Once you have made the decision to sell your property, the next step is to determine whether you wish to hire a real estate agent to act on your behalf. An increasing number of sellers are choosing to go the ‘DIY’ route, also known as ‘For Sale By Owner’. Both approaches have merits and require careful consideration. Regardless of which approach you choose, there are common pitfalls for all property sellers.
1. Hiring the wrong agent
One of the most critical decisions early in the process is the selection of agent (if you choose to have one). Not selecting the right agent can significantly affect the outcome of the sale.
Be careful not to select an agent based on commission alone. Afterall, the cheapest agent is the one who can get you the highest net selling price. Sellers should also be wary of selecting an agent based on an inflated appraisal of the property; this practice is commonly known in the industry as ‘buying a listing’. Another very common mistake sellers make is to select an agent who is out-of-area, usually due to a personal relationship or recommendation. Property markets vary greatly and out-of-area agents often lack local knowledge and the ability to interpret market nuances.
Look for an experienced agent who has a proven track record of selling properties in your neighbourhood. Ask for and personally verify references from past clients. Find out how many listings the agent will have in addition to yours and who will be present for the Open Inspections? You must pick a selling agent that you can trust and can communicate openly with. They are your representative and should work in your best interest at all times. If you don’t trust your agent, then any negotiation with a buyer will be a three way one and won’t lead to an optimal outcome.
2. Unrealistic price expectations
All properties can be sold. It is just a matter of price. Too often, sellers are fixated on a target price based on the net proceeds. This pricing strategy often leads to an overly ambitious price expectations. While a seller can have whatever asking price they want, buyers reserve the right to disagree. At the end of the day, the market value for a property comes down to what the buyer is willing and able to pay today; not yesterday and not tomorrow.
3. Not understanding your rights and obligations as a vendor
It is important that all sellers are fully educated about their rights as well as their obligations as vendors. Be thorough in reading the fine print in legal documents (such as the Agency Agreement) and don’t hesitate to seek advice from the Office of Fair Trading or your legal representative if necessary.
4. Not selecting the appropriate method of sale
There are two main methods of sale: Private Treaty or Auction. All sellers will have to make the decision on whether to put a sticker price on the property and sell it via Private Treaty or take the property to Auction. Both methods have pros and cons and neither are foolproof. Much depends on the prevailing market dynamics, which may favour Auction in a sellers’ market and Private Treaty during a buyers’ market, for example. Whether you choose to sell by Private Treaty or Auction also depends on the type of property being sold. Agents also often have a preference for one method of sale over another and sellers should discuss both options with the appointed agent. At the end of the day, sellers need to make an informed choice and be fully comfortable with the chosen method of sale.
5. Not doing own research and homework
At every step of the process, sellers need to invest time and effort to do their own research. Prior to selecting an agent, go around to nearby Open Inspections and Auctions and see how the agents conduct themselves. Interview at least three agents and be strategic with the questions you ask them. Throughout the selling process, attend as many Open Inspections and Auctions as possible in your neighbourhood. This will help you to get timely first-hand information on market sentiment as well as enable you to analyse competing properties.
6. Not taking presentation seriously enough
When you are selling a property, you are not merely selling bricks and mortar. You are also selling a dream. Therefore the property needs to be presented in such a way as to appeal to the targeted buyers (be they owner occupiers or investors). While staging or styling is increasingly common and can be very effective, it is still possible to present a property nicely without a substantial budget. Some of the best return-on-investment can come from de-cluttering, mowing the lawn, improving the curb appeal of the property, painting, etc. Investing in strategic cosmetic fixes can also be rewarding. Be careful though not to over-capitalise on any pre-sale renovation.
7. Poor marketing
You can’t sell a property if nobody knows about it. Marketing (of which advertising is one key component) is essential to getting people through the door and needs to be managed strategically according to your budget. The amount of money spent on advertising can often be indicative of how motivated the vendor is to sell. The more a vendor spends out-of-pocket on advertising, the more invested they are in the selling process.
Due to the costs, vendor-paid advertising can be a controversial issue as some sellers feel they are paying to promote the branding of the agent/agency. As advertising outcome can also be difficult to track accurately, many sellers are not convinced of the return-on-investment. The good news is that more and more people are searching for properties online and Internet advertising is a cost effective option.
Irrespective of whether you have a mansion, a Unit, a renovator’s delight or just a piece of land, do invest in professional photography to make sure your asset is shown in the best light.
8. Getting too emotional and not listening to market feedback
Every home owner thinks their property is better than their neighbours’. Sometimes the emotional attachment to the property can cloud your judgement as a seller and prevent you from listening to genuine market feedback. A property ceases to be a ‘home’ and becomes a commodity as soon as it is placed in the marketplace. It needs to be marketed as a commodity and priced relative to competing properties to be attractive to buyers.
While it is not possible to be entirely objective, sellers need to try to take a step back and assess their situation in a business-like manner and take into account opportunity costs involved with a drawn-out sale. Time is money and there can be significant costs if a property lingers on the market.
9. Not timing the sale
Many sellers want to sell their property when it is looking its best. Hence spring and summer often see more listings than winter. However, timing the sale is not just about picking the nicest season. Sellers also need to consider the level of competition for their property at any given time. Keep in mind also that in peak selling periods, your agent is likely to have more listings to look after and may not be able to focus 100% on your property.
10. Not having a Plan B
Sellers are optimists and often make the mistake of not having a Plan B. Make sure you know what your options are if your property does not sell. Having a Plan B is all about control and can prevent you from getting too emotional and from making knee-jerk decisions.
About Oliver Stier
Oliver J. Stier is the Director of OH Property Group, a leading Sydney buyers agency. He studied Quantitative Economics and Finance at Cambridge University (UK), University of Toronto (Canada) and Princeton University (USA). In addition to being a licensed real estate agent, Oliver also holds the Chartered Financial Analyst (CFA) designation.
