In this informative 14 minute clip, I describe the most important things home owners need to consider when selling their property. The video covers topics such as choosing the agent, presentation, pricing, and method of sale.

If you would like to receive a free Market Report on your suburb, detailing trends, demographics and recent sales, click here. I have also prepared some helpful information in my report “The 7 mistakes home sellers make”. You can order your copy here.
For more information on preparing for your sale, call me on 0412 247818, or Freecall 1800 302027.

I’m not sure The Clash had Real Estate in mind when they wrote that song in the 80’s, but I’d like to thank them for the heading, because it is something that I have been asked fairly frequently in the past month or so, as owners weigh up their options as to whether they should accept an offer or hold out for more money in a different market.

My first response is – “It depends on your own circumstances, and what you are trying to achieve”.  Some will be better off waiting, but I think the majority will be better off accepting their current situation, looking to maximise their price in that market, and moving on.  Here are a few examples I have come across lately…

• Vendors who would like to achieve a sale price of $270000 to $285000, when all the feedback has been around $250000 to $260000. This was an investment property that was yielding around 3.5%.  The owners were selling as they had a mortgage on the property, and one of them had lost their job, making it hard for them to keep up repayments and maintain their lifestyle.  They asked me “Should we wait until the market gets better and we can get more?”  When we looked at the numbers, the answer was no!  We were needing an increase of 3-5% over the 6-12 months that they really needed to sell within.  Considering the state of the market, (which I see as a normal, balanced market) and the fact that the “experts” are saying the Sydney market may increase by 2 or 3 % in the next 12 months, the answer became clear. They should look at maximising the offers they are getting in the current market, and move on!  The costs of holding on (both financial and lifestyle – stress, etc) were not worth it considering the potential increase in the short term. ie any potential increase would only be wiped out by the holding costs, not to mention the stress.  We adjusted the asking price, recontacted every buyer who had inspected the property to let them know the new price, generated lots of activity (and a sense of urgency) and Hey Presto! Property sold, owners happy that they have their life back!
• Here’s another example; I met with some sellers looking to sell their own home to upgrade in both size of home and location.  The properties in the area they were looking to move to have been selling in the $700000 to $750000 range.  They were thinking their’s is worth around $550000 to $570000, but I advised them based on recent sales they are more likely to be around the $500000 to $520000 mark, which, after looking at recent comparable sales, they agreed with.  (They bought for $317000 quite some time ago) Their immediate reaction was that they would wait until they could get “their price”. When we had a look though, it made sense for them to sell and upgrade now… if the market rose by the 10% they would need it to in order to achieve their price, it was likely that the market they were looking at buying in to would rise by at least the same percentage, considering it was in a more desirable area.  If that was the case, their $55000 increase would be more than wiped out by the extra $70000 to $75000 they would have to pay.  So, even if they get more for theirs down the track, they will be worse off.

There are times that you may be better off waiting – for example, you may be better off taking your property off the market and undertaking some renovations that are cost effective.   Quite often, however, you need a crystal ball to see what the future holds as far as selling prices and market conditions are concerned.  Either way, make sure you look at your current situation realistically, and do the numbers.  As I always say, you are best to underestimate what is likely to come in (your selling price), and overestimate what is likely to go out (your buying price, and or holding costs).

If you would like to discuss your own position, call me on 0412 247818, Freecall on  1800 302027, or email me on david@davidmeadowcroft.com

You know the 3 P’s of buying property – Position, Position, Position but what about selling property? Are there common principles that also apply to selling?
 
Many purchasers subsequently become sellers so it is not unusual for us to assist clients in both roles over time. Therefore, this issue is dedicated to the specific concern of vendors and, in particular, what it takes to sell a property.
 
Very often vendors believe they are at the mercy of the market when selling their property. In other words, they don’t think they have any real control over what happens and they cannot influence the outcome of their sale. However, in the majority of cases nothing could be further from the truth!
 
