If you are thinking about selling your property, here the Top 4 tips for maximizing the return on your investment.
Know Your Market
Market research is critical to maximizing your real estate return. Many people sell their property based solely on personal timing, such as starting a job in another area or moving into a new house and choose to sell irrespective of what the local housing market is doing. The savvy investor however, will buy and sell property after analyzing the local market conditions.
Unlike the share market, knowing your local property market can reap big dividends for the investor. The share market is filled with savy professional investors who know how to read signals and respond in advance to any change in the market. This action is called a "predictive response". For example, a simple inflation figure can cause shares to tumble in value as the professionals know that this will lead to an interest rate rise.
The residential property market, filled with non professionals, however, operates responsively, rather than predictively. Hence, when an interest rate rise is announced, only then do house prices go down. Reading the financial section of your newspaper, or purchasing money magazines, will guide you to when the next interest rate rise will occur. If you sell before the next rise hits, you can miss the drop in values.
Reading your local newspaper will also indicate whether your local area is growing or shrinking. Headlines such as “Another Widget factory shuts it doors” should ring alarm bells that there is going to be a flood of houses about to come on to the market as people move out of the area in search of work. This will lead to deflated house prices and should signal for you to sell straight away.
On the other hand, headlines such as “Massive Industrial Park Expansion” will indicate growth in the area, and suggest you should hold on as the new local jobs result in more people seeking houses in your area.
Choose your Real Estate Agent Carefully
Choosing the right real estate agent can make or loose you thousands of dollars. When choosing an agent, you should first check is that the agent is registered. Californian residents can check they are registered with the Californian Department of Real Estate here. If you live elsewhere, simply look up your local state property department website for more information. Secondly, the real estate agent should have a substantial presence in your suburb and work full time. A part time real estate agent means you'll only have part time marketing of your property.
A good real estate agent should be able to provide:
- A list of recent sales in your suburb, complete with listing price and sale price
- A detailed marketing plan for your house, including how it will be advertised on the internet, newspaper, magazines and possibly radio
- A graph of what advertising medium buyers used to find houses in your area
- Access to premium local internet advertising sites
- A flow chart of the selling process
- A document detailing how the agent commission is calculated and any other fees
Presentation Matters
Having the "For Sale" out the front of the house covered up by over grown weeds creates a bad first impression. The bad first impression means that both less people will inspect the property and the offer that you do get will be lower. While the idea of mowing your lawn and gardening on a weekly basis while you are trying to sell is not a new one, I see houses for sale with over grown gardens, time and time again.
So what are some other presentation tips?
A neat and tidy house is a good first start. Grab all your old bricker brac and put it in a box out in the shed, before the "For Sale" sign goes up. Clean and tidy houses are much more inviting to look around and appear to be much larger than cluttered houses.
Finish any renovation projects. A half painted house or half installed kitchen wins you no favours in the eyes of the buyer. It means work for them when they move in. Try to make the house look like there is no work to do when the new buyer moves in. Half finished projects will lead to claims by the buyer, when the house price is being negotiated, to clean up the mess that you started.
There are loads more presentation tips, so check out the article “Tips for Presenting Your House” for more information.
Don't Start Too High, or Too Low
Choosing how much to sell your house for starts on day one, when you decide how much you would like to list your property for. Getting a good price is a balance between getting a lot of people coming through the property, and not inviting lots of substantially under value offers.
If you introduce your house to the market say, ten percent to high, then this will put a lot of potential buyers off from even looking through your house. On the other hand, if you list your house at the desired selling price, then you will only invite low offers. High listing prices scare buyers off and often these buyers won't come back even if you drop your house price to within their range.
So how do you choose your listing price? Start with the desired selling price in mind, add on the agent's commission, then with the aid of the real estate agent, add the average percentile difference between the listing price and the selling price. It is critical that you find out this information from real estate agents, and good ones will be only to happy to help.
For example, if you would like to sell your house for $275,000, the agent has a 2% commission, and the average difference between selling price and listing price is 2%, then:
To cover the agent's fees = 275,000 x1.02 = $280,500
To get the desired price = 280,500*1.02 = $286,100
You will need to list your house for around $286,000, in order to achieve your goal of around $275,000. While this is good in theory, you then need to match it against the listings for similar houses in your suburb to ensure it is still attractive for prospective buyers.
Happy house selling.
