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I have said that virtually all sellers want the golden three outcomes when they sell. The problems of sellers often stem from a lack of understanding of the necessity of ranking those three desired results in order of importance.
Of course, you want all three. But can you rank them in importance? If you can, it helps enormously in your decision-making process. Your final choice of strategy is easier to choose when you know what outcomes are particularly important to you.
Just to remind you of the sellers' three “wants”:
- Best possible price
- Shortest time
- Least inconvenience/preservation of privacy
First, let's expand on each of these desires. What do they realistically mean when we are selling?
VERY BEST POSSIBLE PRICE
What do I mean by very best possible price? This certainly opens a vigorous discussion!
In my experience there are two prices:
a) Vendor “happy” price
Many vendors are really happy with a “fair” price. They have checked the neighbourhood. They don't want to undersell. There becomes a price range with which they are “happy”. Phrases are used such as “I know that I have been offered a reasonable price”; “That suits me”; “Little inconvenience (didn't need to open the home for inspection)”; “I'm happy that selling my home is now all behind me”; “It was a quick sale”.
I am not suggesting that they sold for a bargain! But the niggling question doesn't arise in these sellers' minds – “would someone else have paid more”? Or, “Was that the very best possible price?”
b) Very best possible price
Sellers often think: “I want to satisfy myself that this is the very best price that is available. The best that we can possibly get.”
We call this price the market premium figure. In buoyant times, this figure could be well above what the seller may have actually dreamed of! A record. In tougher times, it may be even less than the seller had feared – but, at the time of signing, the seller was satisfied that they couldn't do better.
SHORTEST TIME
Selling a house is not always a bundle of fun. If you always have your home looking like an advertisement for Vogue Living, then this won't concern you as much. So often when a sale has been completed the owner will say: “Thank goodness, we can now live normally and not have to wake up every morning and make sure everything is in place.” It is an effort (for most!)
Many sellers simply hate the uncertainty of not knowing what is likely to happen in the near future. Suddenly, we are not sure how long we are going to be living here. How come people don't seem to want this house we have so beautifully turned into a gorgeous home? Is it the price? Is it the agent? Is it the property? Is it us?
Tension builds. Generally this happens when the early expectation of activity is not being realised.
But then other pressures may be building. There are situations where you may have already bought and time becomes critical. Where transfers are involved, speed of sale often becomes the dominant requirement. The alternative is so often leaving one half of the family to supervise the sale (very difficult for that party). In this case, a speedy sale suits everyone. If the property is left empty, it provides its own set of problems. Where a property is empty, the shortest time on the market is desirable because no matter how diligent you are with mowing the lawns, watering the garden, “airing” it, a home empty for some time gets that unwanted “feel”.
Your agent should have access to “days on market” information. Days on market are the average number of days a property takes to sell – from signing the selling agreement to finalising the contract. Of course, this information is only an “average” and this average will vary according to the selling method that you choose. It will also vary from area to area.
Different strategies impact on “days on market”. If speed of sale is important then the attending agent will have already defined the time implications inherent in the different selling strategies.
LEAST INCONVENIENCE/MOST PRIVACY
“I don't want to be inconvenienced.”
“I want to retain my privacy; I don't even want the neighbours to know.”
“I don't want any publicity.”
It is possible that these may be your most important criteria. Too often agents are obsessed with price and assume that every seller must get the best possible price. They don't LISTEN to what the owner really wants. It needs to be recognised that price is sometimes not the top criteria.
Some years ago, I received a call from a very frustrated salesperson in one of our offices in a provincial city in Queensland. She was selling the home of a very good friend of mine, a doctor with a large personal following. He refused to have a “For Sale” sign or any identifying advertising. I was asked to call and use my powers of persuasion “to make him see sense and to advise that he must auction as it's in a prime position”, to quote the salesperson. On making the call he explained his position. He was not in a hurry to sell and had recently taken a partner into the practice and, as in all country cities, rumours abounded that he was going to leave the practice. The rumours were true but had he put a sign on his home, patients may have transferred to other doctors and his practice would have decreased in value. So getting the top price was not the major criteria in this case. A “quiet sale”, which rarely gives the best possible price, suited this person and his circumstances. His practice was worth more than the difference in the sale prices of his home. Privacy counted more than price and speed of sale was not essential.
