1. Leverage the property's character
Pamela Yardney, director of Metropole Property Investment Strategists' says vendors should leverage the character in their property to take advantage of the emotionally charged environment of auctions.
"The auction process generally aims to provide a quicker result, making it a more alluring option for many sellers. However, the wrong type of property can fail to move at auction and potentially languish on the market for an extended period of time," Yardney says.
"Auctions are most effective for properties that are unique or special in some way, such as a rare architect designed or period style home. Properties that are generally highly sought after, in a good inner city or bayside location and/or where it might be difficult to put an exact figure on their worth (due to a lack of comparable stock), also often do well at auction."
2. Consider selling via private treaty
A private treaty sale is more effective for vendors who are trying to sell in a market where there is an abundance of similar stock on the market and local sales activity has slowed considerably. This can be a great strategy for those attempting to sell in the highly concentrated mortgage belt areas, or in fact those trying to sell a high end property in a non-responsive market.
Yardney says there are currently more properties on the market than willing buyers, due to economic uncertainty, and suggests private treaty as an effective solution for selling your home in an active buyers market.
"If you live in an area where lots of locals are seeking to market their property at the same time, this could be a good option at the moment," Yardney explains.
3. Know your buyers
Patrick Bright, real estate author and buyer's agent for EPS Property Search says that a lot of buyers remain sceptical when it comes to the auction process and many will prefer to stick to property that is being sold with an asking price. These sorts of trends can give you an idea as to how to sell your property," Bright explains.
"Buyers simply don't want the financial outlay before auction day on expenses such as building and pest inspections and the legal fees associated with having the contract read on a property that may end up being priced way out of their league. Particularly if they don't take the time or don't have the time to do their research to understand the property's current value."
Rich Harvey, managing director of propertybuyer ™ says first home buyers and buyers that don't enter the market too often are scared off by auctions because they create a very emotional and confrontational environment, where buyers feel exposed.
"People's hearts start beating and the competition can turn buyers off," Harvey explains.
"On the other hand the benefit of auctions is that they allow for price flexibility, and buyers and sellers both like this. It doesn't peg price expectations and it allows the real estate agent to do what I call 'test the market', to say well the property could be worth $900,000 but it could be worth $1.5 million."
4. 'Bid them low and watch them go'
Harvey says a popular tactic by many real estate agents selling via private treaty, is to do what he calls 'Bid them low and watch them go'.
"In a good market, such as the first home buyer market at the moment, when the agent lists the property as 'offers over', they create lots of interest as the price seems quite low, and lots of buyers come in and view the property," says Harvey.
"The vendor thinks that the agent has listed the property too low, but if they're clever they'll convince the vendor to list it low, and you just watch the bees come around the honey pot - the competition from buyers will be strong and often push the price up."
5. Timing counts
The time of year, and even the condition of the weather, can turn your buyers on, or off your property.
Harvey says that selling your home during the holiday season over Christmas and New Year, or even on a long weekend, can be a bad move as it tends to restrict your exposure to several buyers markets.
"You will notice that the most auctions occur in late February and March because the weather is hot, everyone is back from holidays and it encourages buyers to get out and about to see your property. Traditionally spring is also a great time, as it brings the new growth on the trees and the weather is warm but not hot enough to deter buyers," Harvey explains.
"In my books, the ultimate time to sell via auction is eight weeks before Christmas and Easter. This is because the usual 42 days settlement period is ideal to secure the deal and allow for enough time for your buyer to move in and unpack before they go on holidays."
If your property is a little more generic, Harvey says it can also be a good tactic to list your property in winter, when there is less competition between vendors.
"So in some ways, when your property is more generic, you can be better off selling from May to August," explains Harvey.
6. Enlist expert help
While Harvey says you can give DIY selling a go, it is not usually a tactic that is recommended by property experts.
"Although DIY advertising can save money on agent fees for your sale, you are not typically able to reach your whole market and not able to gauge the best price range to advertise at or sell your property at," Harvey explains.
If you're going to auction it will cost you between $300 and $500 to hire an auctioneer. For about 1.5% to 3% of your sale price, your agent will sell your home via private treaty, listing your property on their own agency website database as well as the main web portals and the local newspapers, covering a wide range of potential buyers.
"In this sense, I find that DIY selling can be a false economy, because an agent is likely to get you more from your sale than you can. I have sold one of my properties DIY and it is really hard work and I have hired an agent each time since," says Harvey.
If you're not sure which agent to choose for your sale, consider a vendor advocacy service (provided by a buyers and sellers agent). They can help you choose the best selling agent, as they know which agents are tough to negotiate with to help maximize your sale price.
"They can appraise your property and advise you of the price range to sell at and make sure this fits in with what your agent says," Harvey explains.
"A vendor advocacy service can also assess the advertising campaign recommended by your agent, and even help negotiate the sales commission the agent is going to charge. If you choose to engage the help of a vendor advocacy service you should not be charged, as they will be paid a referral fee from the agent of your final choice."
7. Consider deadline sales
Deadline says are a mixture between an auction and a private treaty. Using this tactic, the real estate agent will deliberately not place a price on the property, and allow buyers to stew over the asking price during the open inspections.
As part of the advertising campaign for the property, there will be a deadline date set, where buyers must have their best offer submitted by this date, or they miss out on a chance to bid for the property.
On the day of the deadline sale, the agent will then reveal the offers to the vendor and the highest offer is usually accepted.
Lee O'Keefe from Bayside Residential Real Estate says that if there is an acceptable offer made before the deadline, a new deadline will be set, giving all other interested parties just 24 hours to put in their best offer, and the best one will win.
If no body makes an acceptable offer by deadline, we can either put the property back on the market with a price on it, or begin counter offers with the current bidders," O'Keefe explains.
O'Keefe says a deadline sale is a great approach during a slow market where the property would not generally attract a large amount of attention from buyers.
"For instance, if there was a property which didn't have a great deal of street appeal, we would sell it via a deadline sale, because if we had placed a price on it and run the campaign as a normal private treaty, there is a very good chance we won't get much interest," he says.
"If we keep the price off it and show the interior photos, the price range appears more flexible for buyers. From here it just comes down to what the buyers feel they want to pay for the property."
O'Keefe says that this is a good tactic in the current climate where some areas are very price sensitive.
"We need to compete with the competition, because properties prices have dropped quite a bit. But more so, I find that buyers get too wound up on price, and sometimes they will spend 5% more than they wanted to if the right property comes up. So this tactic allows me to show buyers the property first and then accept offers from there," Lee explains.
This article was first published on Your Investment Property magazine March issue. To subscribe, go to www.yipmag.com.au
Do you have more than $200k in your super fund? You could use your super to buy property - Find out how