Selling a property is not unlike selling a business. In fact, the average sale price of a business in Australia (of around $200,000) is far less than the cost of an average home – yet most of us take a far too passive approach to selling our home or investment property.
 
Some vendors also think that if their property doesn’t sell in good time then it must automatically be the agent’s fault. Of course, your agent is fundamental to the successful sale of your property but it’s you rather than the agent who has the greatest underlying influence over the sale of your property.
 
After many years and thousands of transactions over the years, I’ve identified the main criteria of selling a property. I’ve now summarized these into the 10 ‘P’s of successful property marketing:
 
·          Prepare, and be decisive – your property is either on the market or it’s not. Everyone sells for a reason so you need to be clear about your goals and when you wish to achieve them. You can’t be half hearted about this decision. Your agent is your business partner in this transaction so advise him/ her of your plans up-front as these will often affect how you market your property and may also influence the final terms of your sale contract.
 
This is not the time to play your cards close to your chest as it can only work against you.
 
It’s not uncommon for the vendor (and not the purchaser) to get cold feet in the final stages of negotiations when they realise they are still emotionally attached to the property. Interesting.
 
·          Price – get at least 3 appraisals from local, respected agents to help set your list price and marketing strategy. Ask how the agent came to their price opinion, and what they have sold in this price range recently.
 
Don’t be over-optimistic or greedy with your list price. As tempting as it is, don’t necessarily be seduced by the agent quoting the highest estimated selling or list price. Agents that consciously “buy listings” this way are not your friend and you will only be disappointed in the final result. (N.B. Recent legislation may also help reduce this problem.)
 
·          People – choose a professional agent that you trust and can work closely with (see above). A good agent will identify your target market and formulate a specific marketing strategy. So, how do you find a good agent? Referrals from friends and neighbours can be a good start but, whatever the method, interview them as if you were taking on a business partner (rather than just an employee) because that is exactly what you are doing!
 
In most cases, your best agent will work and may even live in your area as they can confidently advise purchasers not only on the features of your property but also on the characteristics and advantages of your locality.
 
·          Presentation – spend the necessary time and money on some TLC but don’t over-capitalize. If your property doesn’t have a natural advantage, wherever possible, create a unique selling feature or “wow factor” to make it attractive and memorable to buyers. However, don’t fool yourself into thinking that the more you spend the more you’ll get back in a better sale price. In fact, the opposite is often true. Listen to your agent’s advice as to where to spend your time and money to maximise your results.
 
This also goes for your furniture and personal effects. You’ve heard the adage, “sometimes less is more” so remove clutter from in and around your home and store it off site. Again, your agent should help you but the old standard of “If in doubt, chuck it out!” also applies here.
 
(Tip – there are property stylists who have a real flair for making over properties for sale. You don’t need to spend a lot to transform the look and feel of a property but their advice can make a huge difference to appeal and marketability of your property. Contact us for more details.)
 
1.      Planning – You’ve selected the right agent; you’ve decided on a marketing strategy; and you know what you need to do around your property to maximise its potential. Some properties take longer to sell – ask agents in your area what the average time is in your marketplace at the moment. Remember,  a well planned auction campaign will still be a minimum 4 weeks. Then there’s the time to settle a contract which can be anything from 30 days to 56 days or longer.
 
All these steps take time and, in total, it could be as much as 4 – 6 months from decision to sell to settlement. Therefore, plan ahead to give yourself and your agent sufficient time to achieve the best results possible.
 
·          Promotion – invest sufficiently in appropriate marketing and advertising. You can’t sell a secret. It’s your property so it also means that you should use your money to promote it. Don’t rely on agent paid advertising as it could encourage them to sell at any price to recover their money.
 
Consider that if an agent is spending their money by paying for your advertising, then they are likely to give your money away just as quickly because they are not a strong negotiator. Saving a small amount on advertising may end up costing you a great deal more on your sale price by having a poor negotiator represent you. That’s not what you want, is it?
 