I remember another occasion where a couple were “owner building” only two doors from their own home. They needed the money from their current home to finance the building but were reluctant to move too far away from their new project – they needed to check on sub-contractors etc. daily. We had two offers on the property, one from someone who wanted to live in the house and offered a 60-day settlement. The other offer came from an investor who offered $10,000 less, a seven-day settlement and a nominal rental for the four months they estimated it would take to complete their new home. On paper the first seemed the best offer but, on analysis, looking at the convenience of no move, no changing of school for the children and the ability to continue close supervision, the second was more acceptable. It suited the investor with less outlay and the ability to negatively gear for the first year. As is the case in all successful transactions, it was a win-win situation. Convenience counted more than price.
So you see privacy and convenience may rank ahead of the “market premium”. Are there things that are more important to YOU than top price?
As explained above, these three desires are rarely compatible. That is, it's very difficult to achieve all three – although I have included in our case studies the story of one vendor who did! (See Case Study No. 6.) You can be lucky and get all three of those components but if this is to happen you'll know very quickly as with no signs, no advertising, no open homes etc. you are relying on the agent already knowing of the likely buyer.
Can you work out what's most important for YOU and then rank them as on the next page? If you cannot, then it is likely that your selling experience will be frustrating and contain unnecessary reality shocks.
At this stage it is imperative that you put time and thought into defining and ranking your desires in order of priority to you.
- Is obtaining a premium price your most important criteria?
- Is it necessary, for whatever reason, to get a sale in a defined and short period of time?
- Are you more concerned with protecting your privacy and selling with the least inconvenience, than with either of the above?
Think about it before reading on.
The time that you take right now to think and then prioritise what's most important to you, will determine how happy and satisfied you will be at the conclusion of the sale. This choice will reveal to you which selling strategy will be ideal for you in contrast with one that will merely frustrate you. Choosing the method of sale that suits your priorities is of utmost importance at this time.
Now you've prioritised, find your chosen combination among the next seller profiles, read and inwardly digest! Do you really need to read the profiles that are not relevant to your situation? Maybe not.
SELLER PROFILE A
If your ranking in order of importance is...
This seller wants the premium price – “satisfied I couldn't possibly do better” – and is prepared to do all that is necessary to get it. He or she is not at all worried about inconvenience or publicity. Timing is more important than inconvenience/publicity.
So the premium price is most important. The key question is whether to take the property to the market with the premium price set and announced, or to take it to the market without a price.
Taking it to the market with a public premium price means your agent will be dealing (at the start) with potential buyers who immediately react, “that is a very high price”. That is a situation familiar to most agents. A premium asking price often immediately creates a negative response with buyers, inhibiting the development of not only an emotional attachment to the property but even preventing them seeing it. The first few weeks of selling are critical and it is important that the balance between a price that will <M>attract buyers and a price that will <M>deter buyers is determined at this time.
This is a situation where marketing without a price should be seriously considered. This way the buyers commit to a price before you, the seller, need to react. So, if you are going for a premium price, don't frighten away the buyers by disclosing that ambition; it's probably best to remove the price altogether. You are then able to “listen” to the market before deciding how firmly you will drive your premium price expectation.
Marketing without a price invariably results in the auction or tender process. An advertising budget is required and the property will be open for inspection (since privacy is the least important factor). The key task will be to find a number of buyers and allow competition to give you the chance of a premium price. Certainly, if the advertising budget is sufficient, it could well find “out-of-district” buyers that often set new price levels when they move into an area new to them.
The price and time priorities were brought home to me with the very first auction that I conducted as an auctioneer. The salesperson briefed me a few days before the auction and the news wasn't good! The owner was adamant that he would not sell below $90,000. While buyers coming through talked mid to late $70s, the reserve was set at $90,000 (surprise, surprise!). Very nervously, I started the auction. Eventually the bidding reached $78,000. I approached the owner, but he wasn't interested at that price so I passed the property in to be offered to the highest bidder at the reserve price. The bidder wouldn't pay more so it was back to the vendor who, to my absolute horror, said he would now withdraw the property from sale. I felt that maybe my career as an auctioneer was going to be VERY brief. He then explained that he was interested in purchasing a business, but unless he could get $90,000 or very close, he couldn't proceed with that venture and would therefore not sell his house. He thanked Carol (the salesperson) and myself profusely, explaining that in three-and-a-half weeks he had, with the increased activity of the auction, established “fair market value”. It just so happened that it wasn't enough for him to go ahead with his new venture. He felt the advertising money was well spent. As he said, if he had marketed it with a price, he may have established what someone wouldn't pay ($90,000). But it would have taken much longer to find out what someone would pay, as the $75,000 to $80,000 buyers probably would not have even considered looking at his property. No sale, but a very satisfied customer.
