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Table of Contents

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Foreword

Why I Produced This Book Introduction

Get Your Pricing Right Appoint The Right Agent Develop A Marketing Plan Crunch The Numbers Run Effective Open Homes Fix Defects

Staging Your Home

Should I Advertise A Price?

Selling Privately

General Or Sole Agency?

Selling by Auction

Selling By Tender

Getting Legal Advice

Improvements To Avoid Common Mistakes By Sellers Conclusion

My Happy Clients

1 2 3 6 19 31 42 47 54 59 69 72 79 83 87 90 93 100 112 114

Sold! A Practical Guide To Selling Your Home

Chapter 1: Foreword

When Paul Blackler asked me to write the Foreword for this book I was flattered. I thought to myself, who better than Paul to write a book on the subject? After all, he spends every hour of his working day adding value to homeowners equity.

What may be obvious to Paul is not necessarily so apparent to someone selling their home. It’s the attention to detail that might add the extra few thousands of dollars on sale day. Within the covers of this book is a wealth of knowledge but is still only a portion of what Paul will use when he’s on the job.

Not all agents are created equal. They don’t all have the drive, enthusiasm and skill set to make an extra-­‐ordinary property sale that will be talked about for some time.

Having read this book from cover to cover, I can say it’s easy to read but at the same time comprehensive and full of facts, hints, tips and ideas that can go a long way to getting the best real estate result possible.

The advice that Paul is able to share with his readers comes naturally, having been in the industry since 2006, 1

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and with property sale values now in excess of $30 million.

It isn’t easy to list your property and keep it in marketable condition while you're living in it. And the selling pitfalls are many and varied for the unsuspecting vendor. So I was very pleased that Paul had taken the initiative and time to elaborate on the process in the form of a book.

Real estate is a large and sometimes complex industry -­‐ no one book is going to answer every question. But I like the fact that this book answers the key questions in a very practical way. I trust you will enjoy the content of this book and I trust also you’ll be able to put some, if not all the points, into action towards a higher value if and when you come to sell your home.

I have little doubt that if you’re reading this book you’ll be able to read between the lines and realise that this agent is not only smart but caring and thoughtful. This book is like the Edmonds Cook Book is to Kiwi cooking – a must read – enjoy.

Mike Pero Founder, Mike Pero Mortgages & Real Estate

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Chapter 2: Why I Produced This Book

I produced this book because I've been asked many questions by sellers over the years. I would estimate that over 90% of those questions were the same, so I asked myself “Why not produce a book that answered those commonly-­‐asked questions?” So while I'm always willing to help my clients whenever they have questions, I'm excited about being able to just say “Read this” and then hand them a copy of my book.

This book is long overdue … I've been thinking about writing it for many years. So my goal now is to get it into the hands of the people who need it – anyone who is selling their home and who wants to avoid the many errors that can literally cost you tens of thousands of dollars, or more.

I dedicate this book to my wife Julie who has helped and supported me during my years in real estate.

Paul Blackler Real Estate Guru, Christchurch Phone: 0800 00 SOLD

Sold! A Practical Guide To Selling Your Home

Chapter 3: Introduction

If you want to know how to do something well, you should look at how people are doing it poorly, and then do the opposite. So I have looked back at the numerous times I’ve seen properties sit on the market for months (sometimes years) and/or have sold for less than they should have. I soon discovered that the sellers were guilty of doing one or more of the following: 1. They over-­‐priced their home; 2. They appointed the wrong agent, or they chose a good agent but failed to follow their advice (or worse, they tried to sell the property themselves); 3. They chose the wrong selling method e.g. general agency; tender; auction etc; 4. They either had no decent marketing plan or, if they did, they failed to stick to it; 5. Their homes were poorly presented.

The Five Keys to Selling Your Home So based on this, I have identified the five keys to selling your home, and they all start with the letter “P”.

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If you work in sales you may already be familiar with these, as they apply to selling any sort of product or service.

Here are the five keys to selling your home: 1. Price – your property must be priced correctly; 2. People – you must choose a competent agent that you can work with; 3. Place – you must place your product (your home) in front of your prospects using the most effective method e.g. by auction; fixed price; or sole agency?

4. Promotion – you must invest in your marketing; 5. Product – your home (the product) must be presented in the best possible condition.

If you appropriately address each of these five key points then there’s a good chance you’ll meet, or even exceed, your price expectations.

I will show you how to do all these things, and more. This book cannot cover every sort of property or every type of home owner. So I have kept the content general in nature. Your particular situation may require something different, or specialised advice.

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I have focused on the key issues facing sellers, not every issue. In this book I predominantly use the words “agent”, “consultant” or “salesperson” to refer to what most people think of as a real estate sales professional.

So let’s get started …

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Chapter 4: Get Your Pricing Right

How Much Is My Home Worth?

One of the first, and most common, questions a home owner asks of a real estate consultant is “How much is my home worth?” They want to know because they want to get the best price they can. They don’t want to sell it for too little as that will cost them money. They don’t want to set the price too high because they know it will never sell.

Calculate an Appraisal Figure If you list your property with a real estate agent, they will help you to find out how much your home is likely to sell for in the current market, based on recent sales of similar houses in your area. This process is called a property appraisal, so let’s refer to the assessment as the “appraisal figure”.

Set a Target Price Your agent will then ask you what you think about the appraisal figure. They really want to know how much you’d like to sell your home for in relation to the appraisal figure. Let’s call this your “target price”.

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Some sellers decide to market their property with a view to achieving the appraisal figure; some want more than the appraisal figure; and some are so desperate to sell they will be happy to accept a price that is lower than the appraisal figure.

The agent needs to know your target price to help them put your marketing plan together; to write your advertisements; and to qualify potential buyers. Plus, it helps them assess how serious and realistic you are about selling your home. It’s imperative that you trust your agent to keep this figure confidential when they negotiate with buyers.

If a seller wants to sell their home for 50% more than the appraisal figure, the agent will know how much of a challenge they have ahead of them. Over-­‐pricing your home is one of the biggest mistakes you could make. We discuss this several times in this book because it’s the biggest barrier to achieving a good outcome.

Referring to Price in Your Advertising You then need to decide what you will say (if anything) about your price expectations in your advertising. Some people specifically mention a price in their advertising, which is called a “listing price” or an “asking price”.

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Other sellers prefer to just mention an “enquiry range” in their advertisements however under current legislation it may not be appropriate as some laws see this as bait or misleading advertising.

Some sellers remain silent on price altogether. And sellers who choose to sell by auction or tender are also silent on price, and the eventual value is decided by the bidders and tenderers respectively.

So here are the three steps again, whether you are selling privately or through an agent: 1. Find out how much is your home likely to sell for; 2. Decide how much you’d be willing to accept; 3. Decide whether you should mention price in your marketing, and if so, how you should do that. We will cover the first two steps in this Chapter, and the third step in Chapter 11.

Let’s look at each of those three steps …

Step 1: Find out how much your home is likely to sell for There are several ways to find out how much your home is likely to sell for:

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1.1 Complete a Property Appraisal This process involves the research of recent sales of comparable properties in your area. The more recent the sales are, and the closer those properties compare to your home, the better. Note that this research needs to be based on the sale price achieved – not the asking price.

You can do this research yourself, but if you use a real estate agent they will do it all for you at no cost.

Some properties are so unique that it is difficult to find sales of comparable properties. In some rural areas, there are very few sales to pick from. These situations will affect the reliability of the property appraisal figure.

Real estate consultants have immediate online access to property information that the layperson will struggle to find. It tells us: • • • • •

The address of the property; The age of the house; How much the property sold for; When settlement took place; General details about property e.g. number of bedrooms and bathrooms; size of the section; zoning etc 8

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1.2 Make Your Own Enquiries If you are selling privately, you can look to see how much similar properties are being marketed for in your area.

But this will only tell you the asking price, if a price was listed at all. So this information will only be a rough guide for you. You really need to know the price for which the properties sold.

You can visit www.qv.co.nz which gives you access to some basic property and sales information without any cost. Or you can purchase one or more of their information packs which range in cost from $9.95 to $150.00. These packs give you a range of property details, depending on which pack you buy. The information includes the sales history of the property concerned, as far back as 1981. It can also include details of up to 10 comparable sales achieved in the area.

A word of caution: Even if you are using a real estate agent, you might feel their appraisal figure was too low.

So you could still do your own research to verify the agent’s appraisal figure if you wanted, at very little cost or effort. The problem with relying solely on the agent’s appraisal is that you are relying on their integrity.

Unfortunately, some agents are prone to exaggerate the appraisal figure in order to give them the best chance of securing the listing.

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That’s one of the reasons why I recommend that you don’t choose your agent solely on the appraisal figure.

1.3 Rating Valuations A Rating Valuation (or RV) used to be referred to as a Government Valuation (GV) or Capital Value (CV). These valuations are only done every three years for the purpose of assessing your rates by your local council. It is set using a mass appraisal process. It does not involve a valuer visiting or inspecting the property. It should only be used as part of your research i.e. do not base your selling price solely on the Rating Value.

1.4 Registered Valuations Another option is to engage the services of a registered valuer. Although a valuer uses comparable sales figures as well, they are completely independent and have no vested interest in whether you like the valuation figure or not. It will cost you money to do this, but it gives you another level of confidence when setting your target price. Plus, you have the option of offering the report to any prospective buyers if that will help to drive up their offers.

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An online search will quickly provide you with numerous registered valuers to choose from. Again, you can order a registered valuation from www.qv.co.nz.

Step 2: Decide how much you’d be willing to accept Now that you have an idea of what your home would be likely to sell for in the current market, you need to decide your target price. This is the price you’d be likely to accept from a buyer. This is not your ideal “top dollar” price. Neither is it your “rock-­‐bottom” price. It is probably something between these two extreme prices.

Setting your target price will be the single most critical factor to decide how quickly you will sell your home. If you don’t get it right, which usually means setting it too high, then: • • •

•

You will have unrealistic expectations of your buyers; Your property will take much longer to sell; You will choose the agent that gives an appraisal figure closest to your expected price, even though they may not necessarily be the best agent; You will lose trust in your agent when they start bringing you lower (or no) offers.

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Because setting your price expectations is so important, I want to discuss this in some depth.

Setting a target price that is too low Under-­‐pricing can lead to a very speedy sale but it may leave you forever wondering if you let it go for too little.

It’s true that under-­‐pricing can lead to bidding wars (which is a good thing) in the right real estate environment, but we will cover that side of it later.

Under-­‐pricing is a not common practice, but there are desperate sellers who need to move on quickly e.g. people who have been transferred in their jobs; people who have found another home that they don’t want to lose; beneficiaries under an estate who want their money quickly; and couples who are separating.

Setting a target price that is too high While any home owner wants to get the highest price, there are problems associated with over-­‐pricing. If you set your price too high in the hope of receiving that “miracle offer”, your home will almost certainly sit on the market for a long, long time.

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This can cause the following problems for you: 1. You and your agent will become frustrated with all the work being put in, for no returns; 2. You will have to keep your house and gardens in pristine “show condition”; 3. You will have to keep running Open Homes; 4. You will have to keep allowing prospective buyers through your home; 5. You will have to keep paying for advertising costs, mortgage payments, rates and insurance; 6. Potential buyers will think that there must be something wrong with the property when they find out how long it has been on the market (it’s a common question for buyers to ask); 7. Any offers you receive will probably be very low as potential buyers will assume you are desperate to sell; 8. If you’ve made a conditional offer on your next home, you’ll put that deal at risk as you repeatedly ask for extensions of time as your home sits on the market.

