Local Real Estate Comments from Peter Cooke and the Team at Richardson & Wrench.
> Setting the Right Price.
A vendor has two critical decisions to make when selling a house. The first is to select the right agent, which I covered in my January article, and the second is to set a price that enables the property to sell within a reasonable period of time.
There is an old saying in real estate that there is no such thing as a ‘wrong’ price, it is simply a matter of time. Of course, eventually everything sells. We once bought a property at the full asking price after only one short inspection. Unfortunately for the vendor it had taken five years of marketing to get it!
Price and time are proportionally related. That is, generally the higher the price the longer the time to sell. It is vitally important for every vendor to think about how long they want to have their property on the market before considering setting a price.
If a quick sale is needed, then the price will need to reflect that requirement. Conversely, if time is not an issue a vendor may elect to wait 12 months or so to achieve their desired outcome.
Vendors need to recognise that most buyers are becoming increasingly well informed about what is selling in their area of interest and at what price. The internet continues to be the research tool of choice and empowers buyers as never before.
The key to a quick and successful sale, apart from superior marketing, is the notion of VALUE. Vendors need to recognise that this is the key motivation for virtually all buyers in all market segments.
What is value? Purchasers will look at a number of comparable properties within a price range to see which one suits their needs best. A switched-on vendor will do the same research. They will price their property to represent value when compared to what else is on the market at that time. This is where your real estate agent should assist you by providing comprehensive comparable sales and on market research. They should suggest a selling range and be able to fully justify that recommendation by reference to comparable recent sales.
The comparable properties used should ideally offer the same level of amenity (type of construction, standard of finish, number of bedrooms, number of bathrooms, car accommodation, etc), be relatively close to the vendor’s property and have occurred ideally within the last three months or at most six months.
Sometimes it is not appropriate to set a price when marketing a property. The property may be unique or highly desirable, it may offer significant development potential, the market may be rapidly rising or the vendors might be highly motivated to achieve a sale within a specified time, and will meet the market to achieve it.
In these circumstances an auction or expression of interest sale may be the most appropriate. The important issue for vendors to recognise is that only a small proportion of property is sold in Armidale is by auction. Therefore, you need a really good reason to use this method, rather than a reason not to.
In summary, a correctly priced property will create buyer interest because of its perceived value. The increased competition this produces reduces the buyer’s ability to negotiate on price. In turn this enables the agent to vigorously defend that selling price and the vendor ultimately benefits.
Was it Confucius who once said “Price it right and watch it bite. Price it high and see it die”? Probably not.
Local Real Estate Comments from Benjamin Beack and the Team at Richardson & Wrench.
> Managing property investment risk.
Local Real Estate Comments from Peter Cooke and the Team at Richardson & Wrench.
> Choosing the Right Agent for You.
Selecting the right agent is one of the most important decisions prospective vendors make. There are many factors that should be taken into consideration, but one of the most overlooked is ‘cultural fit’. Too often vendors base their decisions on agency size, fees charged or a previous relationship without considering whether the selected agency operates in a ‘vendor supportive’ manner. The best sales results are achieved through a partnership between vendor and agent that sees both parties effectively contributing to the process. So take the time to find an agent that you can work with, the one that ‘fits’ you best.
There are a number of ways to market & sell real estate, including auction, private treaty, expression of interest and tender. There is no ‘best’ way, and the selected method should only be arrived at after considering the specific property and its attributes, the vendor’s preferences and motivations for sale, whether the market is rising, falling or is stable and the general seasonal conditions. Make sure that your agent can justify in detail why a particular method is being recommended and how this will deliver the best results for you. Request information about what is being achieved right now.
When it comes time to have your property appraised, remember that the agent who puts the highest value on it is not necessarily the ‘best’ or even the agent that holds your property in the ‘highest regard’. Agents should always be able to justify their appraisal by reference to recent comparable sales and taking into account the particular features of your home. The consequences of listing your home at an unrealistic price can be significant. This might include many months (or even years) on the market, disruption to family life, dissatisfaction with the agent and eventually selling at a price way beneath what you had hoped for. As far as pricing your property is concerned, all that glitters is rarely gold.
Marketing is one of the most vital elements in an overall sales strategy. Vendors often do not get involved in developing a marketing plan and allow the agent free reign on advertising what, when & where. Take control of your property’s marketing by requesting that the agent prepare a detailed marketing plan, including a web strategy, setting out which publications are to be used, what ad sizes are to be run and on what dates.
This will allow you to make comment on the breadth and depth of the marketing to be employed to ensure that it meets your expectations. Keep the agent accountable for delivering all the advertising promised.