It makes sense to effectively promote your property in any market but it’s even more true in today’s subdued market. Your agent will recommend the appropriate mix of newspaper, property signage, real estate window cards, internet, open homes, etc. You may choose not to employ one or more of these tools but be aware that modern property marketing uses a coordinated mix of these strategies to achieve a sale. The one you exclude may well have been the one that sold your property more quickly.
 
Also, an open or multi-listing will work against you. A single agent/ agency working for you is much better than many agents competing against each other for your sale. They will end up confusing the market or, most likely, not work for you at all as no one agent is assured of being paid for their time and effort. Sole and exclusive listings are by far the most successful.
 
·          Patience – is a virtue. Give your agent and their marketing strategy enough time to create interest in the property but also be prepared to listen to what the market is telling you.
 
·          Positive attitude – this ‘P’ also includes staying pleasant. There is no doubt that selling, in particular, a home can be an emotional roller-coaster. Keeping the house tidy, preparing for open homes, waiting for offers, negotiating the terms of contract – it can all be quite strain. Nonetheless, it’s imperative to remain calm and focused as possible as any negative sentiments will impact on your ability to think clearly and negotiate the best sale price and terms possible. This also includes maintaining a positive relationship with your agent as you need to work together as a team.
 
This is another reason why choosing the right agent in the first place is so important. Be careful not to personalize or become emotionally involved in any negotiation with the purchaser. As an agent said, “You do not have to live with the buyer afterwards but their money may keep you warm!”
 
·          Pliable – or flexible. You’ve done everything right but you’ve still not sold your property. Well, there’s a time for sticking to your guns and there’s a time to make a change. If whatever you’ve done isn’t working then it maybe it’s time to change tack in one or more areas of your strategy.
 
For example, a reasonable offer received in the early stages of your campaign often proves to be your best offer. If you intend to buy again soon then it’s even less critical to hold out for a top price as buying back in the same market means you should also repurchase at a similar fair price.
 
·          Perception – this is the mood or sentiment of the general real estate market and, importantly, the state of the local market you are in. This is the one thing that vendors have virtually no control over but properties continue to be sold in every market and every part of the economic cycle. Don’t forget that perception also contributed to the strong market of 2002/ 03 so it can also be your friend.  If you take control over the other P’s you can minimise the impact of any negative general market sentiment.
 
·          Pro-active – You might call this the 11th point but it’s really just a summary of the above. Remember, you don’t have to be a ‘victim’ of the market. As the above 10 points demonstrate, there is much you can do to actively contribute to the sale of your property. Address them with the required level of enthusiasm and you will give yourself the best chance of success.
 
Good luck, we trust your sale goes well!

I would like to thank Wayne Slager of Your Loan Adviser for allowing me to reproduce this article.

There’s been quite a lot of talk about Clearance Rates lately (April 2011) and how they have come back from the 70’s back in to the 50-55% range. I’ve heard comments, and had questions, from sellers (and those thinking about selling) about what this means for them…Should they still look at Auction as a method of selling, or are they better off just going to the market with an asking price. Here’s my opinion on Clearance Rates, and what you need to consider…

So many times I read articles in the Press about rising Real Estate values, and quite often these articles are accompanied by comments from the public accusing Real Estate Agents of inflating values and making Real Estate unaffordable. This makes about as much sense as saying the young girl who gives you great service at the Supermarket influences food prices. ( I note that when the market is slowing, the same people don’t thank the Agents for making housing more affordable)

There are, however, several ways that Real Estate Agents can influence prices to a certain degree. For the sake of this article, let’s call these Micro Influences.  These include;