I can give you countless examples of home owners who have suffered a great deal because of over-­‐pricing their home and who, with the benefit of hindsight, would have set a more reasonable price at the beginning.

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Setting a target price that is “just right” Unquestionably, the sellers who get the best results are those who set a reasonable target price for their homes based on what the market considers to be a “fair price”.

So how do you decide what your target price should be?

Irrelevant Factors to Ignore Although this might surprise you, the following factors (although relevant to what you might want for your property) are irrelevant in calculating what potential buyers will view as a fair price in today’s market: 1. The price you paid for the property – apart from anything else, you might have bought your home a long time ago in a very different market; or you may have paid too much for it; 2. How much time, effort and money you have spent on the property since you’ve owned it – you may have invested in the wrong areas; paid too much for your renovations; or made less-­‐than-­‐desirable changes to the property that could possibly reduce the offers you receive; 3. How you feel emotionally about your home – you might have loads of wonderful family memories and sentimental attachments to your home, but a buyer does not; 14

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4. How much profit you need to make on the sale to pay off your mortgage (or other debts) or how much you need to buy your next home – these issues are not relevant to how the market will view your property.

How quickly do you want or need your home to sell?

Consider how long it takes for homes to sell in your area.

If they are selling quickly, you are probably in a “Seller’s Market” and you are more likely to achieve or possibly exceed a fair market price. So even if you have to sell quickly, you can still set your price at its fair market value.

But if homes are selling slowly in your area (a “Buyer’s Market”) this indicates that supply is exceeding demand.

In these circumstances, you might want to consider setting a target price that is slightly lower than your appraisal figure. Why? Because selling quickly is more important to you than a few thousand extra dollars and a lengthy selling process.

People often fail to factor in the stress and emotional cost associated with a drawn-­‐out sale. In this case, lowering the price by 10% or more, depending on the urgency, is advisable.

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What condition is your house in?

If your property is in immaculate condition, it is probably in better condition that most of the comparable properties included in your property appraisal. So in this situation you might be justified setting a target price that is slightly higher (no more than 10%) than your appraisal figure.

Or perhaps your property is very tired or even dilapidated. Do you have repairs that need to be made that you plan to fully disclose to the buyer as part of the agreement. Are the floors, walls or ceiling in less than pristine condition? Are the appliances, counters, cabinets and fixtures out-­‐dated? Is your property less desirable than others in your area because of its proximity to a busy road, train or business? Is your yard oddly laid out or hilly, making upkeep a bit more of a challenge? Do you have undesirable neighbours who fail to maintain the exterior of their homes and gardens?

If you see any of these factors applying to your home, in a way that positions it significantly below what other homes might be, then you should consider setting a price that is slightly lower than your appraisal figure (no more than 5%).

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By following these tips you can get the price right for your home from the start, sell it quickly before incurring added costs and spending additional time that could be better spent elsewhere. Getting the price right from the start will assure you get the most for your home.

Now that you’ve set your target price, and you’ve discussed this with your real estate agent, you can prepare your Marketing Plan.

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Chapter 5: Appoint The Right Agent

If you are appointing a real estate agent to help sell your home, you must choose carefully. Selling your home is an important time for you, and you need to be able to work well with your agent.

Is there such thing as the “perfect real estate agent”? I don’t know about that, but I do believe there are four qualities that have to exist: 1.

2.

3.

4.

You must like your agent; You must trust your agent; Your agent must be competent and credible; Your agent must be backed by a trustworthy and credible brand.

I know that all four of these qualities are important, but which one would be the most important to you? Could you imagine trying to work with an agent that you didn’t like much; you didn’t trust what they said; and you didn’t think they knew what they were doing? Hmm, I didn’t think so.

Let’s now break down each quality:

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1. You must like your agent It might take many weeks or even months to sell your home. It will be a frustrating time if you don’t like the agent you're working with. The good news is that most real estate agents have strong people skills. Their job demands it. They would have quit a long time ago if they didn’t get on with people. So what sort of person do you get on with the best? Most of us like people who are positive; who smile; who take a genuine interest in us; and who treat us with respect and kindness.

We also tend to get on with people who have a similar personality to us; and we struggle with people who have opposing personalities to us. I have a very simple Personality Profile Test below that you can use. It will help you identify your personality type, so that you can find a good fit when you choose your real estate agent.

Please note that this profile test should be viewed with an open mind and a good dose of humour. We shouldn’t stereo-­‐type people, but I find this test gives valuable insights into how we (and others) think, and why.

There are four main personality types: 1. Driver – these people are very logical; they see things in only two colours (black and white); they are very direct and to-­‐the-­‐point; they don’t like 19

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getting bogged down in all the detail and fluff; and they are very task-­‐orientated; they don’t mind ruffling a few feathers with people if it gets the job done quickly (company directors; project managers; lawyers; doctors; engineers); 2. Expressive – these people love having fun; they don’t take things too seriously; they value relationships; they can sometimes lose focus (having a good time but not getting the job done); they are not always organised; they like being the centre of attention; they love praise and recognition (on-­‐stage performers; event planners; media people; advertising; sales people); 3. Amiable – these people sit half-­‐way between the Driver and Expressive; they are the peacekeepers who avoid conflict; they don’t like taking too many risks or making decisions that could upset others; they don’t need lots of praise but they appreciate the occasional pat on the back; they don’t like the limelight and prefer to be left in the background to get on with their work (counsellors; secretaries; pastor; teachers; nurses); 4. Analyst – these people are detail-­‐focused; they love having all the information and statistics at their finger-­‐tips; they tend to be perfectionists and can be inflexible and unwilling to change 20

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(accountants; business analysts; surgeons; auditors; pharmacists; engineers; architects).

Have you ever met someone and you just didn’t click with them? If so, it’s quite possible that they had a very different personality type to you. The lesson is to either seek out agents who have a similar personality type to you; or that you make allowances for their ways of doing things. Just because they are different doesn’t mean they are wrong.

Don’t select an agent purely based on the number advertisements they offer or years in the industry.

Sometimes profile and time does not always deliver the service you may be want. There are many talented and successful agents who may fit your profile but who are less experienced. These agents can bring a fresh perspective, enthusiasm and personalised service.

2. You must trust your agent Any relationship will struggle if there is a lack of trust.

You need to have confidence in what your real estate agent is doing and the advice that they are giving you. It usually takes time to build trust.

We tend to trust people who share the same core values as us. What would you describe as your top five core 21

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values? Many people say things like respect; integrity; honesty; family; sincerity; positivity; hard work; generosity; compassion. Once you’ve identified your core values, seek out an agent that exhibits the same values.

For example: •

• •

•

Respect – they listen; they are sensitive to your needs; they talk to both of you; they say “please” and “thank you”; they are always on time; Integrity – they have high morals; they do what they say they’ll do; they do the right thing; Honesty – they tell you want you need to hear, not just what you want to hear; they admit to their mistakes; they are open about their shortcomings; Family – they are kind to your kids; they respect your family time; they speak well of their own family.

These are all clues to help you decide what their core values might be. Some real estate agents list their values in their website profile (although writing it and living it out aren’t necessarily the same thing). I find it is our actions, rather than our written words, that give the biggest insight into our character.

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3. Your agent must be competent and credible I think this is the most critical factor in deciding who to list your property with. You can find an agent that you get on very well with, and you can trust them implicitly.

But if they don’t know how to promote and sell properties and negotiate hard when needed, you’re not going to sell your home for the best price in the quickest time.

This part of your screening process will not involve making enquiries about the personality or their character (we have already covered those two areas). This part of the process is where you make enquiries in six specific areas: 1.

2.

3.

4.

5.

6.

What does the REAA have to say about them?

How experienced they are?

What sort of sales results they have achieved?

What their customers say about them?

What sort of access do they have to buyers?

What awards they have received?

Let’s look at these areas individually: 1. REAA All real estate agents in New Zealand must be licensed with the Real Estate Agents Authority. The REAA is an 23

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independent government regulatory body for the real estate industry in New Zealand. Its job is to promote a high standard of service and professionalism in the real estate industry and help protect buyers and sellers. The REAA provides you with significant level of protection as a buyer or seller. This protection does not exist if you have a friend sell your home or through any DIY process. You can search for any agent’s name at www.reaa.govt.nz.

Some sellers have lost thousands of dollars off their sale price because of mistakes made when selling their prized possession.

When you use an agent to sell your home, you have effectively taken out an insurance policy at no cost to yourself. This policy has no upper dollar limit so in the event that your agent does mess up a sale, you have a judicial process to help you get a fair deal. Most agents in New Zealand carry Professional Indemnity Insurance of several million dollars. Again this means that if agents make a mistake then you have someone to sue, with the means to pay you out if you win your case against them.

2. Experience While every real estate agent has to start somewhere, do you really want a brand new agent to cut their teeth selling your home? You want to look for an agent who has solid experience in selling properties like yours, 24

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especially in your area. In saying that, you can still get excellent results if the agent you wish to appoint is working alongside or being supervised by a more experienced agent to oversee the process. Sometimes the enthusiasm of a new agent coupled with the wisdom of an established agent can achieve an even better result.

If you visit www.reaa.govt.nz you can: • • •

Find out an agent’s contact details; See how long they have been licensed; Find out if they've had any complaints upheld against them in the last three years.

3. Sales Results You need to ask them how many homes they have sold, particularly property types like yours. What price range were these properties? How long did it take them to sell, on average? How close to the seller’s target price were they?

The agent may not know all these statistics but hear them out. If you think you might sell your home by auction, ask the agent how many properties they’ve sold that way, and how many sold at auction, or shortly thereafter.

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4. Customer Feedback Ask the agent to provide you with a range of testimonials that are no more than 12 months old. Ask if you can call any of them? Do you know any of those people personally? Are they saying general things or are they specific? Do they shed any light into the agent’s core values?

5. Access to Buyers This is probably one of the most critical things to look for in an agent. Your property will sell faster and for a higher price if it can be put in front of the right kind of buyer.

The more of these buyers there are, the better off you'll be.

However, you cannot be guaranteed they already have the “best” buyer for your property. Only after an appropriate marketing campaign, managed by a competent agent, can you be sure you have found the buyer who will pay the most. And that’s who you want isn’t it!

So ask about their networks; their Buyers Pool; the way they generate interest in their listings; and how many other agents in their company they can share your property with? Ask if they have any buyers right now who 26

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could be interested in your property (I appreciate you'll only be taking their word on this as it’s impossible to prove).

You should be wary though when an agent says they have a thousand agents (in their company) ready to sell your home, because that is not the way it works. It’s a great line but seldom has any truth or value. Most agents are only interested in selling their own listings. If this was the case then you’d not have to spend any money on advertising.

6. Awards Ask about what sort of awards they have received and when. Doctors know who the good doctors are; teachers know who the good teachers are; and real estate agents know who the agents are.