So price and time were of equal importance to him. While no sale was achieved, the exercise was successful. He realised that his very important premium price couldn't be achieved and he found that out in the shortest possible time.
Seller Profile A recommendation:
You will probably find that an auction with an advertising budget that identifies your property will suit you best. If you are in an area where you feel this option may not be at all appropriate, than market with a premium price. Advertising is the best support you can give to your ambition for a premium price.
SELLER PROFILE B
If your choice is...
The highest priority for non-inconvenience/privacy with the least interest in price is, as you might imagine, unusual and generally involves some special circumstances. Christopher Skase sold his Brisbane mansion in 24 hours, in maximum secrecy and fled! Privacy and time was obviously more important than price! But there are many other honorable situations when the circumstances dictating the decision to sell are so intense and painful that the desire is, “get me out of here”. Even opening for inspection is not on. Here the “vendor happy” price is all the sellers are thinking of – indeed they could well be prepared to take a bargain price to get it all behind them. (I know many people won't believe me, but agents hate selling for bargain prices, even when vendors don't care and just want out. It's not what we pride ourselves in achieving.)
Probably neither open homes nor any advertising that might identify your property will be chosen. Possibly you may even decide against a “For Sale” sign.
In this case, do you have one agent or do you have it listed with lots of agents? If agents sense that price is relatively unimportant for a seller, there is sure to be an intensity of activity as they contact buyers. All buyers love bargains and it's amazing how buyers' priorities change dramatically and become unimportant if a property is really keenly priced.
But if your privacy requirements are really essential, you may not want to have to communicate with a lot of agents. A sole agent would be ideal – far more private. Be sure that you select an agent that will be active and recognise that time is also important to you.
Seller Profile B recommendation:
A sole/exclusive agency with a price will retain your privacy and if the agent cannot immediately identify a buyer then you may need advertising that does not identify your house, yet refers to the attractive price. Alternatively you could also ask your agent to have just one “open house by invitation only” where his/her current buyers could be asked to inspect your home at one designated time (no signs, just privately invited). If this doesn't result in a sale then you will need to revert to non-identifying advertising.
SELLER PROFILE C
If your selected choice is...
Our sellers want to get the best possible price but want least inconvenience and privacy –“we have plenty of time to sell”. Time is not a priority. Many sellers are in this category. In fact, if you asked all sellers to rank their priorities, our guess is that the majority would select this combination.
Many of these sellers' willingness to offer their property to possible purchasers would have been initiated by an agent contacting the owner with: “If I got you a really good price, would you sell?” Here we have a relatively non-committed vendor who, if no attractive offer is forthcoming, will be happy to stay living and owning the property. Their only reason for selling would be the premium price offered. They are not interested in advertising in any shape or form, don't want to be inconvenienced and speed of sale doesn't even enter the equation - this is almost the perfect sale for any owner!
It goes like this: “We have time on our side, so we can wait for a premium price; “We're not in a hurry”; “Hopefully, the agent will find the right buyer and, with his negotiating skills, bring about a premium price”.
Very logical. Many agents wrestle with what advice to give in these circumstances. The temptation is to list the property with a premium price and hope that the perfect buyer will “come”. Perhaps your agent is already talking to the perfect buyer. But what if they balk at the price? How do the agents keep finding new prospects while maintaining privacy – particularly if time is unimportant and the sales process becomes drawn out?
With this profile, you may not have wanted or accepted the idea of a specific advertising plan. However, your agent may well be reluctant to spend some of their own money publicising your property under these circumstances. At some stage, activity starts to slow. As activity slackens so do your chances of getting the best price. It may be necessary in those circumstances to consider embarking on a planned advertising programme if they really wish to sell.
