rack. Dust with icing sugar and serve warm.

ENJOY!


DECODING REAL ESTATE TALK

Agent

The person or firm appointed by you to act on your behalf with third parties, and thereby receive a commission.

Agents in conjunction

You may appoint more than one agent; or an appointed agent may act with another agent who introduces a purchaser or tenant, to your property.

Appreciation

An increase in property value triggered by inflation, improvements or increased demand.

Auction

Sale of a property in public to the highest bidder.

Body Corporate

The legal administrative group of owners of offices, home units, flats, town houses, etc. for common property.

Bond

In rentals, a sum of money which is paid by the tenant to ensure against damages to the property.

Breach of Contract

Breaking the terms of the contract.

Bridging Finance

A temporary loan to bridge the time-gap between paying for one property and receiving payment from a previous property.

Building Approval

This is the first stage of building a home on land where the approval has been made by the council that the land can be built on.


Building Regulations

Laws laying down standards in materials and construction methods which you must observe.

Buying Commission

The money you pay to an agent for helping you to acquire a specific type of building.

Capital Gain

The profitable difference between your buying price and selling price, now subject to Capital Gains Tax.

Certificate of Title

The paper that records property ownership, one copy lodged at the Titles Office, the other with the proprietor.

Commercial Property

For business purposes office buildings, shops, warehouses, hotels etc.

Commission

A percentage payable to real estate agent for selling a property by the person authorising the sale. Usually a percentage of the sale price.

Company Title

Is a term used where a company owns the land and the buildings on that land parcel. The shares held by you in the company govern your licensed living area.

Conditional Sale

Subject to conditions such as finance, building inspections etc.

Contract of Sale

Written agreement setting out the terms and conditions of a property sale.


Conveyancing

Legal process of transferring the ownership of a property from one person to another.

Covenant

An agreement between landlord and tenant, or vendor and purchaser, covering specific things which will be done or cannot be done to a property.

Cover Note

Immediate insurance cover which has just been bought.

Date of Settlement

The day, under the terms and conditions of the contract, when a vendor is obliged to transfer a property to the purchaser.

Deposit

Usually 5% – 10% of the purchase price of a property placed in trust as evidence of intention to buy. Non-refundable, after exchange of contract, it goes towards the purchase price when the sale goes through.

Depreciation

Drop in a property’s value due to passage of time, deterioration, or changes to neighbouring properties. This can have significant tax benefits for investors for tax depreciation purposes.

Developer

A person who buys property and by improving it through sub-division or construction for instance lifts its value.

Equity

The percentage of a property an owner holds after outstanding loans have been deducted from the market value.

Freehold

A property which is owned outright and for unlimited duration.


Holding Deposit

One weeks rent on the property applied for which secures the perspective tenants interest.

Investment Return

The rate per month (or year) of return on investment produced by rental and resale.

Joint Venture

Two or more people or companies combine to carry out a project or enterprise.

Land Usage

Determined by zoning regulations residential, industrial etc.

Landlord

The owner of a property for leasing.

Lease

The formal arrangements by which one party has use of another’s property in return for rent.

Lease with option to purchase

A lease embodying the right of the lessee to buy the property at an agreed price within an agreed time.

Market Price

The price paid for a property it is real, whereas “market value” is only an estimate.

Mortgage

A document pledging a property as security for the repayment of the money you borrow on the property.

Mortgagee

The lender on the mortgage.


Multiple Listing

System of selling the property through many agents. The buyer pays only one commission. This goes to the agent who lists the property on an official multiple listing form and is shared between the first agent and the agent who actually finds the buyer.

Offer to Purchase

A formal legal agreement which offers a specified price for a specified property. The offer may be firm (no conditions attached) or conditional (certain conditions apply).

Option

In selling, the right (secured by a payment) to purchase a property at an agreed price on or before an agreed date. In leases, the right to renew at a mutually agreed rent.

Passed In

When a property fails at auction to reach the vendors reserve price.

Presentation

Refers to an agent presenting themselves and the company they represent in a good light to a perspective buyer.

Prestige

A perception. Up market. High quality of living. Refers to area’s and housing.

Private Sale

The sale of a property without the assistance of a Real Estate Agency.

Property Management

A real estate agent manages properties for landlords ensuring the property complies with legislation and regulations at all times, selecting tenants, collecting rents, arranging maintenance and so on.

Property Wealth

The difference between the market value of your properties and the amount of money you owe on them.


Reserve Price

Price below which an owner is not prepared to at auction.

Sale and Lease Back

An investor buys a property and leases it back to the seller – a practice which is on the increase.

Settlement

Completion of sale when balance of contract price is paid to the vendor and the buyer is legally entitled to take possession of the property.

Site Value

The amount an unencumbered piece of land, less any improvements, is likely to realise at the time of a municipal valuation; the land component of a developed property.

Sole Agency

One agent or agency has the sole rights to sell a property.

Speculator

A punter who buys property in the expectation of selling it later for a higher price.

S.T.C.A

Subject to council approval

Sub-lease

A property which is already leased is leased again, but not for a longer period that the unexpired part of the original lease.

Tenant

Occupant of a property whether it be a house, unit or apartment.

Unrenovated

Still obtains the original materials and features.

Valuation

An estimated value of a property based on features and renovations etc.


Vendor

Person offering a dwelling for sale.

Vendor Statement

Statement setting out particulars of the property, made by the vendor.

Vendor Terms Contract

When a property is paid for over time usually a deposit and then regular payments of the balance, plus interest over several years.

How to sell your property in 21 days

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