selling a house
September 21, 2010 5:13 PM Subscribe
Help me tease out too many uncertainties and variables in selling a house.
We have a house (Footscray, Melbourne), pretty normal sort of a place, currently tenanted, that we're going to sell in the next few months. I'm a bit bamboozled by the options though and would like some collective wisdom applied, if I could beg your assistance.
Firstly, timing: we could sell it in late November, with tenants still in (but vacant possession), or wait until the tenants move out on 1 Feb and sell it before easter '11.
If earlier, it would save us maybe $2000 a month for maybe three months on bridging finance, the garden would still be quite green and lush, and we could move on with things.
If later, well the tenants furniture is a bit awful and conducting the sale is also an impost on them, I'd like to make a range of cosmetic improvements, I think that overall the house could be presented better (even if the garden's a bit drier), but we may need to hire furniture (and how much does that cost?).
The market could go up, or down, I'm not prepared to guess which way. So that's all unclear to me.
Secondly, which agent? We've got a good rental agent, and he's cheap, his commissions are extremely low, but he doesn't do much more than put the place on the internet and conduct inspections. He's pretty passive, not even thinking a sign out the front is worthwhile. The alternative is this mob, who do the full service thing, have a strong local presence, put a board up and generally present the house well. But cost maybe $20 000 more with final commissions. They would of course say they're worth it and will easily make that much more in the sale, but I don't trust real estate agents whatsoever or anything they say without hard data, they're parasites, looking out for themselves not us their clients.
As part of that, private sale or auction? Auctions are the done thing in Melbourne, but again they cost money and they come with a large degree of risk? Would our passive agent run a decent one? And if it didn't sell in November, what then?
For me this comes basically down to, do houses sell themselves and are people rational and methodical in house hunting, or are they taken by impressions and the vibe, created by advertising?
My wife and I are strongly towards the rational end, we don't believe in the bullshit and would readily look at houses that were presented in a plainer manner. But the industry disagrees with us, it tells us that it's all about the vibe, that creating an allure is what makes a place sell and sell for a lot more. They would say you've got to invest money to make money. But of course, they would say that wouldn't they? And they wouldn't undertake any research that contradicted that.
So is it true? Should we sell now, with a low key approach, in a tenanted house that's less than ideally presented, but really is exactly the same house that anyone would buy later, or should we spend tens of thousands of dollars and a bit more stress, and will we make tens of thousands more?
(if you could maybe indicate what country you're from when answering, and whether you're experienced in real estate matters, that would be awesome).
We have a house (Footscray, Melbourne), pretty normal sort of a place, currently tenanted, that we're going to sell in the next few months. I'm a bit bamboozled by the options though and would like some collective wisdom applied, if I could beg your assistance.
Firstly, timing: we could sell it in late November, with tenants still in (but vacant possession), or wait until the tenants move out on 1 Feb and sell it before easter '11.
If earlier, it would save us maybe $2000 a month for maybe three months on bridging finance, the garden would still be quite green and lush, and we could move on with things.
If later, well the tenants furniture is a bit awful and conducting the sale is also an impost on them, I'd like to make a range of cosmetic improvements, I think that overall the house could be presented better (even if the garden's a bit drier), but we may need to hire furniture (and how much does that cost?).
The market could go up, or down, I'm not prepared to guess which way. So that's all unclear to me.
Secondly, which agent? We've got a good rental agent, and he's cheap, his commissions are extremely low, but he doesn't do much more than put the place on the internet and conduct inspections. He's pretty passive, not even thinking a sign out the front is worthwhile. The alternative is this mob, who do the full service thing, have a strong local presence, put a board up and generally present the house well. But cost maybe $20 000 more with final commissions. They would of course say they're worth it and will easily make that much more in the sale, but I don't trust real estate agents whatsoever or anything they say without hard data, they're parasites, looking out for themselves not us their clients.
As part of that, private sale or auction? Auctions are the done thing in Melbourne, but again they cost money and they come with a large degree of risk? Would our passive agent run a decent one? And if it didn't sell in November, what then?
