The Ultimate Guide To Renovation Course - Module 11: Renovating to Sell Part 1

Renovating to sell now, for those of you who have chosen the renovate to sell strategy, the renovation may be over, but it's not time to relax just yet. There's still more work to be done. It's very important to be active in the marketing and sales process. Don't just hand it over to the real estate agent and hope for the best. Before you sell the property, you need to have all of your paperwork ready for your conveyancer or property solicitor to prepare the contract. Start organising this before you finish the renovation. Failing to do so could mean missing out on an earlier offer because your contract is not ready. If you've performed a structural renovation, you'll need any trade certificates, such as plumbing and electrical, and any other permit information relating to the building works, DA or planning. Also, if you have done a structural renovation, you also need to include a certificate of final occupancy. Selecting the right real estate agent to sell your property is a big decision. A good agent is personable, friendly and doesn't come across as pushy. But they also need to be an effective salesperson and have a tougher side when it comes to the argy bargy of negotiations. One of the most common complaints heard about a real estate agent is them overestimating what the property is worth at the time of the appraisal in order to secure the listing over a competing agent. It goes something like this. The agent says, Mr. And Mrs. Smith, I think we could achieve in excess of $550,000 for your home. Right now, Mr. And Mrs. Smith feel vindicated. They knew it was worth more than $475,000 appraisal that they got from the other agent. Now, what's happened here? The agent has simply tapped into Mr. And Mrs. Smith's own bias and it's a bias that most of us share. Naturally, we think our home is special and when we see something down the street sell for over $500,000, for instance, we think, well, our house is better than that and our house should be worth more. So now that the agent has secured the listing, he now has the small problem of Mr. And Mrs. Smith's high price expectations. The agent may then incrementally lower Mr. And Mrs. Smith's price expectations over the course of the campaign. This may even start from the very first open for inspection. The agent says, Mr. And Mrs. Smith, we had very good numbers through for the open inspection this evening, which is a really positive start. However, the feedback on the price tonight wasn't up to the level that we'd anticipated. The groups through this evening were mostly buyers up under the $500,000 mark, but it's still very early days. This lowering of expectation continues, typically framed as the changing market conditions and buyer feedback. In the end, Mr. And Mrs. Smith are convinced that the market has changed since the time of the appraisal and they are now going to have to meet the market and they end up selling for $455,000. The the moral of this story is don't just select an agent because they tell you what you want to hear on price. It's hiring the right agent which gives you the best chance to achieve a high price. This example is not designed to be disparaging towards real estate agents. There are good and bad in every profession. Real estate agents are a key relationship and vital to your renovation success. So let's look at some of the good ones. The Detective A well trained real estate agent is not only a skilled negotiator, but also a good detective. At every opportunity they are subtly probing would be buyers for information on their situation. Have you looked at other properties lately? Do you live locally? Are you thinking of moving? Why? What made you choose to look in this area? Have you seen anything that's interested you so far? Have you bidded on any properties recently? These and many other questions like them are designed to find out a potential buyer's personal circumstances, motivation and more importantly, their budget. A good agency then compiles, tracks and cross references this information and discusses it at the agency's weekly meetings. Good real estate agencies also conduct regular training to improve and hone these skills. Most of the time your real estate agent will want to bring a serious offer to you in person. This is in part to gauge your reaction. Avoid responding or making counter offers there and then on the spot. Withdraw to allow yourself some time to think if the would be buyer is anything like you. This offer may be one well thought out step by step in the sequence of offers, so take a little time to consider your response. Accept good offers slowly. Even if it's an agreeable offer, you should be at least seen to be thinking about it. As we discussed in Module 6 Offers, Negotiation and Auctions, both parties feel satisfied with an outcome which has been arrived at through a negotiation process. If you agree too fast in particular to a buyer's first offer, then they may think that they could have secured it for a lot less and are paying too much. Remember, it's not until the contract is signed by both parties that you have a binding deal. Also, be aware of discussing too much in front of your agent. Remember the percentage breakdowns of sales commissions discussed in module 6. When it comes to the final thousands, their motivation is to get the deal over the line as quickly as possible because it makes very little difference to their final commission. Stay calm. Selling can be stressful, but try not to let emotions enter into the negotiations. If you receive an obvious low ball offer, for instance, just politely decline and say thanks anyway. And remember to avoid being the first party to put a price on the table. As we also covered in Module 3, negotiations can get intense. A tactic of some savvy buyers is to conduct negotiations face to face with your agent while you are allayed offers over the phone. The tactic is designed to make you feel isolated from your agent and this should be avoided. The agent's fee or commission is normally a percentage of the end sale price. This varies from state to state, but a range of 1 to 2% is common. A real estate agent's commission is negotiable and some agents are happy to reduce it in order to secure your listing. There is an argument, however, that if an agent can't negotiate effectively on their own fee, how are they going to perform? When it comes to your money and your money's at stake. When hiring a real estate agent to sell your property, you enter into an agreement to give the agent authority. Now this is typically exclusive just to them. This allows them to sell your property. It's possible to have multiple authorities or agencies handling your listing, but this is not always advisable, particularly if there's to be a split commission. An agency authority has a set time period, typically 60 days or more. Like the agent's commission, the period of authority is also negotiable. If going to auction, I like to make the agent's authority expire no more than two weeks after after the auction. At this point the campaign is effectively dead and I need to get fresh blood and new ideas on board as quickly as possible in the form of a new agent and a new campaign. Now, it's worth noting that if you even bring someone to buy the property and you source that person yourself under that authority, the agent still gets the commission. So be aware about having extended extended timetables on that authority. Deciding on whether to sell your property by private sale or go to auction is a decision that you will need to make in consultation with your real estate agent. Auctions in particular are area specific and are more popular in capital cities and some large regional centres.