The mistakes people make

The Mistakes People Make

The Mistakes People Make 15 Financial Pitfalls To Avoid When Selling Your Home

The Mistakes People Make

Our promise to you Since 1988 we have strived to provide the very best real estate service in Sydney to the many property buyers, sellers, investors and tenants who call on us for help and advice each week.

This booklet and the advice it contains is part of that promise. We hope you enjoy the content and profit from the experience.

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The Mistakes People Make

The great Australian dream is to own your own home.

From our first years as an adult we are expected to live this great Australian dream and buy our own home as soon as we are able.

In the main, most of us manage to scrape together a deposit sufficiently worthy to impress our bank and then we trot off into the marketplace to buy our first home.

For the next several years we struggle to meet our monthly repayments. We give up all sorts of little luxuries to ensure that our repayment arrives at the bank on time and that we continue to have the privilege of living in what sometimes feels like the bank's house rather than ours.

One day we are struck by a thought - "I think we should buy a bigger, better, brighter home - I think we should trade up, sell this home and buy another�

And this is where the errors begin.

After sacrificing so much for so long many people throw away thousands of dollars whilst selling their home as a result of simple mistakes that could easily be avoided.

Over the years we have seen many home sellers make these same mistakes repeatedly.

And it is for this reason that we decided to publish these everyday mistakes together with some common-sense solutions.

If you are contemplating selling in the next 6 months study these next few pages and take note of the mistakes of those that went before you. If you know of someone who is thinking of selling please pass on your copy of this Special Report - they deserve to know.

The Mistakes People Make

Mistake No. 1

Failing to research the marketplace Everyday houses come onto the market and everyday houses sell. Everyday properties are advertised in the local paper, property magazines and in agent's windows. And everyday people put their homes on the market at the wrong price because they failed to spend a few days (or even weeks) checking out their local marketplace. Surprisingly, this is not difficult.

The primary mistake made by 1st - home sellers is thinking that the only way to find out how much they might be able to sell their home for is to ask a local agent.

This is a very dangerous thought.

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If you are a 1st - time property seller the simplest thing to do is to check out the marketplace yourself - it's not difficult and takes very little time.

Here's what you do . . .

1. Carefully read the property pages of your local newspaper every week for about 3 weeks. As you read, be sure to circle any advertisements for properties that seem similar to yours and are located in the same suburb.

2. Visit at least 3 real estate offices in your area, read the advertisements in their windows, take note of any property that seems similar to your own and be sure to pick up one or two property magazines for step 3 below.

The truth is that many salespeople employed by the local agent are only new to the market themselves. And because of the chronic lack of proper training in the real estate industry the advice a property seller might receive from a real estate salesperson (with little experience) is often inaccurate.

3. Carefully read through the property magazines you collected from the local agents. Again circle any property that seems similar to your own and is also located in your suburb.

On the other hand there are a few agents (very few) who employ marketplace experts whose job requires them to study the local property market everyday. These real estate salespeople have generally been employed by a local agent for years and have made real estate their career.

They are aware of all the recent property sales in the local area and they are up-todate with all the properties currently on the market. You can rely on their advice.

4. Finally, and probably most importantly, take about an hour to drive around your neighbourhood. Take note of the agent that appears to have the most FOR SALE signs and the agent that seems to have the most SOLD signs. In most cases these two agents are one and the same. This is the agent you should invite t o yo u r p r o p e r t y t o p r ov i d e a professional market appraisal of the possible selling price of your property.

The Mistakes People Make

Mistake No. 2

Failing to research the agents How much junk do you receive in the mail from local agents. It seems that every day there is more and more. Mostly we chuck it all in the closest bin . . . until the day arrives when we decide to sell our property.

Suddenly the junk we receive in the mail from agents takes on a new perspective.

Suddenly it contains "valuable" information about which agent might be the best to assist us sell our home.

This is exactly what most agents want you to think. They put an endless stream of junk into our mailboxes hoping that they'll be "johnnie-on-the-spot" on the day you decide to sell.