For me this comes basically down to, do houses sell themselves and are people rational and methodical in house hunting, or are they taken by impressions and the vibe, created by advertising?
My wife and I are strongly towards the rational end, we don't believe in the bullshit and would readily look at houses that were presented in a plainer manner. But the industry disagrees with us, it tells us that it's all about the vibe, that creating an allure is what makes a place sell and sell for a lot more. They would say you've got to invest money to make money. But of course, they would say that wouldn't they? And they wouldn't undertake any research that contradicted that.
So is it true? Should we sell now, with a low key approach, in a tenanted house that's less than ideally presented, but really is exactly the same house that anyone would buy later, or should we spend tens of thousands of dollars and a bit more stress, and will we make tens of thousands more?
(if you could maybe indicate what country you're from when answering, and whether you're experienced in real estate matters, that would be awesome).
Eh, I forgot.
As to the tenants and vacant possession - in situ tenants are often a feature not a bug. Are they amenable to having their lease broken (with compensation) upon sale? If so, then that's even better as they'll attract both private and investment buyers who want them to stay.
Personally, I'd be really nice to my tenants at this stage and keep them in the loop, drop their rent a bit in exchange for the effort of keeping the place tidy for potential buyers (blocks of showings rather than one offs if possible), and see what types of buyers start showing interest. Don't fret over their furniture.
It costs money, as a buyer, to be interested in a property. Normally buyers have to get and pay for the property inspection certificates and no buyer can afford to shell out a few hundred dollars on every property they are interested in.
So one excellent investment you can make as a seller is to procure and make available the inspection certificates yourselves and advertise the fact. This will draw in a much larger number of potential buyers. Also work out what energy efficiency improvements the new owner could do with the rebates etc calculated and provide that as well. These two things will make your place very buyer friendly.
posted by Kerasia at 7:05 PM on September 21, 2010 [3 favorites]
As to the tenants and vacant possession - in situ tenants are often a feature not a bug. Are they amenable to having their lease broken (with compensation) upon sale? If so, then that's even better as they'll attract both private and investment buyers who want them to stay.
Personally, I'd be really nice to my tenants at this stage and keep them in the loop, drop their rent a bit in exchange for the effort of keeping the place tidy for potential buyers (blocks of showings rather than one offs if possible), and see what types of buyers start showing interest. Don't fret over their furniture.
It costs money, as a buyer, to be interested in a property. Normally buyers have to get and pay for the property inspection certificates and no buyer can afford to shell out a few hundred dollars on every property they are interested in.
So one excellent investment you can make as a seller is to procure and make available the inspection certificates yourselves and advertise the fact. This will draw in a much larger number of potential buyers. Also work out what energy efficiency improvements the new owner could do with the rebates etc calculated and provide that as well. These two things will make your place very buyer friendly.
posted by Kerasia at 7:05 PM on September 21, 2010 [3 favorites]
For me this comes basically down to, do houses sell themselves and are people rational and methodical in house hunting, or are they taken by impressions and the vibe, created by advertising?
I study markets and it's a given that every so often buyers do act irrationally. I don't know the conditions of the Aussie real estate market but it might be worthwhile to check out the price-to- rent ratios in your area. Are they at historical highs? If so, the chances of a market fall may be yet another factor to consider.
posted by storybored at 7:54 PM on September 21, 2010
I study markets and it's a given that every so often buyers do act irrationally. I don't know the conditions of the Aussie real estate market but it might be worthwhile to check out the price-to- rent ratios in your area. Are they at historical highs? If so, the chances of a market fall may be yet another factor to consider.
posted by storybored at 7:54 PM on September 21, 2010
Melbourne is currently experiencing record-breaking population growth, and Footscray is still in the process of gentrifying. There is no way that your house will sell for less next year than it will this year. Not gonna happen.
posted by flabdablet at 4:54 AM on September 22, 2010
posted by flabdablet at 4:54 AM on September 22, 2010
Wilful I wouldn't be too worried about the market moving in any particular direction between Nov and Feb. We had a GFC and it barely made a move from its steady growth; something that would have a large adverse effect on one of the "hotter" Melbourne suburbs' property prices would be unprecedented.