• Obtaining the trust of their sellers in order that those sellers then accept their recommendations (about presentation, method of sale, pricing, etc)
• Getting the price right in the 1st place – an overpriced listing will attract less buyers, which will mean it stays on the market for longer. It is a fact that the longer a property stays on the market the less chance it has of obtaining a premium price
• Advice on presentation – I remember watching an episode of Selling Houses Australia (Foxtel) in which the host questioned the Agent as to why he hadn’t advised the sellers to clean the house and yard, and get rid of clutter, etc. The Agent’s response was “That’s not my job. My job is to sell what they give me to sell!” This is the equivalent of a Doctor treating a smoker for Lung Cancer and not advising the smoker to give up smoking.
• Marketing – a well executed campaign, starting with quality photography and a well written advertisement will attract more buyers. Put these buyers into competition, and hey presto – a premium price is achieved. No one is inspired to look at a property when the photos on the internet show dishes in the sink, especially when it is accompanied by copy such as “3br b/t  with DLUG and A/C !
• Negotiation Skills – the ability to steer a buyer towards the right result for all concerned. No tricks, no fancy lines, just knowing what to say and when to say it, and quite often what not to say. Quite often this is accompanied by the Agent actually building a relationship with the buyer in order to gain their trust and respect, and not treating them like a 2nd class citizen.

There are of course many areas in which a Real Estate Agent has no influence at all over the prices. In contrast to the above, these are the Macro Influences. These include;

• Interest rates – unless your Real Estate Agent happens to be on the Board of the Reserve Bank, there is nothing the agent can do to influence these.
• Employment – again, unless your Agent also owns a major corporation in your area (such as one that employs thousands of locals) then they are unable to do anything about this. If more people want to live in your area as it is close to work, prices will increase – simple supplpy and demand.
• Local planning – unless your Agent is a Member of Parliament or on your Local Council, they are unable to do anything to influence local planning issues that will address shortages in local housing, thereby addressing the major influencer of prices – again, local supply and demand.
• General desirability of your local area – again, unless your Agent is a Member of Parliament or on your Local Council, they are not able to affect issues such as transport, parks, schools, shopping, etc. If more people want to live in your area, prices will go up. If there is less demand, prices will remain stable.
• New taxes – from time to time, the Government sees in their wisdom to implement taxes and charges which directly influence supply and demand. An example of this was the Vendor Tax introduced in New South Wales towards the end of Bob Carr’s reign as Premier, and subsequently removed by Morris Iemma, although by then, the damage had been done – the number of investors wanting to buy was basically reduced to zero, and took years to recover.
• Governemt Grants – you only have to see what happened to the market when the First Home Buyer’s Scheme was introduced, with an extra payment to those buying a new property. At the time, my office was handling a large townhouse development, and the builder immediately increased his prices by $15000 across the board, and got it with no trouble. 8 years later, when the Boost was added to the Grant, we saw a huge increase in demand from first home buyers, which then trickles through to higher price ranges.

So, to all those who continue to blame Real Estate Agents for doing their job – ie advising their sellers on the steps to take to maximise their price, my advice is simple. Stop waiting for the prices to come down (see my previous article about my Aunty in 1946) and get in the market when you can. And when it comes time to sell, make sure you choose an Agent who knows what they’re doing, because I am sure by then, you’ll actually grateful, and happy, that the Agent does everything in their power to get you the best price.

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I read a report a few days ago that prices had gone backwards in the first few months of 2011. Then I heard an “expert” on the radio reporting that the median price in Bankstown had “come off” 20%! What? This means that, in effect, a house that was $500000 last year can now be worth only $400000 – surely not!

I’ve waited 23 years to tell this story. Well, not really… because I have been telling it FOR 23 years, but now I have a reason to share it with you.

I have always had a problem with how the media report sales prices, and in particular the reporting of an agenda – “Prices are going up, prices are going down, etc”

This story goes back to the late 80’s when I was working in the Inner West of Sydney, and took a call from a journalist – “I’m writing a story about how the market has gone up (1987-1988) and then gone down, and now gone back up again” she said. I’m looking for a house that has been sold 3 times in the last year or 2 and follows that pattern”, she said.

I told her that the chances of finding a property that had been sold 3 times in that time frame were slim, but “I”ve got one!  However, it’s gone up every time.$180000-$185000 -$187000.”  “Thanks anyway, that doesn’t fit my story”, she said. She’d already written her story, and was looking for facts to back it up!