Mind you, this is a very successful ploy on the part of some agents - because some people make their decision about which agent should sell their home based on the nonsense these agents put in your mailbox.

The best way to decide which agent to employ to sell your property is to do two things - and neither will take a great deal of time . . .

1. First, survey your local area. Drive around and note down the agent that seems to have the most FOR SALE signs erected. This agent will also have the most buyers on his books for properties in your local area - after all, buyers are attracted to the agent with the greatest variety of property for sale.

Also note the agent that has the most SOLD signs erected in your local area.

This agent is the most active agent they actually sell homes. Often these two agents are one and the same making your choice that much more simple.

2. Second, survey your friends and neighbours. Ask them who they bought their home through ; ask them about the service they received ; ask them who they would list their home with.

Get a general feeling about who they think is the most active agent in the area and who would do the best job selling your home.

A little bit of basic research like this will go a long way and it's certainly better than relying on the junk you receive in the mail.

The Mistakes People Make

Mistake No. 3

Failing to obtain mortgage pre-approval When you are in the process of considering the sale of your property you are probably not thinking about buying your next home. If you're like most of us you're thinking of "taking one step at a time"

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as you list your property for sale.

These days no-cost mortgage brokers with a range of banks and lending products at their disposal will visit you in your home at a time that suits you. They will arrange all the documentation required to apply for a loan, they will chase the approval for you and they will do the lot for no fee whatsoever.

However, there are good reasons to consider both steps at the same time.

Many times we have seen people miss out on their dream home because their own home sold faster than they thought.

Suddenly they had to apply for a mortgage to buy their next home only to have the delay cost them the property they wanted to buy.

Once you have your pre-approved mortgage in place you will feel much more confident about shopping for your next home - no matter how quickly it happens.

The simple solution is to arrange a mortgage pre-approval at the same time

Remember the boy scout motto BE PREPARED.

The Mistakes People Make

Mistake No. 4

Failing to obtain a pest and/or building report Most of us wouldn't think of listing our home for sale without attending to a few cosmetic repairs that might improve the saleability of our property.

On the other hand very few people think of obtaining a pest report prior to listing their property. A pest report identifies hard-to-see problems such as termite and borer infestations as well as more obvious problems such as cockroaches, mice, etc.

Before a prospective buyer commits to the purchase of your property they will obtain a pest report on your property.

Imagine how they might feel about buying your property if a termite infestation is discovered – you might lose your best chance at a top price when a little planning beforehand may well have prevented this p ro b l e m . A P e s t re p o r t w i l l c o s t approximately $150 – $175 and is well worth the investment – it may well save your best sale.

Building Reports, on the other hand, identify possible problems with the physical structure of your home – and all buyers will obtain one on your property b e fo re t h ey m a ke a co m m i t m e n t .

Therefore it's wise to obtain one yourself before a report from a buyer takes you by surprise.

Perhaps the most insidious aspect of pest and building reports is that recent legal precedents have forced up the cost of professional indemnity insurance payable by pest and building inspectors. This means they are doubly cautious about what they say in these reports.

For example, a building inspector finds a fault that requires repair. He estimates the cost of the repair at $200 – but he also fears being sued if he's wrong. So what does he do ? He overestimates the cost of the repair to ensure he won't be wrong about the cost and to ensure he won't be sued in the future. Suddenly the $200 repair becomes $300 or even $400.

When the buyer gets the report he reads that the property requires a $400 repair.

He then promptly asks the seller for a discount of an additional $400 off the already negotiated sale price to cover the cost of the repair highlighted by the building inspector . Who's winning here ?

Certainly not the seller !

Imagine a building report that suggests repairs of $5000. What would a buyer say then?

The solution – be well armed before listing your property by obtaining a pest and a building report before listing your home.

The Mistakes People Make

Mistake No. 5

Thinking that all capital improvements will be reflected in the final sale price Over the years we've run into many property sellers who have literally spent fortunes adding to and improving their property.