Kerasia has offered terrific advice. One other thing to remember is that in Aus, the majority of houses are sold in the summer months, especially before December. This said, I'm sure the difference would be outweighed by a thousand other considerations.
Regarding agents, I totally agree with you about their overpriced services. I haven't used these guys - and Kerasia may have some thoughts - but lawyers real estate offer to sell for a flat fee (not commission) of $4400. That also includes conveyancing and other bits and bobs, which set us back over a grand last year when we were buying so it's gotta to be worth considering (and I know the people we bought off paid the useless seller - an imposition not a help to the sale - a damned sight more than that.).
posted by smoke at 5:19 AM on September 22, 2010
Kerasia has offered terrific advice. One other thing to remember is that in Aus, the majority of houses are sold in the summer months, especially before December. This said, I'm sure the difference would be outweighed by a thousand other considerations.
Regarding agents, I totally agree with you about their overpriced services. I haven't used these guys - and Kerasia may have some thoughts - but lawyers real estate offer to sell for a flat fee (not commission) of $4400. That also includes conveyancing and other bits and bobs, which set us back over a grand last year when we were buying so it's gotta to be worth considering (and I know the people we bought off paid the useless seller - an imposition not a help to the sale - a damned sight more than that.).
posted by smoke at 5:19 AM on September 22, 2010
Rule of thumb: improvements/renovations should reap 5x the cost upon sale.
I'm puzzled at this. I would consider any improvement to have subjective value to the next person coming along. They may have chosen a different material or color or any number of factors that make it less than ideal. I've heard that you are lucky to get half of what you put into an improvement, but some do better than others.
posted by dgran at 1:26 PM on September 22, 2010
I'm puzzled at this. I would consider any improvement to have subjective value to the next person coming along. They may have chosen a different material or color or any number of factors that make it less than ideal. I've heard that you are lucky to get half of what you put into an improvement, but some do better than others.
posted by dgran at 1:26 PM on September 22, 2010
Response by poster: cheers folks, especially kerasia.
I am in fact a bit more experienced in this than my post may have indicated, but I appreciate the confirmation of some of my thoughts. FYI, our rental agent is "Half a percent" real estate, which is an indication of their approach to sales, they only take half a percent, rather than the 2.5% which is common. I recommend them. Except they are inner south east (St Kilda) focused, don't know anything about Footers.
My point about what the market is doing between spring and autumn is that it could go up or down, that's not really a factor in our thinking, because it's too big an unknown.
As for improvements, I wasn't thinking major renoes, really just a repaint, repolish the floorboards, not more than a few thousand dollars tops - but things you can't impose on tenants.
kerasia, Victoria doesn't really have a system of inspection certificates. if people want to get a tradie in to look at a place before sale they're welcome to, that's common, but there is no formal system guaranteeing anything.
Next year there should be mandatory energy efficiency ratings, and our house would stack up well, I've insulated it well, water tank, solar panels etc. But I could just point these out in the sale docs.
posted by wilful at 5:00 PM on September 22, 2010
I am in fact a bit more experienced in this than my post may have indicated, but I appreciate the confirmation of some of my thoughts. FYI, our rental agent is "Half a percent" real estate, which is an indication of their approach to sales, they only take half a percent, rather than the 2.5% which is common. I recommend them. Except they are inner south east (St Kilda) focused, don't know anything about Footers.
My point about what the market is doing between spring and autumn is that it could go up or down, that's not really a factor in our thinking, because it's too big an unknown.
As for improvements, I wasn't thinking major renoes, really just a repaint, repolish the floorboards, not more than a few thousand dollars tops - but things you can't impose on tenants.
kerasia, Victoria doesn't really have a system of inspection certificates. if people want to get a tradie in to look at a place before sale they're welcome to, that's common, but there is no formal system guaranteeing anything.
Next year there should be mandatory energy efficiency ratings, and our house would stack up well, I've insulated it well, water tank, solar panels etc. But I could just point these out in the sale docs.
posted by wilful at 5:00 PM on September 22, 2010
You know, right, that if you repolish the floorboards you're pretty much guaranteed to get a buyer whose first move will be installing wall to wall carpeting - and they will hate your choice of paint color, too.