So you want to deal with the agents who have received awards – especially the awards voted for amongst their peers. It’s their colleagues who see that agent every day; see how hard they work; how they deal with their clients; how much integrity they have; what their clients say about them; and what sales they’ve been able to put through.

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Be Warned -­‐ Things to Look Out For It’s just as important to know what not to have in a real estate agent. So be wary of agents who: • •

•

•

Over-­‐flatter you all the time, or otherwise seem insincere; Seem to tell you things you want to hear – especially about how much they think your home will sell for; Are quick to drop their commission rate. If they can’t negotiate their commission rate with you, what are they going to be like when they are negotiating with a buyer to accept your price?

Have a disciplinary record with the REAA.

How to Find a Real Estate Salesperson?

I would use these methods to find a good agent, and in this order: •

• •

Referrals from experts e.g. your lawyer; accountant; a property developer; a property investor; Referral from your friends and family ( ask them why they liked the agent; be specific); Internet search – you will find agent profiles on their company’s website; 28

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• •

Property Guide search; Drive-­‐bys – look to see who has all the listings.

A Great Question to Ask Here is a great question that should be asked, but seldom is: “Why should I list my property with you (or what makes you so different from everyone else)?

Many agents give vague responses that show no direct benefit to the home owner, like this: • • • • • • •

I am a very good agent (too vague); I am an experienced agent (too vague); I have been selling houses for 30 years (no direct benefit); I provide great customer service (too vague); I can give you a free appraisal (not unique); I am passionate about selling houses (not unique; no direct benefit); I listen to my clients (too vague; not unique).

Instead, they should be able to provide you with some specific points of difference that are unique and which provide a real benefit to you. For example they might provide an extra service at no cost to you or they might give you additional marketing products for free (products that other agents charge for).

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Chapter 6: Develop a Marketing Plan

Selling your home for the best price is about three major things: Exposure. Exposure. Exposure. No-­‐one will buy your home unless they know it’s for sale. The more qualified people you can include in your “buyer pool” the faster you will sell your property and the higher price you will achieve.

I know some people are private, but if you place too high a price on your privacy, you will probably limit the interest and therefore the number and quality of offers for your property.

So why bother making a plan? Well, there is a saying that “If you fail to plan then you’re planning to fail”. If you fail to create a well thought-­‐out marketing plan at the start, you might end up digging a money pit that sucks your wallet dry over the coming weeks and months. When you know how much you’ll be putting towards marketing, you can allow for that in your budget.

A marketing plan doesn’t have to be complicated. A basic plan should have four steps, which answer these four questions:

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1.

2.

3.

4.

How much should we spend (budget)?

Who am I trying to reach (target market)?

How should we reach them (strategies)?

What should we tell them (marketing messages)?

Most people focus on step 3 (strategies) without paying much attention to the other three steps. Do not make the same mistake, otherwise your efforts will either struggle or fail altogether.

If you appoint a good real estate agent, they should create the plan for you, with your input of course. But here are some tips in case you are doing it yourself or if you want to understand the process better: Step 1 -­‐ Set Your Budget How much should you plan to spend on marketing your home? A general rule of thumb in real estate is to be willing to invest around 1% of the value of your home in advertising and marketing. So for a house worth $500,000 the owner should be prepared to invest around $5,000 in marketing. It might be tempting to skimp on your marketing, but it can end up costing you more in the long-­‐run because a poorly-­‐marketed property takes longer to sell. We have already discussed some of the 31

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problems of having your property on the market for a long time. Most of these problems have costs associated with them: • • • • • •

Property outgoings such as rates and insurance; Ongoing maintenance and up-­‐keep; Legal fees; More marketing fees; Mortgage interest; Opportunity costs, including the risk of losing the next home you wish to buy.

If you think you can’t afford to pay for advertising, then try to look at it from this perspective: you can’t afford not to advertise your property! The cost of your campaign will depend on the range of selling strategies you intend to employ. We will cover these strategies later. But some common costs include: • • • •

Good-­‐quality photographs that highlight the best features of your home; Street signage (a good quality sign with images – not just a “For Sale sign); Newspaper advertising; Online marketing sites e.g. www.trademe.co.nz and www.realestate.co.nz;

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Step 2 -­‐ Identify Your Target Market Believe it or not, your property will not appeal to everyone on the planet. I've yet to see a property that does. Certain properties appeal more to some than others. So there will be a class or category of buyers who will pay more for your property. In other words, there will be aspects of your home that make it more appealing to some people than others. Some properties are more suited to families rather than couples (and vice versa); occupiers rather than investors; retirees rather than first-­‐ home buyers. Some homes suit a particular ethnicity or working group because of their location. Fixer-­‐uppers do not appeal to everyone. Some people want a home in a quiet location while others want it to be in the busy part of town.

The reason this is so important is that once you know who you're targeting, you can promote the property in a way that appeals to their demographics (physical make-­‐ up e.g. race; age; gender etc) and their psychographics (how they think and feel e.g. image/status; safety; social).

This will make it easier to decide how you should be promoting your property (your strategies) and what you should be telling them (your marketing messages).

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This is not to suggest that if someone comes along who does not meet your definition of a potential buyer that you ignore them. But it allows you to focus your marketing strategies and messages for maximum impact.

If you cast your net too wide by trying to appeal to everyone, you will fail to press their emotional buttons and you may by-­‐pass the very prospects that are most likely to buy your house.

So, who is most likely to buy your property? Does it appeal primarily to a single person, a young couple or a big family? Would this buyer tend to have a certain kind of job or make a certain amount of money? Would this person value certain things that your property has to offer? Could they be a nurse and you live really close to the local hospital? Would they be likely to own a car or take public transport (if the latter, you can emphasise the nearby bus stop and train stations)? Do they own a dog or want a garden?

If you’re not sure, consider who your neighbours are.

Take a walk around your neighbourhood and observe the people; who are they and what do they enjoy doing?

Whatever you think your typical buyer would appreciate, you will look for ways to tell that target demographic that this is the perfect home for him or her in a way that does

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not necessarily exclude other buyers. We will cover this in the section that discusses your marketing messages.

Once you’ve identified who would be most attracted to your home, you need to plan how you’re going to find them …

Step 3 -­‐ Choose and Implement Your Marketing Strategies What is the best way to reach your target market? Are they more likely to read newspapers or watch television?

Are they internet-­‐capable and technology-­‐savvy? Where do they hang out? What sorts of groups or networks do they congregate in?

If you want to target retirees you might want to consider newspaper advertising, and advertise in the local bowling club publications. If you want to target young families, you might try a mailbox drop around local kindergartens and schools.

Let’s look at some of the options for marketing: Your real estate agent may suggest options such magazine advertising; television; radio; letterbox flyers; video promotion; a window card in their real estate premises. They will almost certainly recommend running Open Homes.

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Here are some alternative strategies to consider which could be used in addition to the strategies carried out by your agent (because you are working with your agent, as a team, I suggest you speak with your agent before implementing these ideas): 1. Tap into your personal networks You can do some marketing of your own through word-­‐of-­‐mouth and tapping into your own networks. Please be aware that even if you find a buyer yourself, you might still be liable for your agent’s full commission, depending on the provisions of your listing agreement. If you have signed an exclusive listing agreement with your agent, let them take the calls because they have the expertise to handle these enquiries properly.

2. Use Social Media to reach a wider network The internet and social media have given us a great opportunity to communicate with a lot of people, quickly and cheaply. Make sure all of your friends know you are selling your property and make it easy for them to share it.

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Here are some ideas: a) Start a blog This takes less time than you think if you enjoy writing. You can share your adventures in selling your home, and provide helpful tips that you have learned along the way. Don’t mention your home too often, but make it clear that you have a home for sale and that people can follow you on your journey, learn from you, and feel like they are part of your experience. b) Advertise on Social Media This might cost you a little, but Facebook advertising is incredible for qualifying and screening the people you wish to target (including where they live). Few other forms of marketing can filter prospects with as much precision as Facebook advertising.

Now that you’ve selected your marketing strategies, you can decide what you’re going to tell them …

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Step 4 -­‐ Develop Your Marketing Messages Now you know your target market and you’ve decided how you are going to reach them, you must ask yourself “What am I going to tell them about my property?” An inexperienced sales person (and even many experienced ones) just tells their prospects everything – every fact and figure they think might be important.

But a smart sales person identifies the main, key marketing messages that will appeal to that particular target market. And they focus on the facts that make the property unique.

What Makes Your Home Great?

Why should someone buy your home instead of the home next door? There has to be a reason, and, if it is not obvious, you must create one (it has to be true, of course).

Do you have mature fruit trees in the back yard? Is your kitchen newly remodelled? Do you have a nice view? Or a pond? Or a Pool? Is the section sub-­‐dividable? Are you in a sought-­‐after school zone? Is it an energy-­‐efficient home? Is it great for entertaining? Or maybe it needs a little work, with capital gain potential once the renovations are completed.

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Think hard about your major selling points and promote them. If you are working with an agent, don’t leave them guessing about what is so great about your home – especially those aspects that are hard or impossible to identify e.g. that the gardens have been have professionally-­‐designed. You know these things better than anyone. Make a list of features for your agent to share with potential buyers.

Unless there are no other homes on the market, buyers have choices. So they need to know why your property is the right choice or at the very least why they should take 90 seconds out of their busy day to read through your listing before moving on. If you get just one person to read your advertisement, your chances of selling your home just increased.

Find a creative way to promote the selling points of your house. If you are not a great wordsmith, give your selling points to a friend and let them write a short blurb for you.

Some people can be very creative and intriguing with words and this is what you want when you are selling your home.

A Picture is Worth… a Lot of Money Always use well-­‐chosen high-­‐quality pictures that accentuate what makes your house great, because 39

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pictures are the first things that buyers will see. Text appeals to our intellect (logic) but images trigger our emotions – and we buy mainly on emotion. Using low-­‐ resolution shots from your cell-­‐phone will not get the job done.

If you are working with an agent, they will take the photographs themselves or engage a professional photographer. If you are not working with an agent and you don’t have a great camera, borrow or buy one immediately. It will make a huge difference.

Pictures get prospective buyers excited; they close the gap between the prospect and your property; they begin to imagine what they would look like and feel like living in your home. So use quality photos to persuade potential buyers that they want to know more and that they need to contact you or your agent today!

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Chapter 7: Crunch The Numbers

Your house is probably your most expensive asset, so the financial figures involved in selling a property can be huge. It’s critical that you have control over your finances and know where all your money is going. The best tool for this is a budget. It should only take you an hour or two to prepare your budget.

How much profit will you generate from selling your home? I want to break down the money you’ll be receiving (credits), from which you will deduct the things you need to be paying out for (debits). The difference will be your profit.

I will focus on the expenses that are over-­‐and-­‐above what you’d normally be responsible for. I will not factor-­‐in your normal property expenses such as your mortgage payments, rates, insurance etc, because you incur these every week, fortnight or year so just keep paying those as normal. So I will assume you have a household budget and that you are able to pay your living expenses each month.

