Everything you need to know – and do – to find the right buyer
I want to sell my house, where do I start?
Selling your home is a big decision, both financially and emotionally. Once you decide to sell there are a number of steps to work through before your house goes on the market. Find out how to set a price for your home, when and how to sell and what happens to your mortgage when you sell your home. It’s time to get ready to sell.
There’s lots of reasons Humans choose to sell: outgrowing a current property, a change in life circumstance, even just itchy feet. After thinking long and hard and answering questions like “should I renovate or sell?” in the middle of the night, thousands every year choose the exciting step of selling.
Once the decision is made, where do you begin? Well, start right where you are. Before even contacting an agent, you should get the property as close to “open home-ready” as possible by de-cluttering, tidying up the garden and getting it all looking tip-top. Then you can move on to when you want to sell, for how much, how you want to sell and what you want to look for in an agent.
The question of how much your house is worth is a big one. There are many factors that will determine just what you should be asking. metahome24.com can help you find an easy answer to the estimated value of your property using its cutting-edge automated valuation model. The model generates an estimated value for your property through analysis of a broad range of data, including:
- Property type (ie house, townhouse, strata title etc)
- Land size and location
- Comparable sales (ie similar homes that have sold nearby)
- Market trends, current and historical
- Property characteristics, such as the number of bedrooms, bathrooms, garages and the size of the property’s footprint.
You can also get an estimated value using an agent appraisal, a bank valuation and other desktop and automated valuations.
Residential property is generally sold in two ways: by private sale or auction. There are quite a few factors you’ll need to weigh up before making the best choice for your situation, including location, property type and demand. Choosing is best done in collaboration with your agent.
1. Auction vs. private sale
Generally speaking, auctions are especially suited to properties in high demand or that have a unique feature. Auctions are a competitive, public process and this can help really drive up the selling price. And there’s no cooling-off period. For those not so comfortable with this transparent process or who may have a property where demand is not as high, a private sale may be a better option. In these cases, the property is listed with an asking price through an agent, who then markets the property and presents offers back to the seller. These sales are less public, can be less costly than auctions and also include a cooling-off period where the buyer has time to change their mind.
Some properties are also sold “off the market”, that is, sold without any public advertising. Selling off market is not an ideal way to achieve the maximum price, because without competition, there’s no way to push the sale price up. A major consideration is what type of property you’re selling. If the property is an investment or tenanted property or a deceased estate, you will have some different things to take into account than if you’re an owner/occupier.
2. Selling a tenanted property
If your property is tenanted, you will need to consider the effects on your tenants. Tenants’ rights vary from state to state and you should make yourself familiar with them for your area. The approach to selling a tenanted property depends on whether it will most likely be purchased by an investor or owner-occupier. If you anticipate the property appealing to an owner/occupier, how you manage tenants becomes more important. While a landlord is legally allowed to sell their property at any time, a fixed-term rental lease also remains legally valid until its end date, so it’s important to work with tenants on a mutually agreeable approach if you want to sell. It’s possible to end a tenancy agreement early by mutual consent and you can also offer tenants compensation to move out, if you want to offer the property without tenants. If the tenants insist on staying and the property is being marketed to owner/occupiers, it might be worth considering waiting until the lease has ended.
3. Selling a deceased estate
Sales of deceased estates run along much the same lines as any other sales, but there are some extra considerations. The laws and processes surrounding the sales of inherited property varies from state to state, so make sure you get some good legal advice to help you through. In most cases, the executor of the Will becomes the owner of the property and is responsible for ensuring all taxes and debts associated with the property are paid and that all people owed entitlements to the estate are paid correctly.
There are a myriad of factors that can determine if now is the right time to sell, so researching your market is the key. Look at similar properties that have sold in your area and find out whether the prices are near what you’re looking for and also if the demand is there. Overall economic conditions, will also play a big part. If there are a large number of “stressed” sales forced by tougher financial conditions, this could drive down prices overall.
Even the weather can play a part. Spring usually sees a spike in house buying in most areas. Or if your house gets good natural light all year round, winter might be best for you, when there’s less competition. Ultimately, supply and demand will play the biggest roles. If there’s high demand and lower supply, this will bode well for your sale. Obviously, your own financial position plays a central role too, so talk to your trusted advisers about when makes sense for you to sell.
