There is a little known saying, which goes like this “In real estate, you make your money on the way in while buying, not when selling”.
While it may seem like a strange thing to say, it makes perfect sense when you think about all of the things you can’t control on the day of auction or sale.
The best way to make sure you have a great profit when selling is to make sure you have built equity into the property before you go to sell.
But when it comes to the actual selling process itself, there are a few things you can do to help fate fall in your favour.
Present and Advertise the Property Correctly
When advertising the property it’s important to have high-quality professional photography – not photos from your mobile phone.
Professional photographers know how to make rooms appear larger, lighter and more appealing. These photos will ensure maximum interest in your property.
It’s also important that the property is correctly styled or staged. You should think about who your ideal buyer is and present the property in a way that appeals to them.
For example, if you think an accomplished executive would be ideal for an inner city apartment, then don’t fill it with cheap outdated furniture as it won’t inspire them.
Set the Right Price
When it comes to setting the price, your agent should be able to provide an estimated price range.
Advertising the property at the lower end of the price range will encourage more enquiry, and potentially more eager buyers to leverage in negotiations – however, it could also attract the wrong kind of buyer.
Setting your listed price higher means the property may appeal to less people, however, you are likely to get more serious high quality enquiries. But once you have those enquires, you may not have many of them which will make negotiations tougher.
Choose the Best Sale Method
There are several different ways to sell real estate in Australia. Each has its own benefits and drawbacks. Certain suburbs or areas will tend to favour a particular sales method. It’s important to do your research and consult your real estate agent to decide what is best for you.
You should also think about whether selling the property quickly is important to you, or whether you are happy to wait a little bit longer if it hopefully results in a higher sale price.
Auctions are great sales methods for properties which have the potential to attract a high number of interested bidders.
They are designed to concentrate a lot of buyer demand and competition and in theory, should result in a property which sells at market price or higher.
The sellers have a great deal of confidence at auction as they can set the sale date, with a high likelihood that the property will be sold on that day. The winning bidder of an auction is bound to an unconditional contract of sale.
They can also rest assured that the property won’t be sold beneath the reserve price. If the property fails to sell, then it can be listed for sale with a quoted price range.
Although auctions have many benefits, they also tend to cost more due to the highly concentrated marketing effort which goes into advertising a property ahead of the auction.
If privacy is an issue, you can also run a private auction where bidders must pre-register and attend via invite only.
Unlike an auction, private treaty sales do not have a specific set sale date. This can be difficult for homeowners who have purchased a new property, before having sold their existing one. They can’t be sure whether their property will sell on time, or at the asking price in time for them to settle on their new home.
Luckily for investors, this is not such a big issue. Provided you don’t mind waiting a little bit longer, this type of selling approach also has its upsides.
Negotiations are undertaken in private, between prospective buyers and the seller. This means that buyers do not know exactly how much competition there is for a property, and can feel the need to provide a higher offer to cement their claim – or be persuaded to increase an earlier offer.
As the negotiation process takes place of many weeks, the process is less vulnerable to things like bad weather – which can be a real downer on auction day.
Another benefit is that the listed price can be adjusted throughout the sales campaign based on the volume of enquiry and buyer feedback – hopefully netting bigger offers.
Expression of Interest (EOI) or Tender
Expressions of interest are not so common in residential real estate, with the exception of luxury homes or development opportunities.
This type of sale method is favoured when the market value or interest levels for a property are unclear. This could be due to it lacking any comparable sales or being unusual in some way.
During an expression of interest campaign, a property is usually advertised for 4 to 6 weeks and prospective buyers are informed that they must submit their expressions of interest before a specified deadline.
Buyers are only allowed to submit a single expression of interest, so the offer they put it must reflect the highest price they are willing to pay for the property.
When submitting an expression of interest, the buyers need to include the price they are willing to pay, the conditions of sale, such as settlement dates, finance conditions, and inclusion and exclusions of the sale.
At the end of the sale period, the vendor will review all of the expressions of interest and choose the one which suits them best. If no suitable winner is found, the property could be opened up for another expression of interest period placed on the market as a private treaty sale.
This type of sale brings all the pressure and competitive nature of an auction but provides prospective buyers more flexibility around when they place their offers – so long as it is by the deadline.
It also lets you keep the price you are willing to accept for the property discreet, allowing the market to find the best price on its own.