How much can I get for it?!
When selling your property, that’s the first and most obvious question you’d ask an agent. But, how often do you get a straight answer? Not often.
I’ve sold more than a few properties over the years, and whether acting for myself or as an advisor to my developer clients, I never leave it to others to do the research I can do myself:
- I study results online,
- I attend opens to see firsthand what the buyers do, and
- I call agents to understand the specific campaigns
I invested 3-4 hours in learning as much as possible about recent sales. The knowledge gained meant I could negotiate patiently, and with confidence, to ultimately make an extra $30k in development profits.
We’ve written before about the different seasons in Melbourne real estate, and why selling in Spring can be a risky proposition, but sometimes there are factors at play that force your hand (e.g. build schedules, holding costs, holidays, etc). Against my better judgement, I tried to auction a property just before Christmas last year, and was disappointed by the turnout – only one bloody bidder on the day!
After passing in the property at $1.22m, my agent brought in the prospective buyers, and began the one-on-one negotiations.
It was in these stressful and emotional circumstances where my research became so important.
I studied some recent sales in the surrounding streets, which pointed to a market value of about $1.30m for mine. But, it can be hard to put your finger on what exactly is a comparable property… Block size, number of beds and baths, new v old construction, orientation, and other factors come into play. Online advertisements don’t usually give you a feel of properties and the characteristics that have the biggest impact on price, and that’s why it’s important to actually attend open for inspections of other properties prior to selling your own!
And, in addition to building my geek spreadsheet and inspecting firsthand my competition, I also spoke to each listing agent… Has the lack of a downstairs master impacted demand? If this was newer construction, how much more do you reckon it would sell for? Have you had many comments about the small yard? How did the auctions go on the day (e.g. how many bidders, what were their ages/demographics, what was the reserve price)?
I struck gold with a property that sold 2 weeks before mine for $1.465m. It was an older single story detached dwelling on a similar sized block, on the same side of the street. Should I expect mid $1.4m instead of $1.3m? A good chat with the agent had me thinking no. The auction saw one of those heated bidding competitions between just two downsizers who each placed great value on the single level nature of the property (mine had a downstairs master, but is a two-story). In other words, it was an unusual result attained through a highly emotional auction. But, it was a great one for me to point to in post-auction negotiations, and it made me feel confident that the right buyer could come around after Christmas!
Back to the post-auction negotiations…
I instructed my agent to stress to the bidders that I was hoping for mid $1.4m based on the result down the road, but I’d be willing to accept a discount on that and ‘meet the market’ so to speak. They went from $1.22m to $1.28m to $1.30m in the space of 10 minutes, all without me making a firm counter-offer. My agent is a great bloke, but was naturally encouraging me to think seriously about accepting. Nope. I knew that a lot of prospective buyers had checked out of the market before Christmas, and I was confident that a renewed Sale by Set Date in the new year could bring me a better offer.
Sure enough, a few weeks later, we had two more interest parties show their hands. The original bidder came up to $1.32m, a second came to $1.325m, and I finally accepted an unconditional offer of $1.330m with a 60 day close.
As much as I liked and respected my agent, I didn’t rely on him to tell me how much my property was worth.
I invested a few hours’ time into becoming a local area expert, through tracking results online, attending opens, and speaking with other agents. Despite the stress, I recognised that a bit more time in market was a worthwhile punt, and I netted an extra $30k.