Real Estate Planning with Anna Manning
Deciding how to sell your home can be as daunting as choosing which shade of white to paint a room. One real estate agent’s advice is to pick the method that’s the least stressful.
“In the end, the method you choose should always be the one which you feel most comfortable with,” John Ross, of Professionals, Redcoats in Lower Hutt, says. “You want peace of mind rather than doubt and concern that you have used the right method. All methods work – choose the one that will work best for you.”
The chief selling options are for sale by negotiation (fsbn), auction, tender and buyer enquiry over (beo).
“If selling by negotiation, we encourage no-price marketing in the initial period.”
“We have resounding evidence that if the asking price is set more than 5 per cent above the market, buyers are put off and the property quickly acquires a stale stock status.”
“Rather than risk your home losing market value because of this, it’s better not to list it with an asking price,” Ross says.
“Buyers will sometimes pay more than the owner was anticipating and at other times much less than the owner thought their property was worth.”
“No-price marketing allows the owner to get buyer feedback before they price their property, thereby avoiding the wrong price and with it the risk of slipping into the stale stock downward spiral.”
“A property should have a price on it within no more than a month on the market and to achieve a good result, this price should be based on credible feedback from buyers who inspect the property during that period.”
Auction and tender are the most common forms of sale without an asking price. Ross says their key advantage over fsbn is they set a date of sale. “Buyers focus on this date and it helps them make up their mind rather than delaying the decision to purchase.”
Ross says the real estate industry is encouraged to use “pure form tender,” which means the property is not to be sold before the close-of-tender date. So a buyer turns up a week into the marketing and wants to buy on the spot, the owner can’t sell it – however good the price might be – until the close of tender. “In the waiting period, the buyer may cool off or find something else,” Ross says.
“Auction is the preferred method of sale for buyers. It is open and transparent and gives them the opportunity to compete right up to their limit, rather than missing out by a thousand dollars, as happens with the other methods. “They bid with confidence knowing that one or more other buyers see the same value in the property.”
“For the seller, their position is protected by a reserve and the bidding gives them peace of mind about where the market really sees the price.”
“This is the method most often used by banks, liquidators and many times by trustees for estate sales, as the courts recognise it as robust for audit and accountability purposes”
Ross calls beo “a poor hybrid” of the other methods. “We have found buyers use it as the asking price and offer less rather than more”
“The Commerce Commission has ruled that it is misleading to offer a beo price if the owner will not accept that price, so I therefore ask: What is the benefit of using beo rather than an asking price?”
Article Source: The Dominion Post – Property Market -31 May 2014
Anna Manning is a Real Estate Agent at Professionals Redcoats Lower Hutt