While pondering the process of selling your property, it could be a good time to consider some of the financial options open to you. Why not consider refinancing your loan? Discharging your current loan by opening a new one can offer many more advantages than just getting a better interest rate. You could get better features, such as redraw facilities or an offset account to reduce both the interest and amount you have to pay back. If you want to renovate or extend but don’t have the cash, refinancing can sometimes be the cheapest option to raise it.
Perhaps you’re looking to buy a second, investment property instead of selling. If you have paid back a sufficient amount on your current mortgage, this can be used to finance a second loan for an investment property. The amount you have paid back, or actually own in your home, is known as equity and gives you opportunity to expand your portfolio. Make sure you do your maths and understand the rules first, so it’s always advisable to talk with a financial planner or institution first.
Sometimes when selling, it can be to your advantage to buy first, especially if property values are increasing quickly and your property type is in high demand. Securing a bridging loan will allow you purchase a property before you have received any proceeds from selling your home. As ever, everyone’s situation is different, so always discuss your options with a financial expert.
Choosing a real estate agent to sell your house
Having the right real estate agent can make the difference between selling your home for a great price or just making your reserve. Research and local knowledge are crucial to getting the best agent for your home. Discover how to find the best agent, how to market your home for sale and how much your house is worth.
One of the most important considerations when deciding to sell your property is who is going to sell it for you. First up, do your research. Look for an agent with a history of strong results in your suburb. Metrics like average days on market and auction clearance rates are vital, as they give a clear insight into how good an agent is. Also, go local. Finding an agent with a deep understanding of the local market is as important as finding one with proven experience of selling the type of property you’re selling. A good agent should know as much about the property and the locality as the vendor. It’s smart to even act as a buyer to test an agent’s performance. Go to an open house and see how they perform. Also ask lots and lots of questions of potential agents. Ask them to take you through case studies of other property sales and to talk you through how the sale happened and how the results were achieved. Ask them why they use certain approaches and what they think will work best for your property and why. If they’re suggesting an auction, ask why? Ask for their best auction tips.
Setting a price is another important, but complex, decision vendors have to make when selling. You have two choices; work with a good agent to set a price or pay an independent valuer. Vendors often price their own homes based on what they need to repay debts or buy a new place, but in reality this bears no relation to the home’s actual market value. A reputable agent, with experience in the local area, will work with a vendor to arrive at a reasonable price, understanding all the relevant market forces. Or for just a few hundred dollars, you can get a sworn valuation from a qualified valuer, who has no involvement with the sale at all.
While decades ago, advertising your property involved sticking a “for sale” sign in the front yard, today it’s all about online advertising and the strategic selling campaign which accompanies it. The advertising portion typically includes professional photography, a comprehensive media campaign covering online and social and sometimes print media. Such work is absolutely vital. After all, a house on the market is no good unless the right people know it’s for sale. Then comes the actual sales campaign, which the agent puts together. It covers how the property should be sold, how it should be staged, how many opens to have, how negotiations are to be managed, rolling out and monitoring the advertising and lots more.
When asking “how much does it cost to sell a house?”, the main thing that comes up is real estate agents’ fees. So let’s break it down. First, there’s marketing and then the agent’s fee or commission.
1. Marketing costs
The seller covers the cost of promoting their property, through advertising and other marketing channels. An agent will recommend a campaign, which might include a board out the front of the house, listing on metahome24.com, photography for the listing, the creation of a floor plan, copywriting and press advertising. The average marketing campaign in the market costs between $3000 and $10.000.
2. Agents’ fees and bonuses
There are two types of real estate agents’ fees. There’s a flat fee, where the agent and seller agree on a fixed fee for the sale of the property and no matter what it sells for, the agent’s fee is set. Then there’s a percentage of sale fee, where the agent gets a certain percentage of the final sale price. The percentage of sale fee, or commission, can range from 1% to 5%, but is influenced by a number of factors, such as the property value and the competition for business among agents.