Due to the relative importance of privacy, using one sole agent will be beneficial for you – especially an agent who understands your desire for a premium price and privacy. As the sales process continues, how do you review the premium price ambition? Is time still as unimportant? Time may not have featured prominently in the early stages of marketing but, as the weeks go by, frustration sets in and the speed of sale becomes important.
So the desire of sellers to secure the premium price may gradually overcome their concerns about inconvenience and privacy. An advertising campaign, combined with open homes, would now give confidence to the seller that a more determined effort is being made to find the right purchasers. This happens when the seller is now not so sanguine about the time being taken. Waiting is no longer as attractive as doing something positive. The most positive thing that one can do is to be proactive in inviting potential purchasers to come directly to your home using the open home method. This is easier now that more and more purchasers are going to open for inspections' properties rather than first going to a real estate agent. At this stage you may even decide, rather than publicly reduce the price in order to effect a sale, that you will remove the price and offer the property by auction. The sacrifice of some of the “privacy” may be worth the opportunity of achieving a premium price. Remember that you CAN change strategies if your priorities change.
At this time vendors often regret not being more active in advertising the property at the early time of listing when it would have had the advantage of a property fresh to the market.
Seller Profile C recommendation:
Certainly start the process by listing at a premium price with one agent in order to keep your privacy. Be prepared to change strategies if necessary to achieve the premium price and even to forgo some privacy. If the above strategy doesn't effect a satisfactory sale, reconsider your selling strategy and again consider non-identifying advertising that still protects your privacy but may attract buyers.
SELLER PROFILE D
If this is your order of priority...
Our sellers here have the same overwhelming desire for privacy as our sellers in Profile B. But now, price is more important than it was then. Now, time is least important. Perhaps the emotional circumstances being experienced by our sellers are not as intense. Again, maybe the overriding desire for privacy is more a reflection of the seller's personality than any specific circumstances that led to the decision to sell. However, the greater desire for a premium price (than seller profile B) leads to some significant issues. It raises the question of marketing with or without a price.
You can market with or without a price. Due to the relatively higher importance of a premium price, sellers will be more interested in a marketing campaign that incurs the least inconvenience. An often adopted technique for these sellers is for their property to be advertised with no “open for inspection” arrangements, and no address, with enquiries being directed to the agent – who will qualify purchasers before undertaking a personal inspection with them.
An exclusive agent will be the preferred appointment. Some sellers with this profile don't even want a “FOR SALE”' sign on their property, fearing unwanted attention from their neighbourhood.
Thus, if your desire for privacy is such that you will not even consider identifying advertising or a sign, you will need to be patient. With no advertising or signage, it may take some time to effect a sale at an acceptable price. You must realise that you are really, in effect, waiting for a suitable buyer to “walk in” to the office or for your agent to stumble across someone wanting your property and willing to pay a price acceptable to you.
One danger of a selling campaign where privacy is the overwhelming requirement and yet premium price remains a key ambition is that, as time passes, sellers often become frustrated. Hopefully, that frustration does not lead to the seller suddenly sacrificing “price” to the point of accepting a “bargain price”.
Seller profile D recommendation:
Appoint one agent and market with or without a price. If the lack of activity becomes too frustrating you may need to review your priorities or your asking price (or both!).
SELLER PROFILE E
Maybe this suits you best...
You want action. You don't care about inconvenience and you don't want the price to be sacrificed, but speed is the overriding consideration.
It can happen for all types of reasons. Not just transfers or another purchase but just the personality of the sellers. “I've made up my mind to sell. And I want to get on with it. Yet I don't want to sacrifice a premium price opportunity.”
Sometimes, the decision to sell is made after months of questioning, but once the decision is made, the sellers here are ready for action. These sellers really respond to promotion and marketing without a price. “Let's promote the availability of this property to as wide a range of buyers as possible.”
This is what all frustrated buyers are continually looking for – brand new listings!
Almost certainly, here you will be supporting newspaper advertising, with the property opened for inspection. If the price is removed, this lack of the published price expectation as the dominant priority will result in a better chance of buyers becoming emotionally attached to the property before price becomes a hindrance or a problem. People viewing the property will be forced to compare and judge the property on the merits of the property, not on the price quoted. “We want this property – now what is the maximum price I can either afford or be comfortable in paying.”
