1 - Understand the value of your property.
Assessing the value of a property is not an exact science, but rather at best, a professional estimate of the worth of a property on a particular day....
Opinions of value given by agents must take into account prices achieved for similar properties that have been recently sold - historical facts. The unique characteristics of your property are compared with properties recently sold and deemed similar. Therefore an agent’s opinion of value is best expressed as a price range.
Generally an experienced agent with strong local knowledge should be able to make an accurate assessment including the most probable price within a range of 10 percent.
Agent Select insists that tendering agents must show which sales were identified as comparable in order to determine your best and worst case expected sale price scenarios.
If the comparable sales are genuinely similar to your property they will give you a good guide as to the worth of your property and substantiate the agent's expected price.
Important factors to consider are the size, quality and configuration of the property as well as land size and location.
2 - Ensure the marketing strategy suits your property
The agent must recommend a method of sale and explain the reasons for their choice. The options available below must be understood in order to assess what best suits...
This is by far the most common method of sale in Australia. An asking price is set, or a minimum price is established and the sale price is negotiated with potential purchasers in private.
- The process is accepted world wide as the sales method of choice
- The vendor does not have to experience the pressures of an auction
- Buyers may assume more competition than actually exists
- Unlike with auction the highest bid may be considerably higher than the next best bid
- There may only be one genuine purchaser
- No fixed time frame is set and accordingly it can take longer to make a sale
- Buyer competition is not as transparent as with the auction process
- A Vendor's bona fide intention to sell on a date is recognized
- Competing purchasers at auction can result in a premium price
- Purchasers do not have the opportunity to cool off as can be the case with private sale
- Often negotiations are concluded after the auction or within the following week
- Ideal for unusual or desirable properties that are difficult to assess value of
- A property passed in after auction with little real interest strengthens the position of a potential purchaser
- Potential to accept a less than satisfactory price on the day
- A substantial advertising budget has been spent without a result
- The highest bid is only marginally higher than the next best bid
A number of other less frequently used methods of sale include Expression of Interest, Tender, Set Sale and Sale by Negotiation.
The most important thing is for you to be comfortable that the method of sale recommended is a good fit for your property.
3 - Spend the marketing budget wisely.
Marketing is necessary in order to generate purchaser enquiry. The skill is to understand the property and spend the right amount on the right options available...
Generally as a rule of thumb the total advertising cost should be less than 1 percent of the estimated selling price of the property.
A fully costed advertising schedule must be provided by agents tendering for your business and must clearly indicate who is responsible to pay it and when.
The combination of most suitable marketing options varies significantly between property types, locations and a multitude of other factors. Importantly the most significant trend is the rapidly increasing part played by the internet at the expense of print. Accordingly most properties should be displayed on the major internet sites.
Your agent must explain to you the reasons for their marketing costs and recommendations.
4 - Know which commission charge is your best option.
Commission charges are generally negotiable and vary in the way they are calculated between different locations throughout Australia...
The Agent Select tender process ensures vendors (sellers) pay the going rate in their particular market.
There are obvious advantages and disadvantages of the various options.
By far the most common arrangement whereby the incentive for the agent is that maximum price equates to maximum commission. The potential negative is that the commission does not vary significantly between a good and bad result.
Generally the percentage increases as the sale price does. This system can penalize the agent for a low result, whilst rewarding them for a high result. The commission percentage is usually graduated between the expected price range. The general market rate percentage is usually aligned with the expected price, whilst anything less attracts a lower percentage and anything above a greater percentage. Probably not the best method if it is your first time.
A fixed amount is agreed to for the successful sale of the property irrespective of for what price it is sold. The disadvantage is that it does not incentivise the agent for achieving a maximum price. Remember the vendor (seller) is not obliged to pay a commission unless the agent achieves the reserve price noted on the sales authority or the vendor (seller) is prepared to accept a lesser price.
There can be a many variations to the above and depending on your circumstances it is hard to go past the fixed market percentage, which has well and truly stood the test of time.
5 - Understand your contractual obligations.
It is extremely important to understand what you are signing when engaging an agent to work on your behalf. Advantages and disadvantages of contractual obligations...
Exclusive Sale Authority
By signing an exclusive authority with a real estate company they will be entitled to claim a pre agreed sales fee if they are successful in selling the property, within a pre agreed time frame for an amount equal to or greater than the reserve (minimum) price which should be noted on the sale authority.
You are under no obligation what so ever to accept a price less than your minimum acceptable price, below which the agent is generally not entitled to any commission. If you do accept a lower price the agent is then entitled to claim a fee.
Exclusive Auction Authority
This authority as it sounds is for the purpose of auctioning a property and has the provision also for your minimum or reserve (minimum) price, above which, the agent can claim a fee. Unlike the Exclusive Sale Authority you are not always obliged to nominate a minimum price until auction day.
The other major difference is that the agent normally has a further 30 day minimum period after auction, whereby if they sell the property at no less than your minimum price, or less if you agree, then the agent can claim the commission. The 30 day time period can be longer if agreed and documented when the authority is signed.
Agent Select would not recommend signing beyond 30 days unless there was genuinely specific circumstances warranting the same.
General Sale Authority
A General Sale Authority does not specify a time period and maintains the status of a binding legal agreement until notification in writing otherwise, or if it is superseded by a exclusive authority with the same, or alternative agent. Simply this type of authority entitles the agent to a fee if they successfully sell the property. A major difference from an exclusive agency is that you are able to list your property with more than one agent.
The major negative with this arrangement is that in response to the low level of commitment you have made to the agent or agents, they generally do not treat your property with priority. They will most likely have other exclusive listings, which will take preference ahead of your property. Not a good situation for something so important to you.
6 - The importance of the agency sales representative.
Whilst the profile of a real estate company is important, so to is the skill of the sales representative who will be personally entrusted with managing the sales process on your behalf. The agent representative's local knowledge, skills in marketing, ability to manage enquiry and ultimately negotiate with prospective purchasers can have a significant impact on the sale price that you achieve.
Ideally you are looking for an experienced, knowledgeable, well presented, punctual sales person who is a good communicator with an excellent recent sale record supported by references. Furthermore, you should have an expectation that the agent will communicate the campaign progress to you on a regular basis and in a manner most suitable to you.
Mondays immediately after weekend activity is a good time to meet or you may prefer a telephone conversation or email correspondence. Whatever the arrangement, it should to be agreed in writing between you and the agent at the outset.