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I recommend that you create a simple spreadsheet to store this information. It’s important to calculate what you might receive after selling your home, as it will determine how much you can put towards your next home if applicable. If you aren’t going to make as much as you thought, you might even change your mind about selling. It’s better to know these things now rather than later. Here are the items to include in your spreadsheet: Credits •

Sale price – insert your target price here. It will probably be paid in two parts: the deposit on signing and the balance on settlement

•

Rates refund – because you pay your rates in advance, the buyer will refund you for their share of the last payment on settlement on a pro rata basis

•

Insurance refund – you also pay your insurance premium in advance, so your insurance company will refund you for the unexpired portion of your premium, calculated on a daily basis from your settlement date

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Debits •

Mortgage repayment – ask your banker to provide you with an up-­‐to-­‐date repayment statement.

You will still be making periodic payments until settlement, so the principal sum due on settlement will be lower than the figure shown in the repayments statement. But at least it will give you a figure to include in your spreadsheet

•

Real estate agents commission – calculate your likely commission bill by using the formula in your listing agreement, and base it on your target price

•

Legal fees and disbursement – ask your lawyer for a quote for completing your sale

•

Marketing costs – you will find this in your Marketing Plan

•

Valuation fees – you may decide to do some research about your property’s market value (if not, ignore this item)

•

Capital improvements & repairs – you might need to allow for the cost of new carpets; re-­‐flooring; repairing the roof; finishing off the deck; replacing the old toilet; landscaping; plantings etc 43

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•

Renovation costs – you might need to allow for the cost of painting, wallpapering, re-­‐tiling etc

•

Cleaning – you might decide to pay a professional to do a complete house clean; a carpet clean; an upholstery clean; a section clearing etc. Even if you do it yourself, you might want to allow for cleaning materials and the cost of a lunch for all your volunteers

•

Storage costs – allow for the cost of storage bins and renting a storage shed if applicable (will you be storing your household effects after settlement?)

•

Removal costs – will you be hiring a moving company to do the heavy lifting for you? They should be happy to provide a quote. Even if you do it yourself, you may need to allow for hiring furniture trailers and lunch for all your helpers

•

Home staging costs – is your home looking too plain, sparse or is it empty. It might benefit from some expert advice and some extra well-­‐chosen furniture items, ornaments and artwork

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•

Contingencies – there are always surprise expenses that pop up so you might want to add another $3,000 into the budget to make sure if it’s there if you need it (if you don’t, great!)

Your Other Ongoing Expenses If all these extra selling costs are placing a huge burden on you financially, you might struggle to keep up with your usual property expenses – especially your mortgage payments. It might be wise to speak with your banker to organize a temporary extension, overdraft, bridging loan or mortgage holiday. If you’re anticipating selling your home a few months out then you could speak to your bank about switching your existing mortgage to “interest-­‐ only” in the interim, allowing you to put a few extra dollars aside (the principal component you would have paid otherwise) towards your marketing budget.

You don’t want a lack of funds to stop you from marketing your property properly, or to stop you from carrying out important repairs, maintenance or renovations.

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Chapter 8: Run Effective Open Homes

An Open Home is one of the best ways to show your home to the most potential buyers in a short period of time. Open Homes can be exhausting and are certainly time-­‐consuming, so to make sure you get the best out of your time, make sure you follow these principles in order to have an amazing and productive Open Home. I want to give you insights into running an effective Open Home to help you do it yourself, or to support the real estate agent who may be running it for you (remember, you are a team): Advertise your Open Home For an Open Home to be successful it needs to be well-­‐ advertised. This means more than putting a sign on the front lawn. Potential buyers may live in other neighbourhoods and they won’t necessarily see the sign on your property. So, you have to get the word out far and wide. Allow for adequate advertising for the Open Homes in your marketing plan.

You should schedule the Open Home dates and times in advance and refer to them in your various advertisements (and other promotions), especially on the internet sites 46

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where you are promoting the property, at least a week in advance so that people can plan their day. Be sure to erect your sign at least a week beforehand, and make sure it mentions the date, start time and finish time. If you are using a real estate agent, they will do all this for you.

Think about the Buyer’s Needs Most serious buyers will be attending several Open Homes in a day so be clear about when your Open Home starts and finishes, to give them a nice broad window to work into their schedule. To sell anything effectively, you have to put your buyers’ needs before your own. So run them on days and times that are convenient for most people; make sure they have easy access onto and off the property; ensure paths are safe to walk on; tie up your dog in the back yard (or better still, take it with you).

Your best day and time options would be on a Saturday or Sunday – in the late morning or early afternoon if possible. Most Open Homes in New Zealand run between 30 minutes and an hour. The duration of your Open Home should not be too short, otherwise people may not be able to fit it into their schedule, especially if they are visiting other Open Homes. Don’t make it too long either, otherwise it can encourage people to be tardy; and all it creates is a big burden for the person running it. If you 47

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are using a real estate agent to run your Open Homes, they will limit them to either 30 minutes or an hour.

It can create a point of difference if you are able to run your Open Homes during the week and/or at early evening times (especially in summer). This could attract people who would otherwise be unable to attend weekend viewings.

Create the Right Environment I will discuss the importance of staging your house in chapter 10, but I just want to touch on this briefly here, in the context of Open Homes in particular. You can really help your real estate agent if you have the property well-­‐ prepared for the Open Home.

Most sellers work hard to keep their homes clean and tidy throughout the whole selling process. They just never know when a potential buyer may see a sign and decide to pop in. With these random or last-­‐minute pop-­‐ins, you can be excused for the house being only 98% tidy. But you don’t have the same excuse with Open Homes. You have ample notice to prepare and clean the house, so take it. You should do an extra-­‐thorough cleaning the day before the Open Home. If you have moved all of your possessions out, this should be a very straightforward task. If you have not, make sure your house is clutter, 48

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trash and recycling-­‐free. Check to see that all closets and drawers look neat and even. Make sure dust and cobwebs are whisked away.

Remove any strong, unpleasant odours from the property. If you have a cat or dog, make arrangements to remove them well before the Open Home if you can – to make sure any smells have disappeared.

Clean and refresh the floors, carpet and furniture so that they smell fresh. If you smoke in the house, there is probably not much you can do to totally rid yourself of the odour, but try smoking outside only in lead-­‐up to the Open Home. Some people are extremely sensitive to cigarette smoke.

Avoid cooking any meals that have strong odours – especially chillies, onions, fish or curries – for at least a couple of days before the Open Home. Keep windows open, and use extractor fans, during the cooking of these meals too.

Keep windows open the day before the Open Home if you can. Don’t forget the bathroom windows too. Use portable fans, ventilation systems and air fresheners if the situation warrants it – but make sure you remove them before the Open Home otherwise people will wonder what you're trying to hide. Your agent will 49

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appreciate it if you have opened up the windows as you leave the property, just before the Open Home starts.

Now that we have cleared bad odours, let’s talk about nice fragrances. We generally feel good when we walk into a room that smells nice, but it’s so easy to over-­‐do fragrances. So keep it subtle, otherwise people will think you’re trying to cover up something. Nothing works better than natural fragrances – meaning freshly-­‐cut flowers.

Some things that were once considered “all the rage” in running Open Homes are now perceived as the home owner trying too hard and again appearing disingenuous or even deceitful. Nothing turns a buyer off faster. So you may want to heed the following warnings if you are planning an Open Home: •

•

•

Don’t have a coffee pot brewing. Perhaps you can place a jug of iced water and glasses for the agent and visitors; Don’t do any baking. It’s just too obvious and people see right through it. Serious buyers don’t attend Open Homes for food or drinks, and they don’t expect it either; Don’t play soothing music or any music for that matter. Again it’s just too obvious. You are not trying to put buyers to sleep. You actually want to 50

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do the opposite. People have different musical tastes. And what are you trying to hide anyway?

Is it the sound of the traffic on the busy road?

People need to know these things up-­‐front. When viewing a property, most people appreciate having the opportunity to view without any distractions.

Other Tips If you are using a real estate agent, my best advice is to leave them to it. They know what they’re doing and sellers who insist on being present during viewings are usually more of a hindrance than a help. It can take a few minutes for the agent to complete their set-­‐up – and they can often be short of time if they have back-­‐to-­‐back Open Homes that day. So be respectful and avoid getting in their way during their set-­‐up.

Make sure all valuables (especially smaller, portable items) have been removed from the property or securely stowed away. If the Open Home gets busy, neither you (if you’re running the Open Home) nor your agent will be able to monitor everyone’s movements.

Take down or remove any family photos if you value your privacy. By hanging numerous photographs of your family, you can make it psychologically harder for a 51

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potential buyer to see their family in your home. Replace these photos with nice pieces of art instead.

Turn on all the lights to make the house appear light, and to hide any dark spots.

Take any clothing off the clothesline as they will obstruct views and may contain some personal items. If you have any dirty or smelly items of clothing in the laundry, take them with you as you leave.

Make an extra effort to clear and tidy the entrance to the property. First impressions mean everything. So clear any weeds or leaves that have appeared; remove any junk mail that has been stuffed in the letterbox; sweep any stones or pebbles on the path etc. Your agent will appreciate not having to do this when they are trying to get ready for visitors.

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Chapter 9: Fix Defects

Most buyers look for a home that is ready to move into immediately. So when viewing, they expect to see what the house looks like in its best, liveable condition. From there, they will imagine what it would look like if their family was in your house.

Of course, the exception is the buyer who is looking for a doer-­‐upper (or fixer-­‐upper) because they want to renovate the property on a large scale – with a view to creating equity.

So unless you're selling a doer-­‐upper, you need to fix any defects and obvious problems. Don’t leave problems unattended since you and your agent might have a duty to disclose them anyway. Outstanding work and defects will only get in the way of the negotiation process later.

There is no quicker way to make a buyer scowl than to show them a property with cracked windows; doors that won’t open or close; broken downpipes; peeling paint; leaking taps and so on. It gives the buyer the impression that the owner hasn’t cared for the property.

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If the owner hasn’t bothered fixing the obvious problems, what are the chances of the owner having fixed any latent problems?

That’s why it’s so important to get on top of these little things because once a prospective buyer sees one problem, they will start looking for others.

So get started and invest a bit of money to fix these problems. Go through each room and inspect everything.

Sometimes we are so familiar with our surroundings, and because we see them every day, we just can’t see the forest for the trees. So have someone else to do the inspection with you. Just compile the list – without fixing things on the way, otherwise you'll get distracted. Make your list first; prioritise the jobs, and get started.

Here is a comprehensive but not exhaustive checklist: 1.

2.

3.

4.

5.

Check that all the internal and external doors open and close with ease; Make sure the locks, hinges and latches on the doors work well and that you have keys for all the locks; Check all the taps (inside and outside) for leaks; Check ceilings for mould, especially in damp rooms; Check that every power-­‐point is working; 54

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6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

Check that all handles and balustrades are fixed (not loose); Check all windows and fixed mirrors for cracks; Check that all cupboard doors, hinges and latches work well ; Make sure the garage door opens properly; Ensure all the lights work (and buy a few spare bulbs); Check that your oven light works; Walk up the stairs and check for creaks; Check all the electrical appliances that are chattels to make sure they work. If not, then repair, replace or remove them; Get on the roof and check all guttering and downpipes for leaks; Check the levels of any sloping floors; Check the walls for any peeling paint or wallpaper; Check all your internal window sills for rot.

