Know your price before the auction. Don’t wait until the stress and pressure of the auction before making your mind up on what your bottom sale price or top dollar is.
If you are selling your property it is vital that you understand what it is worth. Sounds pretty basic, doesn’t it? But this is actually quite hard to do, especially as so many property owners get quite emotional when it comes to selling their home sweet home.
So how do you do it? Firstly, most people get a few agents in to give an appraisal. Each state has its own rules about the process the agent must go through to arrive at a suggested sale price. Fundamentally you can expect the agents to return with a list of comparable sales that demonstrate what they think your home is worth. But you need to remember that there is often an element of flattery in these comparisons, as the agent at this stage of the game is pitching for your business. So try to remain level headed as you consider these recent sales and whether you can truly expect something similar or better.
If you watch Selling Houses Australia, you will see that Andrew Winter takes his difficult vendors through a property that is currently for sale and competing with their home. This is an important part of understanding value as this is shining a spotlight on what buyers today are looking at right now, instead of concentrating on history. Most markets are pretty dynamic, so you need to get an understanding of the situation at the time you are planning to sell. Buyers usually have a choice. Based on what else is available for them to buy, would they choose your home at that price?
Lastly, when determining what your property is worth, you need to listen to the feedback from buyers that are inspecting your property. Now, hopefully, you have appointed a gun agent who has been able to attract a lot of buyers to the viewings. And this gun agent should have been able to press these people for their thoughts and also be able to read and interpret the nonverbal communication. And then this gun agent should be communicating with through throughout the sales campaign so that you truly understand the positives and negatives of your property and how they impact on price. And through this process they should have been able to gain your trust and faith so that, come to the crunch, you will seek and heed their advice. Lastly, the gun agent will have been able to convert some of these buyers into red hot prospects, who are prepared to register and bid at your auction.
Now, whether you have twenty prospective bidders or only one, the principal is the same. Your clear understanding of what the property is worth will give you the confidence to know when you have achieved a good price or whether to pass it in and hold out for more dollars.
Where sellers often go wrong is when they set the reserve too high and they take too long to decide whether they will move from this figure. A successful auction relies on momentum and the decision on a bottom line sale price needs to be made ahead of time with a clear head, not in the middle of a stressful auction. Too often we see what could be a competitive auction stalls as the agent wrangles with the vendor to get the property put on the market. Which is great for us as buyers!
Likewise, when you go to bid at auction, you need to set your top dollar (or maximum bid) beforehand, with a clear head. You also need to know where this property sits in relation to the rest of the market. When you understand value, along with a premium that you are prepared to pay if this home uniquely suits your needs, you are less likely to get drawn into a foolish competition. We ask our clients to consider the level at which they are prepared to let another buyer have it. It is crucial that you know this figure ahead of time and makes a commitment to yourself to stick to it!
On the flipside, if you are the only bidder prepared to make a bid, or the highest bidder on a property that has passed in, by understanding the value you can confidently continue negotiations and know when a fair price has been reached, or when the vendor simply wants too much. Increasing your bid after an auction isn’t always a silly thing to do, particularly if you know that you are still way short of a fair price. By all means, try for a bargain and take advantage of being in the box seat. But keep in mind that if you are way off the mark, and the owner does have a realistic price expectation, in all likelihood, they will find another buyer before too long.
Whether you are a buyer or a seller, knowing the value of the property in question will enable you to confidently agree on a price, or know when it is wiser to let it go.
Published:- 9 March 2012
Please note: Good Deeds buyers tips are intended to be of a general nature. Please contact us for advice that is specific to your individual circumstances. You may also need to get advice from other professionals such as an accountant, mortgage broker, financial planner or solicitor.