Vendors often simply look at the fees charged when making decisions about selecting agents without stopping to assess what the underlying value of their offer is. An agent’s commission should reflect the services they provide and the value they add in the provision of those services. Look for agents that have marketing, advertising and sales processes in place which maximise the sale value delivered to you, their clients. Saving a few dollars on fees up front might cost you thousands later.
Spend the time to identify the right agent. It could be a very lucrative and worthwhile investment.
To all those responsible for selecting R&W to receive an Armidale & District Chamber of Commerce New Business Award for 2009, we were greatly encouraged. Thank you.
Local Real Estate Comments from Peter Cooke and the Team at Richardson & Wrench.
> What is the Community 1000 Initiative?
The Community 1000 project was developed by Richardson & Wrench Armidale as a means of supporting local not-for-profit groups with real cash donations. This means that the whole community benefits through the funding of services provided by these great organisations.
When someone lists and sells their house with R&W during the remainder of 2009 (and maybe beyond if you twist our arm!), we will donate $1,000 on settlement to the local not-for-profit organisation of the vendor’s choice. It doesn’t matter if you are just considering selling your house or have it on the market already, we would be delighted to be appointed your selling agents.
Local community groups are encouraged to register their interest in the program. Simply write or send an email to us outlining who you are and the nature of your organisation. You will then be added to the list of local groups that may be nominated by vendors.
Donations have already started to flow, with the local RSPCA being the first beneficiary. Many other payments are due to be made in the coming months, to organisations such as CanAssist, PCYC & Vision Australia (Armidale), to name just a few.
It is a great initiative and so easy to be a part of. If you are a vendor, simply list your property for sale with R&W, and we will do the rest. If you are a not-for-profit organisation, just let us know who you are. It is that simple.
Come on Armidale … let’s get some funds into the hands of local not-for-profit clubs and organisations that really need it!
> Rate rises won’t hurt housing demand
The Reserve Bank’s decision to raise rates for the second consecutive month should not make a large material difference to housing demand, the Housing Industry Association (HIA) has claimed.
According to HIA’s chief economist Harley Dale, figures show that sentiment towards buying new homes begins to falter when mortgage rates hit their 10 year average of 7.25 per cent.
Even with the latest rate rise, the variable rate on the average mortgage is still significantly below that mark, he said.
Similarly, the strength of the underlying demand stemming from the shortage of housing plus ongoing population growth means the sector should be able to absorb another rate rise.
“It is widely regarded that rates will rise moderately over the next six to nine months, and that’s at a time when we don’t have a lot of evidence of new home building recovery and nothing of the magnitude needed to bridge the housing gap,” Mr Dale said.
Source: Real Estate Business
Local Real Estate Comments from Peter Cooke and the Team at Richardson & Wrench.
> Reducing Property Investment Risks
Owners of investment properties can cut risks and maximise profits by paying careful attention to common mistakes made by novice investors. Sustaining returns can mean charging fair rents. As demand for the need to rent decreases any increases imposed can be important. Many novice investors fail to charge fairly and find themselves faced with vacancies, quick turnovers and lease terminations, all of which are major expenses. Impediments to income need to be avoided. This is why I suggest that owners of rental properties avoid the temptation to manage properties on their own.
Professional managers are aware of local changes to rents being charged and can see that the rent your property achieves is competitive with others. Charging the correct rent keeps tenants happy and sees the premises cared for. This in turn helps ensure that the value of the investment grows over time, year after year. In most areas, the rental market remains tight. Yet vacancy rates can vary greatly from region to region and suburb to suburb.
If you are currently attempting to manage a property without professional assistance, it can pay to enquire about the low cost of professional property management. Self-management can lead to a failure to keep business records and tax matters properly aligned, as few private owners have access to the detailed accounting systems used by professional property management departments.
> Rush on First Home Concessions is Tapering Off
The response to date has been enormous, but with the cut-off point nearing, the rush to qualify for the financial concessions available under the First Home Buyers Scheme is beginning to taper off. The scheme expires on June 30, and while 12,664 buyers took up the opportunity to save in February, this sum is down 500 from the month before.
Buyers have been quick to take advantage of three factors working in their favour. These are (1) lowered interest rates (2) the enhanced first home owner’s grant and (3) lower property prices. The influx began after the Federal Government announced the First Home Owners Boost back in October. This increased the grant from $7,000 to $14,000 for established homes and from $7,000 to $21,000 for newly constructed homes.
Affordability was further enhanced with the NSW Government’s contribution of a $7,000 First Home Owner Grant and a $3,000 New Home Buyers Supplement. Reports from the Housing Industry Association claim that buying a home in Australia has not been this easy in years.