Every minor thing a buyer can find wrong with a house is potentially an opportunity, down the track, to negotiate the price downwards. Even worse still, the reduction in their offer will be disproportionately larger than the actual repair cost. This is because buyers factor in a premium for all the inconvenience of fixing the problems; they want to include a safety margin in case the repairs 55

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cost more than they expected; and people naturally assume the worst, not the best, scenario.

If there are numerous outstanding defects, the buyer will wonder what else they will uncover once they buy the property. The defects suggest that the seller (you) did not care very much about keeping the property maintained and likely let it go until the repair could absolutely wait no longer and/or that the cost of repair was too high to attend to. The way the buyer sees it, they will be taking on the cost that is the result of your years of neglect.

Imagine what goes through the buyer’s mind as you offer one lame excuse after another to justify your neglect.

Every excuse adds to the “Reasons Not to Buy” column.

These maintenance items are silly reasons to lose a potential buyer.

The ironic thing is that even if a prospect makes an offer, they will often specify in the Special Conditions that the seller (you) must fix all the defects by the settlement date. So you might as well just fix them now.

It makes sense to do the work yourself because, unless the repair is significant and very expensive, you will almost certainly recoup the repair costs – and maybe more!

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I recommend that you keep all your receipts, warranties, consents and other documents needed to prove you completed the work. A serious buyer may want to see this information.

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Chapter 10: Staging Your Home

This purpose of this chapter is to give you some helpful suggestions about how to stage your home to command the best price.

First Impressions Count Can you remember your first date? I'm sure you wanted to look your best in order to make the very best impression possible. It’s the same when selling a home.

You don’t get a second chance to make a first impression.

Psychologists claim that the average time it takes a person to form an opinion of whether something is “good” or “bad” is three to seven seconds. Once they’ve formed that impression, it is very hard (but not impossible) to get them to change it.

Curbside Appeal A potential buyer’s “first impression” happens when they see your property for the first time. So ask yourself, “How smart does my property look from the curbside?”

Make an extra effort when it comes to your front yard as it is the first thing a potential buyer will see. Keep your front lawn smart, which may mean cutting it twice a week 58

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instead of once. Spend a little extra time pruning or weeding the front gardens. Use a trimmer to keep the edges between the paths and lawn looking clean and tidy.

The goal is to have the buyer thinking, “Wow, this home has been well cared for”.

If the summer is hot, water your lawns and gardens generously to keep everything looking fresh and healthy.

Use automatic timers if you are away from home a lot. If your lawn seems to have more weeds than grass, consider treating it with lawn food and re-­‐seeding. For less than $25 you can make your grass look bright green – just visit your local hardware store. The sooner you get started the better, because a renovated lawn can look ugly in the early stages.

Remove Rubbish It seems obvious but you need to get rid of any rubbish, debris, broken or derelict items. It sends a poor message to the market that if you can’t keep the obvious areas tidy, there is probably plenty of rubbish hidden in less conspicuous places.

Remove Clutter Remove any items that create clutter, such as tools, toys, outdoor equipment, bins, recycling, timber, building 59

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materials etc. These are items that are not needed every day, but are not to be thrown away. Find or create a storage place to house these items. You might have a shed, or you might be able to find some storage under the house, in the rafters of your garage, or in the gap between your garage and your boundary fence. It might be worth spending a bit of money in some nice storage boxes and bins. They can hide a lot of clutter quickly.

Spruce Up the Exterior Many people focus so much on making the inside of the house look good, that they ignore the exterior of the house and other buildings. Make sure you have cleaned the outsides of all the windows and doors. A water-­‐ blaster is a worthwhile investment to clean the dirt and grime off your cladding, and to remove stubborn algae, mould and moss from your fences, outdoor furniture, paths and driveway.

If the paths or driveway have cracks, consider whether you can repair them. There are some amazing and affordable products on the market to help you repair such cracks. Replace any cracked or broken tiles as well.

It’s easy to forget about the roof because it’s not so visible. So get a ladder and check out what’s going on up there. Repair or replace any tiles; attend to any nails that 60

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are missing or protruding; and clear, repair or replace any broken or missing guttering and downpipes. A roof takes a beating from the elements, so it is more susceptible to deterioration. Look for opportunities to restore, renew and repaint these surfaces.

Make sure your rubbish bins and wheelie bins look orderly and are not overfilled. If they smell, give them a good wash.

If you have a pool or pond, make sure they are vacuumed/cleaned and as clear as possible.

Interior Presentation When it comes to setting up your interior, you need to de-­‐clutter again. You want to make the rooms look as spacious as possible. This is difficult to do if there is clutter everywhere. Plus, the clutter creates a distraction for the buyers. You want them to focus on the best features of your home – not the toys, remotes and books scattered around the room. While you don’t want the rooms to appear empty either, too little is definitely better than too much.

If every surface is covered in trinkets, ornaments, photos, trophies and mementos, pack all but a few carefully placed items away. Quality is better than quantity.

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Potential buyers need to be able to picture themselves in your home and if they are overwhelmed by your life, it will block their ability to see themselves living in your home, and they will look elsewhere.

Most of these items probably need to be sold at a garage sale or taken off to the tip. But if they are valuable and essential to you, then store them away or hire a storage unit for a couple of months, while your house is on the market.

Re-­‐organise your wardrobes too. By removing some of your clothes, you can accentuate the space, no matter how small your wardrobe might be. Very few people use every item in their wardrobe all the time, so we can all make some extra room in our wardrobes. Instead of piling all your shoes randomly at the bottom of your wardrobe, invest in some shoe racks (or pop them into some tidy storage boxes at least).

Reduce the amount of “big furniture” in your home. For example, you might have a couple of big couches, matching armchairs, a massive television, a bulky entertainment unit and a coffee table in your lounge. But this amount of large furniture items can make the room look small and cause people to feel claustrophobic. Try re-­‐configuring your lounge so that you have the bare minimum in the room, without making it look empty or 62

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sparse. You can then “fill in” the room with the subtle addition of smaller “feature” items like a stylish table lamp; stunning cushions; one or two pieces of nice artwork on the walls; a beautiful vase filled with freshly-­‐ cut flowers.

A large-­‐screen television takes up an incredible amount of floor space, so consider mounting it on the wall if you can.

Perhaps your room is huge and it already looks sparse.

The problem with too much room is that it can cause a lack of warmth and atmosphere. In this case, you might need to bring in some big items. But this is not a licence to bring in loads of clutter, junk and tacky ornaments.

What if you are selling an empty home? Research suggests that if a tidy home is marketed for sale when it is filled with nice, quality furnishings, it will achieve a higher price than if it is sold when it’s empty. So if you’ve had to move out before listing your property for sale, you might consider asking a home staging company to make some recommendations for you. If you have a nice home, the extra staging costs should be easily offset with a higher sale price. Needless to say, these costs should be included in your budget at the start.

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Clean Like Your Life Depends on It Whether you’ve got a small home or a large home; in a good location or an average one; in an apartment or a homestead – no buyer likes to be in an unclean house.

Even if it is a derelict property or a mortgagee sale, the buyer will usually discount their offer if the property is unclean and untidy (it might be a sub-­‐conscious decision).

Of course you need to clean your home through scrubbing, mopping, vacuuming and dusting. But when you are selling a home, you need to go the extra mile and clean the areas that you might normally neglect or rarely clean. Get right into the corners of your pantry; pull out the couch and vacuum those hard-­‐to-­‐get-­‐to places; run a wet cloth along all your skirting boards; climb on a step ladder and wipe the top of your pantry; fridge or microwave; wipe down all the walls and ceilings; wipe down the chandeliers and curtain rails as they are real dust-­‐collectors. A fussy buyer will check in these areas.

Make sure you remove any cobwebs on the ceilings, fixtures, corners, doorframes and under/back side of furniture. Dust your fixtures top and bottom and in every crevice, including any fans. Wipe all your skirting boards, architraves and sills. Clean under every cabinet and appliance. If you can’t get on your hands and knees, pay someone else to do it.

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Thoroughly scrub all your bathroom floors, by hand if possible, and get the grout as clean and white as possible with an appropriate cleaning product (seek advice from your hardware store).

Consider re-­‐sealing your bath if the seal looks black and mouldy. Make sure the drains run smoothly and are not clogged. Use a plunger to remove any hair that has accumulated in the drains.

Wash all of your windows and mirrors on a fine day, to know they are spotless and streak-­‐free.

Move your furniture so that you can vacuum underneath.

Use fabric cleaner to freshen up your couches; and use a carpet deodoriser to freshen up your carpets. If you did not replace your carpet before selling, make sure you spot-­‐treat any problem areas. If it’s been many years since you cleaned the carpets and/or if you have cats or dogs inside, it might be wise to call in a professional carpet cleaner. They have powerful equipment; they know how to treat a wide range of tricky stains; and for a bit more money they can do a commercial clean on your couches and arm chairs as well.

Make a big effort to dress up your beds. That means using attractive modern bedspreads, with thick inners.

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and cushions. Finish it off with a couple of stylish bed-­‐ side lamps.

All this cleaning might sound at bit overwhelming, but there are a few things you can do to make it easier: •

• •

If you are not in a hurry to put your home on the market, just commit half an hour every day to cleaning your home. You'll be surprised how much work you'll get done; If you are in a hurry, hire a professional cleaning company to do most if not all this work for you; Ring around all your family and friends for a “Big Clean” on a Saturday morning” followed by pizzas for lunch. It’s a lot of fun when everyone chips in, and it breaks a huge job for a couple down to a small job for a group. Just get the word out early because people usually need a bit of warning.

Flick out a reminder text a couple of days beforehand. Make sure you have all the cleaning materials they need (or ask them to bring some with them) and keep them well fed and watered.

Play some upbeat music to keep the mood buoyant. Don’t be scared to ask as the worst thing they could say is “no”. Usually one or two people front-­‐up and that will at least double your numbers!

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Focus on the Two Most Important Rooms No two rooms impact a buying decision quite like the kitchen and bathrooms. Buyers know how much it costs to replace or renovate a kitchen or bathroom, so if these rooms are shoddy, the buyer will recoil or reduce their offer according. If these rooms are tasteful and stylish, the buyer will be more willing to meet the seller’s price.

According to valuers, if you replace or renovate these rooms properly, you could recoup your outlay by as much as 200%. But if you refuse to replace or upgrade a horrible kitchen or bathroom, the buyer could reduce their offer by as much as 200% of the cost it would have taken you to do it. It’s only natural for a buyer to view such problems with their “worst-­‐case scenario” mind-­‐set.

But make sure you don’t overspend on these rooms, on the assumption that you'll automatically double your investment every time. You still need to be wise about what you do. Your budget should be set according to the quality of your home. Don’t go overboard and if in doubt, just aim to create something conservative, clean and stylish.

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Chapter 11: Should I Advertise a Price?