Most likely this campaign will result in an auction (which is just another term for bringing interest to a head within a specific time frame).
Here, you will be increasing and broadening interest by removing the price. In doing so you are increasing the opportunity to achieve a premium price. The overriding priority, speed of sale, is also achieved with the “urgency” that an auction promotes in buyers.
The key here is marketing without a price. Price has been removed as an impediment to the timing process. Yet, the expectation of a premium price has been maintained. Certainly, at the end of the campaign, you should be able to say, “I believe I have achieved the best possible price that is available” – our definition of premium price.
The whole campaign from agent selection to sale of the property could be as little as one month to six weeks. In fact, it could be less if time is really critical. This could be dependent on the exposure and content of the advertising campaign selected.
Here's a story ...
I had the situation when someone was transferred and wanted a sale before he left 10 days later. I checked to see if anyone in the office already had a buyer who could be interested, with no success – except for those who had a buyer who would be interested in a “bargain”. As getting an acceptable price was fairly high on his list of priorities, selling at a bargain price was NOT an option, so we talked “auction” and decided that the urgency of this situation could be used to his advantage. So, on the following Saturday, there was a prominent ad and photo that couldn't be missed. The heading said it all: “If you're in a hurry to buy, this owner is in a hurry to sell. SEVEN-DAY AUCTION.” It created huge interest. We “opened” it each day and auctioned it the following Saturday, and as is nearly always the case where there are multiple buyers, the property sold above reserve and the owner was on his way. Of course, this wouldn't work in every situation but the need dictated the circumstances.
Seller Profile E recommendation:
The method most likely to achieve these goals is auction with an advertising budget to broaden the range of buyers viewing the property. It could be marketed with an exclusive/sole agency and without a price, but the importance of timing will be better satisfied by the auction process.
SELLER PROFILE F
When our seller wants...
The sellers who fit this profile may have already experienced the selling process before and been frustrated by all sorts of issues. “I don't want to get caught again”; I don't want the uncertainty this time of not knowing when I am going to get this sale behind me”, and so on.
Nevertheless, the importance of privacy could mean a reluctance to have open home inspections and even advertising. The lower ranking of price means the sellers will be prepared to have the reasonable price expectation presented as the major advantage for potential buyers. In this case, appointing one agent will probably be appropriate and the advertising will no doubt concentrate on the value of the property.
As with the decision for privacy, the importance of buyer activity could well encourage the support of an advertising campaign – particularly if problems in selling before related to buyer inactivity. Here, any advertising is more likely to have “inspection by appointment”. Perhaps the element of speed will negate privacy ambitions so that open for inspections may even be considered in order to achieve the widest coverage. A sole agency will be important to maintain control and the privacy our sellers want. Possibly fulfilling the first two desires will probably inhibit a high price outcome.
Seller Profile F recommendation:
If premium price is not as important as your desire for speed of sale and privacy, then an exclusive/sole agency would be preferred with an advertising plan concentrating on the attractive price/outstanding value. You will probably prefer that the advertising does not identify your property with an address.
SUMMARY
I have tried to define many of the different circumstances you may experience when selling.
I believe the best strategies can only be developed once you know the priorities of your critical elements.
What sometimes happens is that circumstances change during the campaign and so your priorities can change. Probably the most common change is a change of priority for the speed of the sale (see case study no. 5). Again and again a property is put on the market with speed of sale not a contributing factor then – guess what – the seller finds a property that they “love”. Whether they buy it or just hope “no one else does before they are in a position to secure it”, suddenly “shortest time” jumps to the top of the priority list.
Perhaps the price of the next property you want means that it becomes more important to achieve the premium price for your home. Perhaps that was not as important before. Perhaps you lose your concerns for privacy – “I'll now do whatever is necessary” and so on.
When this happens please, please take your agent into your confidence. If selling with a price, you may decide to reduce the price in order to attract new buyers. If you do decide to do this, ask your agent to contact everyone who has already seen your home (and hasn't yet bought) and advise them of the new price. You may get one or two of them back again for a second inspection. Sometimes, agents don't remember to do this.
Just remember changed circumstances probably mean a changed strategy.
This is an excerpt from Myf Porter‘s Guide to Selling Property. Read about Myf Porter.
Excerpts from Myf Porter’s Guide to Selling Real Estate:
