(By Chantalle Bell)
The boom of the digital age has opened up many doors to the way we buy and sell property…
In the past we used to pop out and pick up the latest copy of the property magazines available, today we switch on the PC or grab our smart phones as online property portals and Facebook have become the new ‘go-to’ for anything, including shopping for your new home from the comfort of your couch.
So selling your own home today should be just as easy right?
Not quite… With so many new services out there, how does one know which is the best, most cost effective way to go? Will you opt for acquiring the services of a professional, making use of the latest ‘package’ solutions to come to market, or trying DIY – either or, your goal is to get into contact with as many serious buyers as possible.
Craig Hutchison, CEO of Engel & Völkers Southern Africa notes that there is more to selling a home than meets the eye. The decision of how to handle the sale yourself is ultimately yours.
However, no matter how digitally savvy or advanced we are, there are a few elements to selling or buying property that one cannot bypass
As with any other service, having a professional, experienced agent at your disposal to take calls, manage paperwork, handle the negotiations and processes and decipher the finer details, to ensure a smooth sale will ultimately save you considerable time and money. This does however come at a fee, and it is important to know what you are paying for.
It is important to know what your options are when it comes to selling, an unprofessional service could end up costing you so much that you lose all your investment gains. “In most cases this is your most valuable asset and not following a professional approach could potentially cost you a significant amount of money,” Craig cautioned.
We take a closer look at what is required during the sale process…
An eye for detail:
It is not always that easy to remove ourselves out of our situation and to imagine what others would see or want – we can so easily get caught up in our own fixations.
We all have a personal idea of our homes and what might need fixing or not before we put it on the market. What we would like or, or more importantly what we don’t want to see when looking for a home. This is a very personal opinion and could be quite costly. If seeing a gourmet kitchen appeals to you – consider that someone else might be more concerned about roof leaks or not mind making the kitchen a DIY project themselves.
Having an outside perspective in terms of needs to be changed or renovated could benefit you with regards to the sale. Agents should know what is critical when inspecting, they know what buyers look at and they are able to validate why some things have been fixed and why the rest hasn’t.
Knowing the market
HomeTimes states that pricing your home according to the listing price of other homes on property search engines in your suburb or street is a bad idea as it might never sell. This is because no two homes are exactly the same, your home is unique. When selling your home, it is not you who will be setting the asking price; it’s the market. Whatever the market is prepared to pay for a home is what it will sell for.
Craig shared an example of a price setting situation with us:
You know that the house two streets down was on the market as you saw the For Sale sign, because humans are inquisitive, you phoned to find out that they wanted R2 million. Three months later, you see the SOLD sign and decide that at that value, you can also look at moving or upscaling.
What you don’t know is that before the For Sale sign went up, they had two offers which fell through due to buyers not being able to obtain a bond, and when the contract was eventually signed, they received an offer for R1,6m which they accepted. The property also had a gourmet kitchen which yours doesn’t and the loveliest sun room as it faces just in the right direction. No report that you buy will ever be able to give you this information or insight.
Agents will get a comparative market analysis done, purchase a property and suburb report and more importantly, after considering all factors, including where the suburb is heading, think like a buyer, seller and bank valuator, all at the same time. Ensuring the seller gets the best price, the buyer gets a solid investment for their future and both are guaranteed on a positive outcome as the banks are sure to find the value.
The pitfalls of overpricing:
At any given time there are buyers looking for newly released properties, hence it is vital to price your property correctly from the start. Are you able to determine the market value of your home without overpricing it?
Statistics show that 81% of people will value their home more than what it is worth, the other 19% are sure to be in the real estate field. It is a human trait to attach emotion to things. But this emotion could end up taking your home’s value down even lower than what it should be and here is why:
- Buyers discard the idea of making an offer.
- Overpriced properties stay on the market for far too long, changing a want to sell to a have to sell – causing a reduction in price and a panicked sale.
- Buyers are always looking and if your home was listed at Price A, and after three months they still see the same property now listed at much lower – would you not also be inclined to think that if you wait, you could snatch a bargain as they are sure to go even lower, or even attempt to put in a low offer in the hope that they are desperate?
- Where a normal property would sell after three months on the market at 98% of the market value, overpriced homes tend to sell after six months and at 75% of the market value.
Finding your buyer:
How long did an agent take to sell your last home? Many will say ‘one day or one week or even one month’ homes “Easiest money they ever made,” is often the words used. But this is never the case. Even though your property sold after a week, a lot happened behind the scenes.
The average time which a property is on the market for, is three months, thereafter is starts to appear as stale stock. If your property stays on the market for too long and the buyers monitor it, they might think there is something wrong and will not even bother to set up a viewing
Do you have access to ALL your potential buyers with their needs and to all possible options of properties? Real estate agents spend years building up an extensive database of all potential clients, so that by the time your property is on offer, they already know who is currently looking and are able to match buyers and sellers up quickly.