The issue of whether to mention a price in your advertisements, or even an enquiry range, is one that can polarise real estate agents. Some agents feel strongly that the price should be left out; and others think it should be included in the advertising. There are advantages with each approach so I will outline them below, to provide you with a balanced view: 1. Arguments for not listing a price in your advertising •

•

•

Some people value their privacy and don’t want all their friends and neighbours to know what their house is worth. By omitting the price, you maintain a greater level of privacy; If your home is a “one-­‐of-­‐a-­‐kind” property, it might be impossible to determine what the market would pay for it. So in these situations it’s probably better to let the buyers tell you how much it’s worth; You could deter buyers who think they can’t afford your listed price. You don’t want to put these buyers off because once they’ve fallen madly in love with the property, it’s amazing how 68

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• •

•

people can find an extra $10,000. But this won’t apply if the buyer’s budget is $100,000 short of what the seller wants; If you list a price and there is a buyer who would have paid more, you will lose out on the windfall; If you are selling your home by auction, you will not mention a price. You want the process to do its work. You do not want to sway or deter any bids by mentioning a price; A well-­‐crafted advertisement will capture the attention of your potential buyers. If they don’t see a price in the ad, they might want to contact your agent for more information. This gives your agent the chance to qualify the buyer and stimulate their interest (this argument has a counter-­‐argument which I will cover below).

2. Arguments for listing a price in your advertising •

A listing price lets potential buyers know one of the most critical facts about your property. If you don’t mention the price, you could actually deter buyers who incorrectly assumed the property was out of their range, when in fact they could afford it;

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•

•

Some buyers become frustrated when there is no listing price mentioned in the advertising. They simply by-­‐pass the listing and move on to the next one. You don’t want to miss out on any potential buyers that could buy your home; Listing the price in the advertising reduces the amount of time-­‐wasters and tyre-­‐kickers that your agent has to deal with, allowing them more time to focus on the genuine buyers.

The issue of whether to include a listing price or not in your advertising depends on the seller and the property.

There is no right answer or wrong answer.

To find the best approach for you, give me a call.

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Chapter 12: Selling Privately

I know I'm biased because I am a real estate agent, but when I wrote this Chapter I tried as hard as I could to be objective and to see things from a seller’s point of view.

Let’s look objectively at both options, starting with private sales: Selling it by yourself If you have a home for sale and a friend, family member or neighbour wants to buy it at an acceptable price, then of course you should sell it privately. Of course, you will need your lawyer to help you.

But what if you don’t have a buyer and you want to sell privately?

The advantage of selling your home privately is that you will avoid having to pay for the real estate agent’s commission. Fair enough, since we are talking about a big chuck out of your sale proceeds. But there are some serious downsides of trying to do it all yourself: 1. Risk of getting it wrong: You will be taking a huge risk with one of your most valuable assets, because you almost certainly lack the time, 71

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2.

3.

4.

5.

6.

expertise; experience; and skills needed to put a real estate deal together and to see it through to completion; Fewer leads: You almost certainly won’t be able to reach the same number of potential buyers as a real estate agent; Lower sale price: An agent has honed their negotiation skills over many years and many sales.

Most laypeople would struggle to achieve the same selling price that an agent could; Longer time: You probably won’t be able to sell your property in the same time as an agent; Greater risk for buyers: When a buyer purchases a property listed with a licensed real estate agent, they receive numerous protections against false representation etc. These safeguards do not exist to the same extent when they deal directly with the homeowner. So some buyers might be deterred by dealing directly with the home owner; Advertising costs: When selling privately, you need to advertise more because you don’t have the same buyer contacts that an agent has. And of course you will bear these costs yourself (when you use an agent, they pay for some of the advertising themselves).

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Plus you will pay the retail price for your advertising (agents can access wholesale rates).

Selling through an agent If you decide to sell through a real estate agent, you will be liable for their commission if they sell your property.

While this is a lot of money, there are some serious upsides to listing your property with an agent that I believe justify the cost. Here are seven compelling reasons why I think that appointing a real estate professional is not only a good decision, it’s the only logical decision to make: 1. Wider exposure: It is unlikely that you can promote your property to as many potential buyers as a real estate agent can – particularly an agent who works for a company with many other agents (all who have potential buyers of their own). Plus, they can introduce most of those buyers to any property within 24-­‐48 hours and usually with just one phone call or email blast.

How much time, and how much advertising and marketing, would you need to invest in to reach the same number of buyers? It would cost you thousands of dollars and it would take weeks.

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And then you’d have to show them all through the property yourself. Do you really have that amount of spare time?

2. Lower offers: When potential buyers discover that you are selling privately, they will often reduce their offers by the amount that you’d normally pay to an agent (they want to claim at least half if not all those savings). So you won’t be saving anything at all, despite having done all the work yourself; 3. Impartiality: When a third party (such as a real estate agent) points out the positive aspects of your property, it has greater impact than when you do it yourself. In other words, buyers will take your claims with a greater level of caution and scepticism; 4. Save your time: You will have to make yourself available to handle all the calls, viewings and Open Homes that the agent would otherwise have handled on your behalf. These enquiries can arise during the day or night, week or weekend. Do you have that sort of time? Can you cut away from your job at any time to meet with an interested buyer? (I have heard of many tales where a deal has been lost because the seller or the agent was unable to react quickly enough); 74

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5. Right skill sets: Do you have the people skills; research skills; negotiating skills; sales skills; and the legal skills that an agent has developed (over many years and many contracts) to allow you to put a real estate contract together? If not, why would you be willing to put a deal in jeopardy by handling it yourself?

6. Higher prices: A quality real estate agent is a skilled negotiator and as such, they will probably achieve a sale price that is higher than anything you could achieve yourself. That premium would at least be equal to but is likely to exceed the commission you would have paid them. So why not bite the bullet and give a qualified professional the opportunity to get the best deal for you from the start?

7. Property Appraisal: It would take a layperson a lot of time to find out how much properties have sold for in their area. If you use a real estate agent they will do all this work for you at no cost. What if you tried to do this yourself and got it horribly wrong? You would be basing all your pricing and marketing on false information, which you could pay for down the track;

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8. Marketing Plan: Again it would take a layperson a lot of time to develop their own marketing plan, but if you use a real estate agent they will do all this work for you at no cost; 9. Greater protection: If you make a mistake when trying to sell your home, you have little or no comeback against anyone. If you use a licensed real estate agent, you have certain contractual, legislative and ethical safeguards to protect you; 10. Advertising: most real estate agents offer their sole agency clients a certain level of free advertising. This includes advertising on their company’s websites and window advertising in their company premises; 11. No sell, no fee: If the above reasons are not compelling enough for you, then remind yourself that you are only liable for the real estate agent’s commission if they manage to sell the property for you. And of course you are totally in control of the outcome since you decide whether or not to accept any offers. You will only do that if you're happy with the purchase price and all the other terms. In other words, you only pay the “price” if you get the “result”.

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But if you try to sell your home by yourself, and it doesn’t sell, you’ve done all that work (or paid the price) without any reward (result).

Here’s an interesting observation In my opinion, the only professional groups that have the skills to sell their own properties, without the help of a real estate agent, are lawyers and property developers.

But I've noticed that most lawyers and property developers I know use real estate consultants to sell their properties anyway. Why? Because they don’t have the time and they don’t want the hassle and risks associated with operating outside their areas of expertise. It just makes sense doesn’t it?

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Chapter 13: General Or Sole Agency

Some home owners think that the way to get the best price for their property is to list it with as many agents as possible, so they sign up for a “General Agency” (also known as an Open Listing) with multiple real estate companies.

A General Agency allows all those companies to find a buyer, without any one agent having exclusivity over the property. This all sounds good in theory, but the reality is far different. When a real estate agent has the security of a Sole Agency (also known as an Exclusive Agency) they get paid the commission, whether or not the eventual buyer is introduced to the property through them or another company. This protects the agent and allows them to bring as many potential buyers to the property as possible, with a view to get the best price between them.

A General Agency has the following advantages for the seller: • •

It puts the property on the books of all the agents of all the real estate companies involved; There are usually many real estate signs on the property, giving the impression to the public that 78

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• • •

there is a lot of interest. But the educated observer will not be fooled in this way; The seller can cancel the General Agency at any time; The seller can find their own buyer without incurring any commission; The property can be of interest to new agents or agents who have no exclusive listings of their own, although even then they will probably focus on the exclusive listings being sold by the company they work for.

The disadvantages of a General Agency are that: •

•

•

The real estate company will not provide as much (if any) free advertising as they provide for their sole agency clients; Most real estate agents give priority (meaning the amount of time and effort they spend) to their exclusive listings, so properties with General Agencies will often take much longer to sell; If an agent has a buyer, they will do everything they can to encourage that buyer to make an offer quickly – for fear that another real estate company could sell it to someone else. But this may mean it sells for a lesser price.

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A Sole Agency has the following advantages for the seller: •

•

•

The agents working for the real estate company will work a lot harder to sell that property because they know another company cannot come along and sell the property under their feet (or if another company has a buyer, then the listing company will still receive most of the commission); The agents have an interest in creating competition between their potential buyers, to drive the price up for their seller. As stated above, this does not happen with a General Agency because an agent will get their buyer to sign up as soon as possible in case another agent comes along with a better offer from another buyer; This whole issue is really about quality versus quantity. You might think you’re getting more agents working for you, but the quality of their efforts is far less than the effort made when they have the protection of a Sole Agency.

The disadvantages of a Sole Agency are that: •

If the seller finds their own buyer, such as a friend or family member, they will still be liable for the full commission;

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•

If the seller wishes to withdraw the property from the market, they have to wait until the Sole Agency agreement expires.

I believe that a Sole Agency is the best option for the seller who wants to get the best price in the fastest time.

I can’t think of too many real estate agents who would argue with this. General Agencies are very rare in big cities, but can be found in smaller towns.

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Chapter 14: Selling By Auction

Whether you have sold a property by auction or not, you have probably sold items through auction sites like Trade Me and will be familiar with how auctions can drive up prices. Selling a home by auction can be the best way to get the highest price in certain circumstances and that is what this Chapter is all about.

Some real estate agents list every property they have by auction, others don’t. I want to give you a balanced view so that you can have an informed discussion about auctions with your agent.

It isn’t very helpful for a real estate agent to universally proclaim “Auctions are the best way to sell a house”, or vice versa, as there are so many variables that can apply.

So let’s consider some of the advantages and disadvantages of auctions, to help you decide whether an auction is the best option for you: Advantages of Auctions •

An auction can be a good choice when you have a property that is so unique that it is difficult or impossible to identify its resale value. In these 82

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•

•

•

•

cases, the market decides what your house is really worth at that time; If you need to sell your home quickly, or by a specific date, an auction might be the way to go.

By creating a sense of urgency, especially in a seller’s market, you may motivate casual buyers to take action; If your property is in a highly sought-­‐after area, with few other houses on the market, then demand exceeds supply. So an auction will bring all the eager buyers together in one place at one time – creating a sense of competition and urgency that few other selling methods can match; An auction is a very exciting event and people can become very emotional. When there is more than one serious bidder in an auction, a skilled auctioneer can create so much excitement amongst bidders that people will often pay more than they had planned to; An auction can work well when the market is so buoyant that buyers are making offers over-­‐and-­‐ above the asking price. This is rare, although it is happening in parts of Auckland at the time of printing this book;

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•

•

When a bank (or any lender for that matter) is forced to sell a property under mortgagee sale, it usually does so through an auction. This protects the bank from any subsequent claims (from the bank’s defaulting customer) that it sold the property too cheaply; Bidders at an auction are usually serious, motivated, and all cashed-­‐up (or have their finances confirmed). An auction will weed out tyre-­‐kickers so you know your agent is only dealing with hot prospects.

