As a seller and a buyer
Knowing what constitutes a good agent, as both a vendor and purchaser, will assist you in achieving the best outcome for your sale or purchase of real estate in a stress free manner. Make no mistake; the wrong agent can turn a stres sful situation into a downright dreadful situation. But a good agent can make a stressful situation tolerable and sometimes even enjoyable.
What constitutes a good agent for a seller may not necessarily mean that they would be a good agent for a buyer and vice versa. For example, if an agent is incapable of achieving a buyer’s highest price for a property, the seller’s loss becomes the buyer’s gain. It is therefore very worthwhile identifying separately, what makes a good agent for a seller and what makes a good agent for a buyer.
From a seller’s point of view
A good agent will always tell you what you need to know and not what you want to hear. Often, this will include the absolute truth about your property and its market value. Whether you do or don’t like what the agent has to say, they possess the courage and fortitude to level with you about the facts.
In some circumstances such as a falling market, the worst thing an agent can do is hold back from telling you the truth. The longer it takes you to move in a falling market the bigger the price drop you need to make in order to catch up to a falling market price.
Kick the tenant out and hire some furniture
Real estate agents love a ‘motivated vendor’. A motivated vendor could be defined as a property seller that really needs to sell and/or really wants to sell.
Agents know only too well, the higher the vendor’s motivation, the more likely it is that the vendor will ‘meet the market’.
There are three categories of vendors, each at differing levels of motivation to sell.
The first category of vendor is the ‘must sell’ vendor. Their circumstances and reasons for selling may include financial hardship, committed elsewhere, job transfer or a deceased estate situation with multiple beneficiaries. Vendors that fall into this category are most likely to sell, even if the price is poor. External circumstances rule their decision making in regards to the sale.
Why the Reserve Price & Auction Clearance Rate don’t matter.
When the real estate market is strong, it’s easy to confuse apparent success and genuine success. A lot of commentary on the real estate market is focused around the vendor’s reserve price and auction clearance rates. Neither is a genuine success indicator yet both are being pushed by industry spin as evidence that all is great in the real estate market.
To fully appreciate how a lot of conventional “wisdom” in the market misses the main point, it’s best to examine the definition of reserve price and the relevance of the auction clearance rate.
The reserve price is the seller’s bottom line, their worst case scenario in terms of price. An agent’s role on behalf of the home seller is to attain the highest possible price from the market place. Gauging the success of a sale in terms of how much the price exceeded the seller’s reserve price misses the crucial point….
What was the buyer prepared to pay?
Many successful buyers at auction secure the property above the seller’s reserve price and below the buyer’s maximum price.
In such instances, the seller’s have overachieved yet undersold. The auction sale amounts to a public victory for the agent and a silent loss for the seller.
The owners are assured that the sale is a success because they exceeded their reserve price and the property sold on the day, it “cleared”.
Transacting real estate in a defined period of time can be a challenging process. Murphy’s Law dictates that when you need a quick sale the campaign will drag on and when you are in no rush to sell the agent fronts up with an offer after the first showing.
The best-laid plans usually become a mere guide once you venture into the real estate market. But a plan that turns into a guide is better than no plan that turns into chaos. Whether you are buying, selling or doing both, it pays to build a timeline.
When buying and selling – there are 3 distinct periods
Preparation stage for the seller – This is when you complete all the little jobs you vowed to do when you moved in. You have finally gotten around to doing it now that you are moving out. Your partner shakes their head at your ineptitude on these tasks, but you now hope a buyer admires your efforts. Depending on the amount of work required, allow 2 to 4 weeks prior to going on market. Removing tenants from an investment property can easily add 90 days to this stage.
Pre-approval stage for a buyer – Getting finance can be easier said than done sometimes. The self employed, first home buyers and buyers with minimal deposits can get caught up in the banks red tape before gaining finance approval. To discover that the bank is hesitant and requires more information in the middle of a negotiation can be stressful and unfair to the other parties involved. It is best and easiest to line up finance before beginning the property search in earnest. Getting finance approved can take up to 4 weeks even if you are relatively straight forward case.
How to attract buyers
A major selling principle
One major principle used to achieve success in selling, is to make buying easy for the paying customer. Retail shops understand this principle well, which is why they offer so many different payment options to their customers. Whether it be cash, credit card, EFTPOS, lay by, in store credit or even a No Deposit Interest Free loan, smart retailers know that you need to engage your customers in order to make that sale.
Car yards will also offer a variety of payment options to potential purchasers in order to secure a sale.
Yet when it comes to selling property, real estate agents still push the most cumbersome and awkward selling method possible onto vendors, as their most preferred method of sale to engage buyers. That selling method is called ‘auction.’
Most buyers lose money at auctions
In order to bid at an auction, a buyer will normally have spent thousands of dollars preparing themselves for the auction, without any guarantee or certainty of being the winning bidder. Buyers need to spend so much in advance because a sale at auction is unconditional upon the fall of the hammer. Because the contract is unconditional, buyers therefore need to ensure that the pest inspection, building inspection, bank valuation and any other due diligence has all been completed prior to the auction. The contract needs to be negotiated by the potential buyer’s legal representative too.