“Agents devote large amounts of their time to finding future clients and building a reputation. In fact, a large share of real estate sales are successful as the result of the agent contacts that have been built up over many years in the extensive database, all resulting from years spent on activities prior to your home being listed,” Craig added.
“Agents devote large amounts of their time to finding future clients and building a reputation.”
Time = money
Agent fees are made up out of time, including driving to appointments, time spent on the phone, meeting prospective buyers, promoting and showing the property and canvassing and distributing marketing material. Consider all the ‘to-do’ items which comes with selling a property, and then sit and do the calculations to determine which service is best for you:
A simplified, quick overview of the process is as follows:
- Research the home’s value and determine the price.
- Conduct an official ‘listing’ process as there are certain legalities you would need to take note of before you go to market.
- Think like a buyer – write the property’s description, take the photos as to make it most appealing, get all the figures together, including the property assessment disclosure.
- Start to plan the adverts and marketing avenues. Real estate does not sell from one advert – especially not if you do not have access to your buyers already. Activities include area distribution, word-of-mouth, property portals, social media, printed adverts, distribution material, e-mail marketing, sign boards, networking and more…
- You will need to keep the activities going in order to ensure that you reach all social groups and opportunities which come available.
- Allow time for various calls and answering the questions which a buyer might have before deciding if they wish to view.
- If you have a viewing interest, co-ordinate diaries in order to ensure a buyer can come to view. This will have to be done numerous times, and note that if no screening process is done, you might end up even entertaining the local neighbours who are just curious of what the property looks like.
- Once viewings has been conducted, it is time prepare the contract. Ensure that you have a legal binding agreement, ensuring that there are no loopholes for either parties as one incorrectly phrased clause could cost you hundreds of thousands.
- Even though a buyer might have indicated they wish to put in an offer, there are still negotiations which need to take place. These come in various forms, it can be in terms of value, extras, occupations, furniture or even conditions set.
- Once everyone is in agreement and the contract is signed, the buyer needs to obtain a bond with various institutions. If this is not done right, then it could cost the entire sale.
- All securities passed, legal council needs to be obtained to handle the transfer and transaction, documents need to be signed and deposits paid.
- If there are issues, it is back to the negotiation table and if not, it is time to start co-ordinating the occupation.
- After occupation, one needs to also allow for possible problems such as incorrect disclosure of property condition, which if it was not done correctly, will need to be resolved between all parties.
- DIY: (Total number of hours spent on all the above) x (your hourly salary rate) + advertising fees
- Agent: Based on the industry standard, 7,5% of property sales price
- Package option: Flat rate depending on services obtained + ((time spent conducting own viewings and negotiations) x (your hourly salary rate))
There are many negotiating factors for the agents to handle, aspects such as the listing price, financing, terms, date of occupation and the inclusion or exclusion of repairs, furnishing or equipment. Professionally trained agents are expert negotiators and will always attempt to negotiate the best deal. Negotiating without a professional agent could be costly and result in lost opportunities in a transaction.
In today’s market where qualifying for a bond is not possible for everyone, it is very important that your prospective buyer is pre-qualified. This ensures that each person who enters your home is a qualified buyer and that you are not wasting your time or exposing yourself to time wasted on clients who will not be able to purchase your home.
Buyers can also opt to take their time with obtaining a bond, or deciding not to if they do not get one from their personal bank, which would be their likely first application. This could cost you your sale. You need to ensure that a buyer is assisted and educated, and that this is done as soon as possible so that the sales can be concluded with a quick turn-around.
Do you know what you would need to disclose when clients come to view? It is imperative for sellers to disclose all known defects of their home to their agents before placing their properties on the market. The agents are then obliged to disclose these defects to their potential purchasers. You could run the risk of a law suit if you do not know or alternatively the sale could fall through.
Whether you are buying or selling, it requires disclosure forms, inspection reports, mortgage documents, cancellation instructions, insurance policies, deeds and settlement statements. Having an expert to deal with this, will help you work through these processes quickly and more efficiently. Agents do not only help and ease this process, but can also provide you with valuable information of the area such as schools, zoning and plenty more.
Education and experience
Years ago, selling property was considered a hobby or part-time job, anyone was able to register and start selling. In 2008 the industry underwent rapid change, and being an agent is now a fully-fledged profession. A Real Estate Qualification is required by anyone who sells property as a profession and you must be in possession of a valid FFC issued by the EAAB (Estates Agency Affairs Board) which takes between two and three years to complete, so you can be sure you are in good hands.
Agents have years of experience, knowledge and support behind them and without a doubt, know their areas and how to do their job very well. They have already identified any potential problems and solutions with the property in advance and understand the seller’s mind-set, they know the ins and outs and have the expertise, and negotiating skills needed to provide reassurance to the buyers, that they are making the right decision.