When it comes time to sell their home these same property owners add up all the money they have spent over the years and expect their final sale price to reflect a return on their investment.

The reality is that many improvements simply “over-capitalise” a property.

For example, installing imported italian marble on the walls of a bathroom in a typical house located in Campbelltown, Penrith or Windsor at a cost of $10,000 would not be a wise investment. Most buyers would not be prepared to pay extra for this improvement when a s i m i l a r, n e a r by h o m e w i t h a t i l e d

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bathroom could well be available for much less.

The same improvement in Double Bay, on the other hand, may well be a smart investment.

The best way to determine whether a future property improvement would “over- capitalise” a property or not is to ask a trusted local real estate agent for their advice.

W h e n i t c o m e s t i m e t o s e l l yo u r property a professional real estate agent will provide accurate advice about the amount a typical buyer would be prepared to spend to purchase your property (even after taking into account all the improvements you've made over the years).

The Mistakes People Make

Mistake No. 6

Taking advice from non-professionals When it comes time to decide on an asking price for your property rely on your own research (see Mistake No.1 – Failing to research the marketplace) and the advice of a trusted real estate agent.

Whatever you do not listen to wellmeaning relatives, friends and neighbours.

If you think about it logically you have done all the research and the local agent has sold (hopefully) hundreds of houses in the local area. Your well-meaning relatives, friends and neighbours have neither done the research nor sold hundreds of houses.

Unfortunately, over the years, we've seen many people lose large amounts of money, opportunities and friendships as a result of poor or misguided advice.

So, the solution is to have confidence in your own research and in the advice of a trusted real estate professional.

The Mistakes People Make

Mistake No. 7

Failing to shop for a solicitor / conveyancer Some years ago the fees charged by solicitors for a conveyancing transaction (assisting in the sale or purchase of a property) were deregulated.

These days solicitors fees are much, much less than they were a few years ago and it pays to phone around and obtain some quotes. When you do be sure to ask what their fee includes – this way you be certain of comparing “apples with apples” Not long after the deregulation of solicitors fees the NSW Government

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introduced the concept of professional Co nveya n ce r s . Th e s e p e o p l e h ave completed an approved course of study and have set up business in competition against solicitors for conveyancing business. In other words they do the same job as solicitors and are, quite often, cheaper than a solicitor.

Anyway, you be the judge – make a few phone calls and you'll find the savings can be as much as $500 for selling and buying at the same time.

The Mistakes People Make

Mistake No. 8

Thinking that the cheapest agent will obtain the same result as the most expensive agent Most people think that all agents do the same job – and therefore fail to ask some very important questions when it comes to employing an agent.

Here are some key questions to ask agents . . .

“How many times over the first 8 weeks will my property be featured in the local paper / property magazine / local paper editorial / etc” “How often can we expect detailed feedback on your inspections of our house with buyers” “How often can we expect detailed feedback on local property market movements whilst we are selling” “How experienced are you (and your staff) at negotiating the best price for a property on behalf of your clients” “Can you provide me / us with a list of your last 3 clients so that we can ask t h e m fo r a p e r s o n a l reference on your ability” When you ask these questions you will discover that there is a world of difference between agents.

Generally the ones that charge the least do the least. And generally the ones that charge the most also do more for their clients.

In fact, as a general rule of thumb, the most expensive agent is also the most confident of achieving a great result for you and your family. They are generally the most experienced negotiators, they generally spend much more on marketing for buyers and they are also more mindful of ensuring you get “your money's worth”.

Think of this – when you agree to pay $1000 more in commission to an agent you might expect as much as $5000 more in the sale price as a result of the skills that agent will bring to the job.

So, the key to making more in your hand when you sell may mean agreeing to spend more on commission (with the right agent)

The Mistakes People Make

Mistake No. 9

Failing to demand a written marketing schedule from the agent prior to listing Part of the key to selling any property is exposure to the marketplace. Buyers need to be aware of your property and its features.