Disadvantages of Auctions •

•

•

If you decide to sell by auction, you might be ruling out buyers who would have been willing to make a conditional offer, such as people who need to sell their existing home before buying yours; Some buyers do not like auctions, and they prefer to only look at homes that have asking prices in their advertising. If you sell by auction, you might be missing out on offers from these potential buyers; An auction is not the best option in some situations such as complex, drawn-­‐out deals or properties that need to be sold subject to special 84

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•

•

conditions e.g. if the title has not yet issued; if the property needs to be subdivided; if there are numerous works (renovations; repairs) to be completed; if Council consent or re-­‐zoning is required etc; An auction can be a very stressful time for sellers, so you may need to factor this in if you are prone to stress and worry. In saying that, a protracted sales process can also be stressful; If you decide to sell by auction, you really need to do this through a real estate agent. It would be a huge challenge for a layperson to sell their home privately via an auction (difficult but not impossible – of course they would need to hire an auctioneer on the day).

Whichever way you go, I believe that it is your willingness to meet the market with a fair price that is more important than the actual selling method you use.

Because every house and every seller’s situation is different, I would be only too happy to meet with you to discuss which approach is best for you.

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Chapter 15: Selling by Tender

How Do Tenders Work?

If a seller chooses to sell their home by tender, prospective buyers will submit confidential written offers for the property to the agent for the seller’s consideration. There is no reserve price as such, but there may be a price guide. Buyers can offer less than this. In fact they can offer any price they like, and can make their offer subject to conditions. The property can be sold before the tender.

Prospective buyers can register interest with the agent and ask to be informed if someone else makes an offer before the tender date. They then have the option of making an offer too. Once the tender period expires, the agent provides the seller with all the tenders. The seller weighs up all the offers (and the conditions applying to each) and decides which, if any, offer they want to accept. The seller can reject all the tenders.

Once a tender is accepted, the buyer is in contract with the seller and the buyer must work through all of their conditions towards settlement.

If a tender is rejected, the prospective buyer (the tenderer) is under no legal obligation to do anything more.

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The seller can, through the agent, negotiate with any unsuccessful tenderer with the aim of reaching agreement on a sale/purchase. It is up to the tenderer if they wish to do this.

Advantages of Tenders •

• • • • •

Tenders give the seller incredible control and flexibility. The seller is not obliged to accept any tender. They can weigh them all up against each other and either (a) Pick the best one and reject the rest (b) Reject them all; or (c) Negotiate with the tenderer of their choice; Like an auction, a tender brings all the offers together in one place and at one time; But unlike an auction, a tender is private and confidential; Unlike an auction, you can accept conditional offers; It encourages the buyer to put up their best offer, first time; It allows the market to determine the property’s market value (ideal when dealing with a unique property).

Disadvantages of Tenders • • •

Not all buyers like tenders; Not all buyers can make an offer and wait until the tender process finishes; Some buyers want the certainty of a listing price.

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Like auctions, selling by tender is not for every seller nor suitable for every property.

Call me if you want to see whether it is suitable in your case.

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Chapter 16: Getting Legal Advice

Buying and selling real estate has many legal pitfalls for the unwary. While a skilled and experienced real estate agent will be familiar with many of the legal issues involved in selling your home, they are not lawyers and they are not there to offer you legal advice. Their job is to help you sell your home as quickly as they can, for the best price.

So you will need to appoint a lawyer (also known as a solicitor) to help you. If you don’t have a lawyer, your agent might be able to explain how you can find one.

While you definitely need a lawyer to complete the settlement of your sale, you technically don’t need a lawyer to sign a Sale and Purchase Agreement. However, it would be smart to contact your lawyer as soon as you have decided to put your property on the market.

If you want your agent to send a copy of the contract to your lawyer before you sign, let your lawyer know what’s happening beforehand. Make sure they can move quickly when it arrives (they might be busy or on annual leave).

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contract for real estate is not binding on either party i.e. it must be in writing. Almost all sale contracts are written on the standard contract approved by the Auckland District Law Society – except for auctions and tenders.

By law, a real estate agent must present all written offers to the seller.

You might need to contact your lawyer earlier (immediately) if your sale is unusual in some way, such as: • • • • •

You have an offer to buy another property; You have tenants in the property; You are in a relationship break-­‐up; You are in default of your mortgage; You are subdividing your property.

If you need to be out-­‐of-­‐town during the selling process, you might need to talk to your lawyer about signing a Power of Attorney so that someone else can sign urgently-­‐required documents in your absence.

Many lawyers offer a fixed-­‐fee service for sale and purchase transactions. They are usually happy to include a pre-­‐contract consultation as part of that fixed fee service. I suggest you give them a call as soon as you think you might sell, and they will guide you through the process.

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A real estate transaction looks straightforward from the outside, and most transactions go through without any problems. But there are many times when these transactions go wrong. Your lawyer is there to avoid these sorts of problems, or to help you if it anything goes wrong.

Your lawyer’s primary responsibilities are: • • • • • • •

To make sure the contract protects your interests; To liaise with the buyer’s lawyer about paying the deposit; satisfying any conditions; To ask your bank to release your mortgage in preparation of settlement; To liaise with your Body Corporate if applicable; To complete settlement, on the day you hand over the keys to the buyer; To pay off your mortgage after the sale is completed; To cover other issues such as your rates, insurance, wills etc.

Most lawyers deduct their fees from the sale proceeds.

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Chapter 17: Improvements to Avoid

This can be a tough one. You want buyers to love your home and be excited about buying it, but you do not want to spend money that is not likely to add any value to the final selling price. There are certain things that have been shown to add that value, and the rest you should avoid. Let’s look at the improvements to avoid: Installing a Pool While you might enjoy lounging by the pool or going for a swim on a hot day, not everybody feels the same way about owning a pool. Buyers know that swimming pools and spas tie up a lot of your time to maintain; and a lot of expense to keep clean. Buyers who don’t want a pool will be put off because they realise that you'll want a higher price because of the pool, even though the buyer doesn’t want it. Some buyers will actually reduce their offer to cover the cost of removing the pool!

Let’s face it, if a buyer wants a pool so badly, they can install one when they move in.

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Re-­‐Development Potential If your home is in a high-­‐demand area, or on a sub-­‐ dividable section, it might attract interest from property developers who see future capital gains in developing the site. They might need to demolish or remove the dwelling and any other buildings; demolish fences; and uproot your landscaped gardens. Perhaps they need to clear the land to erect several new homes or an apartment block. So you will be wasting your money if you renovate or upgrade the dwelling, fences or gardens prior to going to market.

Expressing Your Unique Personality Some home owners renovate their homes in a way that reflects their own, unique personality or to make a statement to the world. This can lead to some interesting results such as re-­‐creating a dolls house; erecting a huge but ugly fountain on the front lawn; installing windows made out of recycled bottles; concreting an entire front lawn etc. The problem is that these improvements (is that the right word?) appeal to no-­‐one other than the current owner. These sellers will not recoup their investment in the sale price and, again, the buyer might actually reduce their offer to cover the cost of removing the offending features.

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Loud Colours Some home owners like to paint their walls in unusual colours. While there is a place for a feature wall, very few buyers will want a house where every room is painted in vivid, bright colours e.g. bright yellow; red; green; purple; or even blue. If you want to appeal to a wider range of buyers, then paint your rooms in “quiet colours”. These are soft or neutral tones such as white, cream or ivory. If you prefer wallpaper, again opt for soft tones. You can then add splashes of colour through ornaments; plants; cushions, mats, towels, bedcoverings.

Potential buyers will probably not share your artistic vision and may not appreciate that you can name all of your bedrooms by a different fruit. Buyers need to be able picture themselves in your property to create a place of their own. That’s so hard to do if your house screams your own personality!

Replacing Fittings You might have taps, light fittings or chattels that are broken, out-­‐dated or in need of replacement for some other reason. Be careful about what you replace them with. Does your property warrant top-­‐of-­‐the-­‐line fittings or does it require something more simple (tidy but not extravagant)?

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You need to be 100% confident that you'll at least recover the cost of your improvements, if not more than that.

But you don’t want to choose something so extravagant, tacky or inappropriate that it will lose you money – or worse, buyers!

Uncovering Hidden Problems You might decide to rip up your carpets in a rush of enthusiasm, so you can restore the beautiful floorboards underneath to their former glory. But you might discover the timber is full of borer or that half the rooms have chipboard floors! It might be worth a trip under the house with a torch and a builder to see what you're dealing with before you lift the carpets. You could have the same problem when ripping down wallpaper – do you know what’s underneath? You may never recoup your renovation costs.

Carpeting Over Natural Floorboards This is the reverse situation of the previous paragraph. If you have timber floor boards, you might be tired of them and think they are noisy to walk on and they are too cold in winter. Before you rush into carpeting your home, remind yourself that we all have different tastes. Some buyers will love the character that timber floors bring.

They may feel it creates a family atmosphere.

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Even floors with big water spots are, to many buyers, preferable to carpet. Maybe a professional floor sander can remove the stain. A new buyer may just lay down a rug or strategically place their couch over it.

Of course, if you have thread-­‐bare carpet that looks stained and horrible, and there are solid floors underneath, you may actually want to consider pulling up the carpet. Even the old nail holes in the floor add character.

Failing to Get Council Consent Many home improvements require Council permission or consents, even before the work begins. You should never, ever, ever undertake this work without gaining all the necessary consents. A savvy buyer will check the public records to ensure the necessary consents were obtained, or they might hire a tradesman to inspect the property as part of their due diligence. This might be done before they make their offer or they might have included it as a special condition in the contract (where they are allowed to cancel the deal if their builder’s inspection is unsatisfactory in any way). These problems are very difficult to fix after the contract has been signed or after it becomes unconditional. In fact, you might still be liable for fixing the problem after settlement.

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Poor Workmanship Have you ever seen a house that has a poorly-­‐finished paint job (including over-­‐paint on the window panes)?

Not only does it look terrible, but the buyer is groaning at the prospect of re-­‐painting the whole house again. If you intend to carry out any renovations or improvements, make sure you have the skills to complete it to a high standard. If not, hire a professional to do it, or don’t do it at all.

Fencing Disputes You might be aware that in New Zealand you can seek a half-­‐share contribution from your neighbour if you erect a reasonable fence on your shared boundary. So you might be tempted to replace that old fence in preparation of selling, and get half the cost back from your neighbour.

But be aware that you need to give your neighbour written notice of this work before you start, and they have certain rights of objection which could drag on for some time. Do you really want to risk scaring off a potential buyer because of a prolonged fencing dispute?

Building on Disputed Land Most people assume that fences are built on the boundary lines, but this is not always the case. If a home 97

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owner builds a fence or improvements on land owned by their neighbour, they have a potential problem if the neighbour insists that the fence or improvements are to be removed.

If you're not sure where your boundary lines are, don’t build anything on land near the boundary. If you’re set on undertaking the work, either hire a surveyor to re-­‐ define the boundary lines; or build the improvements well inside your property. Otherwise, abandon your plans altogether because it’s just not worth the problems that could follow.

Making Large Landscaping Decisions Think carefully before cutting down any big trees on the property. This all goes back to personal preferences.