As long as the house is structurally sound, and doesn't leak air or water (and from what you've said about insulation, it is and it doesn't) then I can't see how you spending money on reno benefits either you or your buyer.
posted by flabdablet at 11:43 PM on September 22, 2010
As long as the house is structurally sound, and doesn't leak air or water (and from what you've said about insulation, it is and it doesn't) then I can't see how you spending money on reno benefits either you or your buyer.
posted by flabdablet at 11:43 PM on September 22, 2010
Victoria doesn't really have a system of inspection certificates. if people want to get a tradie in to look at a place before sale they're welcome to, that's common, but there is no formal system guaranteeing anything.
Inspection certificates are not mandatory, sure. But would you buy a house without having a qualified building inspector (not just a tradie) checking it out for structural integrity, pests etc? I don't and nor do most intelligent buyers. My point regarding certificates was to get them yourself from, say, the HIA or the Archicentre (who offer a $15k guarantee) and save potential (intelligent) buyers the cost of individually arranging for the same inspection. If you provide the report yourself you will get you many more potential buyers.
posted by Kerasia at 2:14 AM on September 24, 2010
Inspection certificates are not mandatory, sure. But would you buy a house without having a qualified building inspector (not just a tradie) checking it out for structural integrity, pests etc? I don't and nor do most intelligent buyers. My point regarding certificates was to get them yourself from, say, the HIA or the Archicentre (who offer a $15k guarantee) and save potential (intelligent) buyers the cost of individually arranging for the same inspection. If you provide the report yourself you will get you many more potential buyers.
posted by Kerasia at 2:14 AM on September 24, 2010
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Do you want a complicated sale for the best price, or a simple sale for an easy to get quickly price? Depending how you choose to sell, you may be able to get simple sale and best price together. Take things calmly and do your homework and it could turn out nicely.
Forget the rental manager. You could do a better job yourselves probably. The alternative is this mob, who do the full service thing, have a strong local presence, put a board up and generally present the house well. But cost maybe $20 000 more with final commissions. ... looking out for themselves not us their clients
You know those full page, multi property real estate agent ads in your local papers? The property owner is paying for them (at an inflated charge for the actual space) but they are really advertising the agent. Don't take on a sales contract with an agent with advertising included. You can always change your mind later if you need to.
Should we sell now, with a low key approach, in a tenanted house that's less than ideally presented, but really is exactly the same house that anyone would buy later, or should we spend tens of thousands of dollars and a bit more stress, and will we make tens of thousands more?
Rule of thumb: improvements/renovations should reap 5x the cost upon sale. So, if you spend $1000 updating the bathroom sink, taps, paint and tiles for instance it should achieve $5k value on your sale price. Don't spend $10k on something that's not going to reap $50k upon sale (excluding necessary repairs). Certainly don't do anything radical to imprint style on the place. Clean and well maintained is enough.
private sale or auction? I'm not a fan of auctions either for buying or selling and many real estate pundits query the increased the popularity of auctions and who they actually benefit. Check out how comparative properties in Footscray are being passed in at auction I think the real estate section of The Saturday Age has the previous weeks auction results.
They would say you've got to invest money to make money. But of course, they would say that wouldn't they? And they wouldn't undertake any research that contradicted that.
I agree with you and your wife about both the rational way of buying and the bullshit the middle-man industry tries to push. As to your point about research there is a renegade real estate professional who is an active in consumer protection for buyers and sellers against the agents. His advice frequently enrages the industry because it discloses the bullshit. He has some free material for home sellers and buyers, and the agencies that operate under his name have been specifically trained in ethical business practices. You could at least compare their terms and conditions with the agents you linked to above.
Check out some of the for sale-by-owner websites, have a think about how much work you want to do yourself, talk to at least four different agents about selling your house and Do Not Sign Anything until you understand all the options.
Hope some of this helps.
posted by Kerasia at 6:45 PM on September 21, 2010 [2 favorites]