Unfortunately, my distrust of the media, and in particular their reporting of the Real Estate market has forever been tainted by that day. Why am I telling it now? Because I have always said that the only true test of market movement is the “Same house selling twice within the test period…” Average prices, median prices, – they mean nothing! They are influenced by the quality of the places being sold in that period.  But, if the SAME house is sold, with no alterations, well, that is the test.

So, last week, we had one. A house sold in December 2010 (at auction), and resold in February2011 (at auction, due to legal recission of the contract). The price achieved at the 2nd sale was 2% above the sale price achieved in December .  So, while there is no way right now of saying how history will assess the market in this period, (up, down, etc), I want to remind you that each property is different and unique, and even the SAME property can sell for 2 different prices within a short period of time. You are dealing with a different pool of buyers, competing against different properties being sold at the same time, and other variables as well.

The moral of the story? The best way to find out the true value of a property in any market is via a well executed auction program – but you KNEW I was going to say that, didn’t you!

I’ve always said there are 3 prices a house sells for, but now I realise there are four. The trouble is, if you are thinking of buying or selling a property nearby, you need to know the real price out of these 4.

What are the 4 prices? Firstly, there is the price the buyer tells their friends and workmates they paid. This is quite often lower than the real price, because they want to let everyone know “what a bargain they got”. “I really screwed ’em down, etc etc!”

The 2nd price is the price the sellers either tell their friends and neighbours, or the one that is sometimes just assumed. “Well, I know they were asking $599000, and they told me they weren’t going to give it away. They didn’t really have to sell, so I guess they got their price”. Sometimes the seller will just say ” I got my price”, OR, just straight out spread the wrong price for reasons of pride. (I acknowledge that mostly sellers do actually tell the truth if asked, they just are most aften not asked directly.  It is quite often neighbours just believing, or wanting to believe the higher price, that then becomes hearsay that then becomes gospel )

The 3rd price is the real price! The one they sold for, the one they really paid, the one that is on the contract, and the only price that means anything. If you are thinking of buying or selling, this is THE price you need to know.

The problem is, what often gets in the way of all this, is the 4th price… the one advertised on the websites and in the paper – often disguised as Price not Disclosed, NFP, Not Disclosed, call agent, etc etc. Don’t you hate that? In 2011, with so much information at our fingertips via the net, why can’t you find out the truth about a property’s sale price?

Sure, you can pay for a report that has a list of sales, but is it up to date? And what if you don’t end up doing anything? You’ve paid money for nothing!

Well now you can see exactly what EVERY property sells for – at no cost. Your own research, in your own time. With PriceFinder Share, you can have access to accurate sales data from around the State. In your own time, on your own computer. Actual sale prices, as per the contract – yours for free.

David Meadowcroft has teamed with PriceFinder to offer this great tool to all local home owners. Sound good? Then register here. YES, it’s FREE!

The National Consumer Credit Protection Act has now come into force, with some ramifications that I think have so far gone “under the radar”..

“What the new laws effectively mean are that the obligation is now firmly on banks and brokers to ensure that a borrower has the capacity to repay the loan in full at retirement age without selling their owner occupied property.”

In effect, older aged borrowers will now be assessed differently to previous applicants. Capacity to repay your loan over your normal working life must be shown ie, you must be able to pay out the full loan over your normal working life, without the need to sell your principal place of residence to repay the loan once you retire.

I believe this could have a huge affect on the market that has yet to be factored in. For example, many divorcees who are “starting over” later in life, will not have the benefit of a borrowing capacity based solely on their capital and income, but one that is also influenced by their age.

If they are forced to take a loan over a shorter period, this will obviously limit their capacity to borrow, which over the longer period (as these new conditions take hold) could have an effect on prices.

In the few weeks since I’ve been back in Bankstown, and speaking with past clients, one of the most often asked questions has been “So, what’s the market really like at the moment? Is it a good time to sell?” Here’s my answer…

As always, for any Real Estate advice, don’t hesitate to call me on 0412 247818, or Freecall 1800 302027.