For any agent the second largest expense in his business is the cost of advertising. Some agents, therefore, will ask a property seller to pay for the a d v e r t i s i n g a n d l a t e r, p a y t h e i r commission. Other agents will accept your listing and tell you they will advertise your property – only to conveniently forget their promises in later weeks.

There are very few agents that will agree in writing to spend money promoting your property without asking you to pay up front for this advertising.

But they're out there – don't give up till you find one.

When you find one you'll probably find that they will be happy to supply you with a marketing schedule, including details of all advertising and promotion for your property (together with dates) as part of the listing process.

Agents like this understand that there's a risk when anyone pays to advertise a property (whether it's the agent or the owner) and they are prepared to accept that risk on your behalf – knowing that they will sell your home and that their commission is sufficient compensation for their work.

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The Mistakes People Make

Mistake No. 10

Failing to arrange communication between the owner and the agent before the selling begins Nothing is worse than listing your property for sale and then having to chase the agent for feedback from that point onwards.

It's not only annoying (at the beginning of the selling process), but it will eventually make you angry. After all, you deserve to know what your agent is doing to secure a buyer for your property, you deserve feedback on each and every inspection by a prospective buyer and you shouldn't have to chase him or her for days to find out – especially considering how much you have agreed to pay when the property eventually sells.

If you're reading this and saying to yourself “surely, that's not what really happens” then you've probably never sold before. In almost every survey that's ever been taken of property sellers the one universal complaint has always been the lack of communication from and/or with the agent.

Although the problem is widespread, the solution is simple.

At the time you list your property for sale ask the agent to provide a copy of his COMPANY FEEDBACK POLICY for you to view – then ask him / her to sign off on that

policy to ensure you both understand what will happen after your property is listed.

As a rule you should expect nothing less than the following as a minimum . . .

1. Feedback phone call after each buyer inspection of your property delivered on the same day as the inspection.

2. A written report delivered weekly detailing market conditions, responses to marketing for your property and the details of buyer comments when they inspected your property.

3. Weekly phone report on progress with buyers.

4. Personal visit to provide a one-to-one report on progress no less than once eve r y 3 to 4 we e k s d u r i n g t h e marketing phase of your sale.

If an agent can't or won't provide you with a guarantee of communication that is at least the equivalent of that set out above you have to ask whether you should list with that agent.

Finding an agent that will provide the correct level of communication will save your sanity during what is generally accepted as one of the most stressful times of your life – the sale of a property.

The Mistakes People Make

Mistake No. 11

Preventing the agent from doing his / her job This mistake sounds like a mistake in itself – after all who would employ an agent, agree to pay him or her thous ands of dollars and then stop them from doing their job. The answer is that many property sellers do just that and in so doing usually cost themselves a sale and often thousands in the sale price.

An experienced agent knows how to sell a home. They know the type of marketing that works best in your local area. And in any area one of the most important aspects of the marketing programme will be the FOR SALE sign.

Some owners insist that the agent does not erect a sign. When this happens the property seller will lose up to 40% of the available enquiry for his or her home.

Lost enquiry means lost opportunity and lost sales.

One of the other ways property sellers prevent their agent from doing their job is during an inspection with a prospective buyer. The agent will usher the buyer in to the home and, almost immediately, the property seller will take over the inspection, often showing the buyer aspects of the home for which the buyer has no interest. The result invariably is that the buyer quickly loses interest in the property as a result of the well-meaning actions of the property seller.

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Remember, before the agent brings a buyer to your home they have spent a great deal of time with them, discovering their likes and dislikes, their wants and needs and developing a trusting relationship with them. When they arrive at your property the agent knows what to show the buyer, what will interest them and what will not.

If you are a property seller our best advice is to make yourself absent during a property inspection and let the agent do their job – the result will be a quicker sale usually for a better price.

The Mistakes People Make

Mistake No. 12

Getting too emotionally involved It's very difficult sometimes to distance yourself from what's going on around you but during a property sale it becomes vital.

The owners might have had a better result if they had given the buyer a counter offer and encouraged him or her to continue the negotiations.