Bonuses are also increasingly being used across the world. These are effectively incentive bonuses, where the agent and seller agree on a percentage-based bonus if the property makes above the agreed reserve. It may be, say, 10% of the amount above the reserve. For example, a property expected to sell for $500,000, being sold by an agent on a 2% ‘percentage of sale’ fee and 10% ‘bonus’ fee, that goes for $550,000, nets the agent $17,000. This is made up of $11,000 for the percentage fee (2% of $550,000) plus a bonus $5,000 (10% of the $50,000 above reserve).
Preparing your house for sale
Presentation is key when preparing your home for sale, so don’t skip this step. Whether it’s a basic declutter and styling or a small renovation to increase value, discover what buyers are looking for in a property for sale and the common selling mistakes to avoid.
Renovations can be a great way to add value to your property when selling, but remember to make sure the potential sale price will justify the expense. Re-carpeting areas with worn floor coverings can be a very cost-effective way to add real spark. A fresh coat of paint inside and out can also make a home feel fresh and bright. Kitchens and bathrooms are obvious targets for upgrade, so consider freshening up these areas. Remember to keep the costs down, as these areas can be expensive to renovate and your outlay has to be justified in the sale price. Also keep colours and fittings neutral, so it appeals to as many potential buyers as possible and they are not put off by personality choices. Ducted air-conditioning could also be a consideration. While the initial outlay may seem high, it will increase the interest in your property and may help drive the sale price up.
If you’re selling a cheaper unit or apartment, think carefully about whether the cost of a renovation is worth the eventual sale price you will get. In some cases, the new owners may also want to do it themselves.
One of the best tips for selling your house is quite simple: present it in the best way possible. You need to remember you’re not just selling a home, you’re selling a lifestyle. Home staging is the term used to describe making your property as appealing as possible to potential buyers so it sells quickly. More than just clean and de-clutter, staging looks at the entire property as it is, then deciding what to store, what to keep, each rooms’ purpose, where to place furniture, accessories and artwork, repairs and upgrades, colours and re-painting, as well as what new things are needed, like towels and bed linen. It often involves hiring furniture for the duration of a sales campaign. You can pay a stager by the hour for advice – for about $100 an hour – and then either do the work required or get extra help.
The first impression your home makes on would-be buyers is vital and making sure it’s a good one when they first come through isn’t as hard as you think. Doing a de-clutter, re-arranging furniture into more inviting configurations and introducing pleasing odours can all come together to paint an inviting picture during an open. Another is to make yourself, family and any pets scarce. This allows potential buyers to relax as they inspect your property and gives them space to picture themselves in the home.
Being “emotionally prepared” for opens is also important, as having people wander through your home can feel like an invasion of privacy to some. Remind yourself it’s just part of the process and take some practical steps to help feel more secure. This might include removing super-personal items, like family photos, kids’ drawings and identifying documents, like diplomas, from the walls. It’s also worth remembering, not everyone is going to love your home like you do. If you hear bad feedback, remember while it’s your home, it’s just a piece of property to potential buyers.
After all the marketing and inspections, it’s come down to the big day – auction day. Auctions are governed by strict rules and these vary from state to state. As they have done through the lead-up work, your agent will run through the process of the day with you and help you understand what is about to happen. In most cases, the final open for inspection occurs just before the auction, then the agent will generally be legally required to disclose certain information about the property. What this is depends on which state you’re in.
Then it’s on to the part we all know, the bidding. If the reserve price is passed, the property will go to the highest bidder. If the reserve price is not reached, the property is passed in. If the property is passed in, then the highest bidder at that stage has the rights to negotiate a price with the agent and vendors.
There’s plenty to do when selling you property and there’s plenty of people with an opinion on how you can do it better! One of the best things you can do is engage an agent early and take their advice. Enlisting an agent early in the process gives them time to work with you to develop the best strategy to market your home and also help with such decisions as whether you should renovate and how much.
