Whilst we don’t advocate selling properties, there will probably come a time when you will want to sell your primary place of residence (PPR). When you do this you need to have a plan and a strategy to ensure you get the best outcome.
So what things do you need to consider? Picking an agent is probably the big one. I'll give my local suburb as an example. Most people if you ask them, would be able to name one or two agents in the local area. I think my suburb has 13, maybe 14 different agents in one suburb. The reality is most suburbs are like that. So unless you're ready to interview every single one of them, you can't guarantee that you are getting the best agent. There are also buyer's advocates to consider. When selling my previous PPR I met with a buyer's advocate to understand how they go about making their money. The reality is they take about 50% of a listing fee. So for myself, I didn’t think it was worth engaging both agents.
You also need to consider the different ways to sell. You need to make a decision whether you go to auction, implement an expression of interest campaign, a private sale campaign? When I sold my PPR I decided to put it up for auction. My house was unique for the area, so I decided an auction was the best approach, as you end up attracting people who can't go out the next day and just buy another property if they miss out. This is the property they need. However if I’d had a property that was the same, or similar to 95% of the suburb, I would have chosen a different strategy. For this type of sale I would have employed a closed bid “auction”. This type of strategy would include having all interested parties put in their highest bid. The agent would then call each person and get them to continually put up their amount of money. This way you're ensuring that you get top dollar.
When picking an agent there are a few things to look for. Go through each agent and rule out the ones that have a poor marketing presence e.g. marketing material, advertising material. Have a look at their sales rate, have a look at the awards that they've won, individual agents, find out which of the individual agents is going to own the sales process and be working hard on the sales process, how much money they're spending on marketing campaign, what the opens are going to be, who's going to be there at the open? Is it the main sales guy or is Little Johnny who's just come out of University? And then really, you can go on gut feel. Those that make the cut (usually around four or five agents), get them out to your property and do an appraisal.
When you get them out talk to them about what they're doing, what they've sold and comparable results. When you’ve narrowed it down to a shortlist of one or two shortlist, ask for some sales that they've had not sell recently. Ask what they’re strategy for selling was, and what they did to ensure the property did eventually sell.
Personally, if I was selling I would use someone I know, as I know the system well enough as far as buying and selling goes. However for someone who might be buying or selling on their first few properties I wouldn't recommend using an agent that you're friends with. This was you can expect them to work a little bit harder and be a bit more aggressive, rather than feeling like you owe them something as a friend. Unless you know how to buy and sell and you know what angles they're going to play on you.
Something else to consider so that you get the most out of your agent is to set your agreement so their commission increases as your return improves. Pick a benchmark you'd be happy with, lowball them on their fee and say to them, I really want this as a stretch target and if you achieve that I'll pay you a higher commission on every dollar you've brought in. All of a sudden there is a big incentive for them to be trying to get that little bit more and little bit more for you.
The reach of the agency you engage is also very important. If my choice is of little Johnny who sits by himself in an office, or a group with ten offices in the surrounding areas, I'd be looking at the office with ten agencies. However I have to put a caveat here as I know Al was caught out by this once before. Many years ago when he was selling a property, he went and saw the agent who said, “Look we've got the largest network in the area, we’ll have ten offices working on it, that's eighty agents who will be right across selling your property.” After three weeks, and only four people through, Al rang to ask what was going on. The answer he received was, “Oh I suppose you could put it to other agencies now. We own this one and they own their own, they're franchises.” So in the end the selling spiel was a lie. If they have other offices, make sure they engage those offices right away.
Please note this article is nothing against agents. They are very useful people for helping you sell your property. Just remember they're trying to work an angle, they're working for you as the vendor but they're going to work you just as hard as they work a buyer, because they need to get you to meet. Meaning they're trying to get you down and they're trying to get the buyer up, aka conditioning. Your agent will probably tell you a figure that your property's going to get. Then as the campaign goes on they're saying we've had a lot of interest around XXXX dollars. They're conditioning you to try and get you to start coming down, which is obviously not the best outcome for you. You want an agent that's going to come in hard and fast and drag people right up to you which means you have to stand firm.
Hopefully this blog has helped you, for when you do need to sell.
Director of OpenCorp, Cam McLellan is committed to sharing his passion and property investment knowledge with everyday Australians.
After thriving in the telecommunications, technology and recruitment sectors and making the BRW Fast Starters list twice and the Fast 100 list three times in 8 years, alongside accomplished OpenCorp entrepreneur and brother-in-law Allister Lewison, founded OpenCorp eight years ago.
Cam started investing in real estate at a young age and quickly mastered the art of building sustainable wealth. He has used the same wealth building strategy to develop a multi-million dollar business, sharing his knowledge and skill with ordinary Australians. Cam has personally bought, sold and developed numerous properties and has an extensive residential and commercial investment portfolio.
Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.