Selling your home - a personal perspective: 4 - The Sale!

by Alistair Helm in , ,


The critical day arrives. Probably second only to a wedding or other significant event, is the day your home finally sells. In the case of our home, that day was the day of the auction on that Wednesday afternoon. Nerves were evident, as were the usual questions:

  • Would the prospective bidders our agent had identified be there?
  • Would there be sufficient interest to generate a bidding war?
  • Would bidding exceed our reserve?
  • Would anyone turn up?

These are the common questions asked by anyone about to sell their house by auction or in fact almost any forms of sale.

But before detailing the outcome of the sale let me recap. As chronicled in prior articles I have over a series of 4 posts detailed the processes and decisions we had gone through in identifying the method of sale, choosing the agent and establishing the marketing plan for our house. Overall a carefully planned programme designed to ensure that our property was presented to potential buyers in the most appealing manner to generate interest and stimulate demand, and ultimately sell our home. 

One aspect of the whole process that most impressed me and strangely (given my experience in the industry) surprised and delighted me, was the very detailed and intimate understanding we gained through our agent as to the prospective buyers. I do not know if this degree of detail is common practice but as a seller it was vital to a sense of connection to the process.

At each meeting with Blair in de-briefing the weekly open homes as well as interim meetings and chats, he shared insights and feedback on each of the key prospects he had identified from enquiry and open home visits. He referred to these prospective buyers by name. He provided insight as to their personal situation, where they lived, what they were looking for, what their expectations of price were and what aspects of the house they most liked and disliked.

Over the 3 weeks of the campaign leading up to the auction we saw insight into a total of 5 couples. The insight was not intrusive nor in any way a breach of privacy or personal confidences,  but provided us with a great ability to manage our expectation and in so doing I believe added credibility and professionalism to the role Blair played. As I say, if this is common amongst agents then these smart agents in my view do themselves a disservice in not highlighting this value they bring to the process. In my opinion it is vital and truly valuable part of the real estate process.

Through the 3 weeks of the campaign we had what amounted to a virtual leaderboard ranking of prospective buyers with some surprising movements. Barely 7 days into the campaign we had what both Blair and ourselves though were the perfect couple as buyers. Cashed up from selling a property in the South Island and frustrated at living in rented accommodation, this couple ‘fell in love with our house’. They visited  a couple of times and Blair talked to them about making a pre-auction offer of which they were engaged around the idea. We even were able to verify their seriousness as we witnessed them bidding at an on-site auction at another very similar property in the neighbourhood. Then things went quiet with them for 5 days only to discover that in those intervening days they had not only found another very different style of property, but had actually attended and bought it at auction! It just goes to show how little you can tell of people’s real interest or intent.

We heading into the last 7 days leading up to the auction with what Blair believed were two strong potential buyers. The property ticked all the boxes for them and they had both seen the house a couple of times. They appeared to have done their due diligence. Based on this and the belief that you have to take the market for what it is, we sat down with Blair coming up to the final weekend of open homes. Our question was ‘why do we need to do these final weekend open home viewings?’ - it seemed to make no sense, who would suddenly appear out of left-field 3 days before the auction? Blair convinced us against our better judgement to go ahead, so dutifully we tidied up and prepped the house again for what we thought would be a quiet viewing.

How wrong could we have been. A new buyer appeared, or at least a relative of a prospective buyer. They loved the house and wanted their relatives to view the house when they came up to Auckland on the Tuesday (the day before the auction) - not a problem we thought, can’t do any harm. Little did we know that this prospective buyer would go on to buy the property!

A key step before the auction was the setting of the reserve with Blair. Naturally we had developed our own view of the expectation of price and what we would be prepared to accept. As a point of note I choose not to reveal the reserve or the selling price - this is not the essence of this article. This is a matter we as sellers choose to remain confidential. The reserve we agreed on was surprisingly aligned with Blair's recommendation, or maybe it is not surprising as through the 3 week campaign he had provided a clear view of the expectations of the prospective buyers, accepting as always that buyers never want to truly show their hand when it comes to price.

The reserve price was set at a level at which we would be satisfied. Like all sellers we would wish to be blown away by frenzied, manic bidding with a stunning resultant price, way above the reserve but you have to be realistic. At the end of the day the difference between our reserve and Blair’s recommendation was less than 5% - naturally we were higher!

An unusual set of circumstances arose in relation to the actual auction day and time which meant that my wife could not attend. This troubled us as to how we would cope if we could not both be there as joint owners of the house. Our immediate thought was how to facilitate the signing of the Sale and Purchase Agreement - would we have to get a power of attorney for me to sign for both of us?