Some buyers might be horrified and upset if you cut down a tree that took decades to mature and they would have wanted. Trim these trees by all means, but don’t go making big, irreversible decisions for your potential buyers. Remember, they can always cut the tree down after settlement or they can ask you to do it as part of their offer. Be careful too if your trees might be protected by law.

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Chapter 18: Common Mistakes By Sellers

1. Dismissing an early or low offer If you list your home for sale and an offer comes in early, it’s only natural to think that maybe you set the price too low (assuming you’ve listed an asking price) or that you’ll keep getting more and higher offers. In these situations, many sellers turn the offer down and wait for others to keep rolling in. And they keep waiting and keep waiting.

I can’t count the number of times I've heard a seller say “I wish I could go back in time and accept that first offer”.

The best approach is to treat every offer on its merits i.e. don’t dismiss the offer solely because it’s the first offer. It might end up being the only one! If the offer is close to your target price then you need to consider it seriously.

Remember, you still have the opportunity to make a counter-­‐offer. Hopefully the other party will meet you in the middle in which case you’ve just sold your home!

You should factor in a premium for selling your home quickly because there are many financial and non-­‐ financial benefits that follow a quick sale, including:

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• • • • •

No more advertising and marketing fees; You can make an unconditional offer on your next home; No more viewings or Open Homes; More certainty; Less stress.

2. Setting an unrealistic asking price Selling for the right price is important – very important. I covered this in detail in Chapter 4 so let me just say that the most common and serious mistake that sellers make is over-­‐pricing their property. They hope and pray that someone will pay “absolute top dollar” but that is a long-­‐ shot. Hoping does not replace solid market research.

Market your house at the right price from the start and don’t be afraid to accept an offer when you receive a fair price.

3. Signing a listing agreement with an agent, but intending to re-­‐negotiate the commission later Not only is this unethical, it breaches the terms of the listing agreement. If the agent has managed to find a buyer at a price and on terms that are satisfactory to the seller, the agent should be entitled to the full commission set out in the listing agreement.

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If anything, the agent should be hailed a hero for achieving such a positive result for the seller.

Sometimes a seller tries to justify their position by arguing that because the property sold so quickly, the agent doesn’t deserve their full commission. It seems ironic that the agent has performed over-­‐and-­‐above the seller’s expectations, yet the seller wants to penalise the agent by reducing the agreed fee. That’s like docking the New Zealand cricket team 40% of their match fee because they won the test match in three days, instead of five. The goal was to win the game – if they managed to do it quickly that’s great. But their reward should be based on the result, not on the time or effort that it took. It is exactly the same when a real estate agent is selling a home.

[I wonder if the seller would be happy to pay the agent more if it took them longer to sell the property. I don’t think so.]

4. Adding a huge “negotiating margin” to the price This only applies to properties sold with an asking price. A great deal of work was done to set a target price, which was predominantly based on what the market is likely to offer for the property. A seller should trust the negotiating skills of their agent to justify to the buyer why they should pay the asking price.

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While adding a small margin is understandable, adding a large percentage (five per cent or more) might deter legitimate buyers who might not be able to afford the inflated asking price. Why would you want to take that risk?

5. Just testing the waters Some sellers list their property on the market, with a real estate agent, with little intention of selling. Sure, they will accept an incredible offer if they get it. But otherwise, they’re just testing the market.

It takes a great deal of time, effort and money to sell a home. If you ask a real estate agent to promote your property and they find a buyer with a reasonable offer, it is extremely unfair to the agent and the buyer if you refuse to accept the offer.

If you want to take this approach, I would suggest that you be honest with the agent at the beginning, or that you try to sell the property privately.

6. Thinking everyone is an animal lover Most pet owners love their animals, and many of them assume others feel exactly the same way. But there are many people who don’t really like animals that much.

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allergic to pet hairs. Others are sensitive to animal smells and intolerant of animals living inside. This applies to real estate agents as well as potential buyers.

So it is best to play it safe as far as animals are concerned.

Before viewings and Open Homes, make sure you: • • • •

Either tie-­‐up or remove your dog; Keep pet food trays clean and tidy; Remove or minimise strong pet odours inside your home; Remove droppings on the lawn.

7. Trying to sell privately It is understandable for a seller to want to avoid paying real estate commission, especially if they think they can do it themselves. If you have the skills to sell your own home, or if you have already found your own buyer, then by all means you should do it yourself (consult your lawyer first though).

Statistics show time and again in every kind of market that you will get a better price and your house will sell faster when you work with a reputable real estate consultant.

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value the role of the agent. Remember, a real estate agent only gets paid if they sell your property.

8. Trying to sell “As Is” Some home owners fail to maintain their home and they allow its condition to deteriorate. When it’s time to sell, the owner can be overcome by the amount of work and time it will take to bring the property up to a saleable condition.

In Chapter 9 we discussed the big price a seller can pay for refusing to fix defects and other problems. A buyer will often discount their offer by more than the amount the seller would have incurred had they fixed all the problems.

Of course, some properties are so dilapidated that they are sold as doer-­‐uppers to DIY enthusiasts. There is no problem with this, especially if the seller lacks the capital to do all the repairs and renovations.

Of course, there are situations when sellers need to sell quickly and they simply don’t have time to effect repairs.

9. Refusing to pay for marketing When an agent sits down with the seller to develop the Marketing Plan, the seller can often baulk at the prospect 104

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of having to invest several thousands of dollars into their marketing campaign. Similarly, when a property has been on the market for a while, the seller can become despondent and reluctant to keep investing in more advertising.

You may think the agent should pay for the advertising and marketing out of their commission. But the commission is for selling the property, not marketing it.

Besides, the agent only gets paid their commission if the property sells.

While an agent might offer to do some advertising for free, it is the seller who usually has to pay for marketing tools such as the property board/sign; newspaper advertising; property magazine advertisements; online videos; television advertising etc. It’s a big mistake to opt for minimal advertising. There are often many properties on the market and potential buyers will never find a property unless it is well-­‐advertised. Asking a real estate agent to sell your home without giving them an advertising budget is like asking a mechanic to fix your car without using a spanner. They might manage to get the job done, but it’ll be difficult and will take them a lot longer.

In our company we’ll produce a television commercial at no cost to you. If you went to an advertising agency you 105

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could spend anywhere between $5,000 and $8,000 for a 15-­‐second commercial. At that price it’s just not an option for most sellers.

As a guide, set aside around 1% of the appraisal figure for marketing. If you commit fully to the Marketing Plan, you might just sell your home faster and thereby end up spending less on advertising overall.

10. Failing to disclose problems If the seller fails to tell the agent of a problem with their property (such as the fact that they didn’t get a building consent for the carport), it will usually come up later, with huge, negative consequences for the seller. Honesty is usually the best policy, and a skilled agent may be able to offer some suggestions to either fix the problem or minimise the effects of it. I recommend that you be honest about the following sorts of problems: • • • • •

Faulty plumbing or electrical issues; Malfunctioning appliances (if they are chattels to be sold with the property); Boundary disputes; Drainage problems; Leaking roof.

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11. Lack of flexibility It’s impossible to foresee all the problems that can arise when selling a property. Things don’t always go the way we want in real estate, and a seller needs to be ready, willing and able to make adjustments to their plan. You will get the best results if you are open to sensible advice from your professional advisors, and not distracted by well-­‐meaning but often ill-­‐informed friends and family.

Your real estate agent has probably been in the same situation many times before. You are paying for their experience and expertise, so work as a team and take their advice. A common example of this is during the final stages of negotiation. Sometimes the parties can be just a few hundred dollars apart and the deal is lost because neither party would compromise. Be flexible enough to create a win-­‐win in these situations.

11. Choosing the wrong agent You need to choose a real estate agent with credentials and a proven track record. They need to have strong negotiating skills. They need to be able to put your property in front of the right kind of buyers who will be interested in a home like yours. Do not choose an agent simply because you like them, or (worse) because they said they could sell your property for the highest price.

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In Chapter 5 we discussed how to choose the right agent for you.

12. Using poor quality photographs There is nothing quite like a well-­‐chosen, high quality photograph to motivate a potential buyer to call the agent or attend an Open Home. A poorly-­‐chosen photograph probably won’t deter a buyer, it will just leave them feeling neutral about your property. If you are paying for a large sign board for your front lawn, the sign writer will need a high-­‐resolution photograph.

I highly recommend that you pay for a professional photographer to take photos of the very best features of your property. A good photographer with a good selection of lenses can add thousands to the asking price of your home. More recently, walk-­‐through digital (movie) cameras and other technology have become more affordable and readily available. These extra initiatives are well worth your investment and may help make your home more appealing to prospective buyers.

You might be surprised to know that prospective buyers often go away after a viewing and continue to view the photos and videos of the house they’ve just walked through. Further, these potential buyers can be positively influenced, if the imagery is good, by comments from 108

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their friends and family. Many a time I’ve had buyers come back weeks later because they can’t get the house out of their mind. I never rule out anyone that’s been through an Open Home or a viewing. You just don’t know what is going through their mind and even when they say they don’t wish to pursue it any further, I always make a note and keep them informed down the line. I’ve done this many times and surprise, surprise, the original reason for them not proceeding has disappeared or their situation has changed.

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Chapter 19: Conclusion

In conclusion, I hope you’ve enjoyed my book and you’ve learned something about selling your home. At the expense of pushing my own wheelbarrow, I’d like to think that this book shows you my commitment to my chosen profession of a real estate agent.

I absolutely love showing people through homes, I love marketing and I love making dreams come true for my clients.

By now you’ll realise that selling a home is a series of strategies and smart manoeuvres. Anyone can sell a home, but it takes a true professional to get the best price in the best time frame.

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Chapter 20: My Happy Clients

“As part of our move into our new home, I engaged Paul Blackler to sell our previous home at 50 John Campbell Crescent, Middleton, Christchurch. The home was just over two years old and was in very good condition.

Previously we had the home listed with Harcourts and their overall performance was disappointing. Paul’s approach to the sale of our home was professional, conscientious, understanding and well-­‐above that received from the Harcourts experience.

The home was advertised correctly, the signage was excellent and the way in which we were briefed after every inspection was a credit to Paul. Needless to say, the home sold as planned and at the price expected.

Suffice to say that we were more than happy with the final result and would have no hesitation in recommending Paul to any person or organisation that wanted a professional person to manage the sale of their property.”

Rob Hughes

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“Paul and the team at Mike Pero were very helpful in keeping us fully informed on the marketing of our property and the interest generated by the open days.

We were able to establish a realistic reserve price for our auction which was more than achieved. We found Paul very approachable and helpful with any queries we had.

Thank you Paul.”

Graham & Jean “Thank you very much for helping me sell my home – in four days! Your knowledge and experience with insurance issues was invaluable. You were very professional, a pleasure to deal with and I would recommend you to my family and friends in a heartbeat.”

Sharlene Hosken “Paul was fantastic in helping me purchase my first home.

He made it completely hassle free and was available for me whenever I called on him. I would definitely recommend him for anyone wanting to buy or sell.

Thanks.”

Mel Tanner

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Copyright 2015 Hey Presto Publications All rights reserved. No part of this publication may be reproduced, distributed or transmitted in any form or by any means, including photocopying, recording or other electronic or mechanical methods, without prior written permission of the publisher, except in the case of brief quotations embodied in reviews and certain other non-­‐commercial uses permitted by copyright law.

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