Here's an example illustrating a common situation that invariably costs property owners a good buyer and often an excellent price . . .

Mind you, this sort of problem is often a l l ev i ate d by g o o d a d v i ce f ro m a professional agent but on other occasions owners manage to lose their own negotiations by insisting the agent do it “their way�. Remember, a good agent is thoroughly trained to negotiate an excellent price on behalf of the owner.

Many 1st-time property sellers feel insulted when the first offer arrives from a buyer. Because it's much lower than the asking price it is rejected out of hand by the owners before it can be given proper consideration.

The sudden rejection is seen by the buyer as a lack of interest in selling on the part of the owner. The result is that the buyer walks away to find another property.

This example is only one of many times where emotions can get in the way of a sale at the best possible price.

The best advice is to keep reminding yourself that the sale of a property (even if it is your family home) is simply a business transaction and no matter how much you might love your home this type of transaction requires a cool head and sensible decisions.

The Mistakes People Make

Mistake No. 13

Failing to "listen" to the marketplace when inspections dry up So, your property has been for sale for a couple of weeks and although there were a couple of inspections in the first week there's been nothing for the past 2 weeks.

The truth (even if your agent is too scared to tell you) is that your property is ove r p r i ce d . M ay b e by o n l y a few thousand dollars, but the asking price is turning potential buyers away.

And one of those potential buyers may be the one – the one that will pay you top dollar for your property.

The longer you wait to correct your price the lower your eventual sale price will be.

Be certain of this fact : the market will not suddenly rise to meet your price – you must lower your price to meet the market – there is no other way.

Once you correct your price buyers will quickly “re-discover” your property and inspections will quickly increase leading to a sale at market price faster than you might have thought possible.

Many property owners fail to see this truth – that the volume of inspections and therefore the chances of a sale at the best possible price is a function of the asking price. The closer the asking price is to a fair and reasonable market price

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the quicker the property will attract a buyer at a good price.

The longer a property remains on the market at the wrong price the more buyers are convinced that there is something wrong with the house.

Subsequently offers from buyers tend to get lower over time – robbing property owners of the full market potential of their property.

One of the myths that persist even today is that some agents have the ability to “talk a buyer into a sale” irrespective of the asking price. This is simply not true – buyers are far too educated and market savvy to be “talked into” anything these days. Generally there are sufficient homes out there for the average buyer to simply ignore any property that is overpriced. And so they do.

So, save yourself thousands by correcting your asking price early – don't wait or the result might cost you and your family dearly in the eventual sale price.

Mind you, if you choose a professional real estate agent in the first place he will advise you on the best asking price, you will list your home correctly and it will sell in less than 6 weeks – and you never need to worry about this mistake.

The Mistakes People Make

Mistake No. 14

Getting too excited when the first offer arrives and then saying "YES" too early in the negotiation If you have never had the experience of receiving an offer for the purchase of your family home before, believe me, it's very exciting.

But here's some advice I received almost 20 years ago from my first sales manager in real estate. It's as true today as it was then – and when you receive your first offer it will make you thousands. He said . . .

“If a buyer is genuine, his first offer is never his last offer” So, when you receive your first offer, no matter how close it might be to your asking price always ask for more money.

And in 99% of cases you will get more money – all you have to do is stay calm and ask.

The Mistakes People Make

Mistake No. 15

Failing to take into account all the "extra costs" involved in selling and buying again For most of us the sale and purchase of a property are transactions we might only undertake once, twice or three times in our lifetime.

Therefore the intricate details are often a mystery. We rely on experts to provide good advice on costs for transactions such as these.

But the mistake made by so many property sellers is that they fail to take into account all of the associated costs of selling and buying before they list their property for sale.

This is the crucial point – you can save yourself thousands of dollars and possible heartbreak if you would simply investigate these co st s b e fo re yo u b e g i n t h e process.

A professional agent or your solicitor / conveyancer will be able to guide you through these costs – but be certain to consider all these costs before starting on the selling process.

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The Mistakes People Make

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