For most of us selling a house is a very major transaction. To get the best results a number of important decisions need to be made right at the beginning. Here are some tips.

Method of Sale

You can either try to sell privately, or you can use a Real Estate Agent. While you save commission if you sell privately, this is something that usually requires a lot of time and effort, and ideally some degree of experience. For most people this option is simply not practicable.

Choosing a Land Agent

• This is one of the most crucial decisions, because a good agent can make all the difference in getting a good result. Ask around before you make a choice, and then get two or three different agents to appraise your property and advise you about the best way to sell.
• Remember that an appraisal is sometimes used to help persuade a seller to list with the agent giving it. For this reason it can be tempting for agents to suggest a higher price than may be attainable, just to get the listing. Therefore you should not necessarily appoint the agent who gives the highest estimated price.
• The next decision is how the property is to be sold. The choices are auction, tender, or private treaty, with or without an asking price. What is best for you can depend on various factors eg the attractiveness of your property or whether or not you mind the process being very public. Unless you have strong personal leanings, it is probably best to be guided by your real estate agent.

Auction

Advantages

• If your property is specially attractive, eg beachfront, and is likely to be highly sought after, then an auction can give you the best result, particularly if two or more buyers are bidding against each other.
• The sale is unconditional from the fall of the hammer i.e. you do not have to wait for the purchaser to arrange finance or satisfy any other conditions.

Disadvantages

• It can be a little more costly as normally the vendor has to pay a substantial portion of the advertising costs over and above the normal land agent’s commission.
• It is a very public process.
• If bidding fails to reach your reserve price, this is generally known and can give the perception that you want too much.
• An auction only results in a price slightly better than the second best bid. This may not be as much as the purchaser would have paid under a tender.

Tender

Advantages

• Buyers have to make their very best offer in the hopes that it is better than any other, and without knowing what your expectations might be.
• This can have the advantage of your receiving a price possibly many thousands of dollars better then the next best offer.
• The process is very private. The public does not know what amounts were offered, or what you hope to get.

Disadvantages

• You might not get the exceptional price that can sometimes be obtained where there are two or more highly motivated bidders competing against each other at an auction.
• The offers might be subject to conditions, unlike at an auction.

Private Treaty with Asking Price

Advantages

• Until recently this has been the most common sale method. The advantage is that purchasers know what the sellers’ expectations are, so have a general idea what they should offer in order to secure the property.

Disadvantages

• The main disadvantage is that you have “shown your hand” and will probably only ever get a price at best slightly below the asking figure.
• The offer is likely to be subject to conditions.

Private Treaty Without an Asking Price

Advantages

• This is really no different from the preceding method except that you do not disclose your price expectations, and buyers are unaware of the range you are likely to accept.

Disadvantages

• Offers are likely to be subject to conditions.
• Offers may not even be in your range, a waste of time for all concerned.

The Listing Agreement

• Once you have selected an agent you will be asked to sign a Listing Agreement. This will set out the commission rate, and whether or not you are to contribute towards the advertising costs. It will also say whether it is a sole agency (auctions and tenders always are) or a general agency i.e. where more than one firm of land agents is instructed.
• In our experience the best results are obtained by giving a sole agency, but not for too long a period. This means the land agent has an incentive to market the property vigorously, because it could be given to other agents if a buyer has not been found within the time allowed.
• Be aware that a sole agency means you have to pay the agent’s commission whether or not the agent actually finds the buyer. For example, if a neighbour approaches you direct to buy during the sole agency period, then even if you sell privately to that neighbour you will still be liable to pay the land agent a commission.
• Normally commission rates are between 3.75% and 4% plus GST and a listing fee of $500. Like everything these can be negotiated, so you should not be afraid to do this.

We handle property sales all the time, and are happy to help you at the preliminary stages. If you have any queries about the above matters, or anything else, please get in touch with us.