People make the mistake of looking to cut costs when choosing an agent or paying for marketing. Choosing the cheapest agent may not bring the best results and also may mean you don’t get the best sale price. The same goes for marketing. Choosing to cut costs could mean the people who should be seeing your property aren’t, so the few hundred dollars you save here may end up costing you thousands. Another common mistake is to aim too high with the selling price. This can potentially scare away buyers who will simply avoid your property because of price. Remember, you can always negotiate the price once a potential buyer shows interest. Do your research into your local market and have a long chat with your agent.
While everyone in the property industry has a theory about how long it takes to sell, the reality is a boring ‘ole month. According to those in the know, on average worldwide, it takes about 30 days from when you take the photos of your home until the date of sale. Once the home has been sold, settlement usually takes between 30 and 120 days, with land sales and sales to developers usually taking longer. Of course, every property is different and several factors influence how long it takes to get a sale. Price point, location and type of property are the three main things that will impact the number of buyers interested in the home and by extension, how long it takes to sell.
What to do after selling a house and next steps
The work doesn’t stop when the auction hammer falls and a sale price is agreed. This is the business end of selling your home. Now is the time to get your paperwork in order, finalise your finance and prepare to move. Find out everything that you need to do in the lead up to settlement day.
Once a property is sold, the next step is paperwork. First is conveyancing. It’s the process of transferring legal ownership of a property from one person to another and is required in every real estate purchase worldwide. It can only be done by licensed conveyancers and solicitors. The conveyancer or solicitor prepares a contract of sale for the property, which includes details of the owners, title, settlement dates, all conditions, what’s included in it, as well as the zoning certificate and sewer diagrams. The exchange of contracts is the formal legal process that creates a binding contract for the sale on agreed terms. The seller and buyer each sign a copy of the sale contract and exchange these documents, making the contract legally binding. Cooling off periods can apply.
So, what happens on settlement day? Settlement is the final stage of the sale, when the buyer completes the payment of the contract price to the vendor and takes legal possession of the property.
Cooling-off periods exist in most states and territories to allow buyers to back out of a sale at either no cost or only a small percentage of the sale price. How long this period lasts and what it will cost the buyer who backs out varies from state to state. Cooling-off periods don’t apply to auctions and there are other exemptions that vary between the states.
If you’re like most Humans, you’ll be selling your property before the mortgage has been paid off. You will have to arrange payment of the outstanding amount on your loan before settlement takes place. Arranging this can sometimes take a few weeks, so it’s important to start this process with your lender as soon as possible in the settlement period. While the process is straightforward if you’re selling for more than you owe, you should, if possible, avoid the situation where the sale price will not cover the outstanding amount on your loan. In this case, the lender can recoup the amount by asking you to provide it out of your own funds, which can include the sale of assets.
While the conventional wisdom is that it’s safer to sell a home first, then buy another, as it reduces your risk and means you don’t have to get bridging finance, it’s possible to do both at the same time, but it all comes down to research. You have to know the markets you’re buying and selling in well and work closely with your agent on both sides, as well as your lender, to pull off simultaneous property transactions, which are popular in spring. It all comes down to research and preparation. While it’s not common, in a rising market, it’s also possible to buy first and sell second. If the property you’re selling is desirable and will have a high level of demand, there’s no reason you can’t look to buy first.
You’ve sold and now it’s time to move on. While the idea of moving house strikes fear into the hearts of most, sparking memories of lifting heavy furniture and not being able to find toilet paper at the new place, it doesn’t have to be super-stressful. It all comes down to planning and taking advice from a few experts.
Here’s some advice from those in the know.
- Don’t automatically book removalists for a weekend, as a weekend move can often be more costly than a weekday.
- Pack an essentials carton, including things like remotes, bed legs, shelf supports, furniture keys and manufacturer’s instructions for re-assembly of items. It will save so much time!
- Prepare a survival kit, with a kettle, tea/coffee, breakfast supplies, special toys, chargers, school needs, pet stuff, bathroom necessities, medications, snacks, corkscrew, spare light globes, scissors, tools, toilet paper, garbage bags etc.
- Check if furniture will fit through doors and up and around staircases at the new property.
- Do a floor plan of the new place for furniture placement and measure spaces to ensure furniture will fit, particularly the fridge.
- If moving to a built-up area, secure reserved parking for the moving van in advance, to allow for easy unloading and access. Fines can be hefty.