Again this is where you can be surprised about how little you know of the process. In an auction you as the sellers completely sign over the sale to the auctioneer who through a right of representation acts legally on your behalf to transact the sale at a price at or above the reserve. This document was signed the day before the auction effectively leaving us both out of the process.

This is a very interesting situation and something I sought advice on from an independent and experienced agent. His advice (somewhat surprising) was that you as sellers should not attend the auction! The logic being that in this way you insulate yourself and thereby avoid the pressure coming from the auctioneer and agent trying to encourage you to compromise on the reserve if the bidding fails to reach reserve. This is a very interesting strategy and something I had never considered. If the role of the auctioneer is to sell the property at or above the reserve and this is your wish then not being present has its merits (and some degree of risk as I am sure many agents will tell you).

So the auction time duly arrived and I was alone at the auction rooms with my wife on standby via text message (she was actually doing a presentation!)

Blair had told me in a pre-meeting that he knew that there were definitely two serious buyers in the room.

I won't take you through the chapter and verse of the actual auction suffice to say that the auction lasted 5 minutes and 24 seconds - I know that because I recorded it on my iPhone - captured for posterity! There was as anticipated, two genuine bidders. Once of the bidders clearly had a threshold which he stuck to staunchly despite the best skills of the auctioneer. The property reached a final bid which was just below the reserve. So with a pause in proceedings, the auctioneer began a somewhat lengthy and protracted process of negotiation with the highest bidder with a clear instruction staunchly adhered to from me that the reserve was fixed and not up for negotiation. The end result was that the auction was recommenced and called and the property sold "under the hammer!"

In my opinion the outcomes was a satisfactory conclusion, whereby as I have often said the price expectations of us as sellers was met by the preparedness of the buyers to pay that price - I felt that the outcome was fair and open; and neither party should have any reason to feel aggrieved nor triumphant.


So after a number of weeks of tense anticipation and nervous expectation we sat back at a well deserve celebratory dinner (actually pizza and a beer at 4 in the afternoon!) and reflected over the process. We had in our hand a signed unconditional agreement for the sale of the our house, with the deposit already transferred from the buyer to the agency rust account; thereby allowing us to move on with our lives and to close a chapter on both the ownership of this house and the selling process.

When it came to reflecting on the cost / benefit analysis of the process we did not (as is universally accepted in the process) physically write a cheque for the commission fees paid to the agency company. We did not feel the ‘pain’ of that large amount of money leaving our bank account, it was seamlessly deducted from the balance of the deposit paid by the buyers. However, we have reflected often on our decisions and the process, and we do not in any way begrudge the fee we paid for the services provided by Blair. We felt that we were professionally guided through the process without undue stress. We discovered great insight from the process and were delighted with the outcome. That chapter of our lives is over and a new chapter begins.


Selling your home - a personal perspective: 3. The Marketing

by Alistair Helm in


Property marketing is one of my favourite topics and something I have shared my opinion on for many years both on the Unconditional blog which I started in 2007 and on this site. As regular readers will know I have in all this time been consistent about one thing. That is, that digital marketing has taken over from print media in the minds of the consumer and consigned this former stronghold of property marketing to the dark ages - never to return.

So it therefore should not come as any surprise that when it came to selling our home recently I was committed to a purely digital marketing campaign. 

So having gone through the process of choosing a real estate agent to handle the sale of our house as detailed in the second article of my four articles detailing the personal perspective of selling our home, we came to the decisions around the marketing of the property

In my view having spent the majority of my career in marketing focused roles, I judge that marketing covers a wide gamete of components and is not simply the reserve of advertising placement. It is far more about what, how, when and where. In the case of property marketing it focuses on the form of marketing as in the platform of sale, the positioning of the property, the presentation of the property, the promotion of the property and the performance of the marketing through the campaign. Let me review and share the approach of each of those 5 P’s.

 

Platform of Sale

This refers to the various options - By Negotiation/ Auction / Tender / Priced. An imperative for me in property marketing is the need to drive the process. I think it is ineffective and lacking in focus to simply announce to the world through an online listing and a sign board, that this property is for sale and then hope that someone makes an offer. Urgency is a tool that should be leveraged. The reality of selling a property is there may well be a buyer out there who will judge that your house is simply the best, and the house they have always wanted, and that they are willing to pay way over the odds for your house. The cold hard fact is that though this could well be quite likely and even possible, what is highly unlikely; is that this ideal buyer just happens to be in the position to buy your house now. So you have to be pragmatic and deal with market today - this month, and focus on the reason why you are selling - you want to move. If you don’t want to move then don’t put your house on the market, the real estate industry really doesn’t need another listing that sits on the books for a year or more.

For this reason I have a preference for Tenders. They appeal to me for the reason that they establish a deadline by which time buyers need to commit themselves. Are they in or out? Offers submitted as Tenders can be either conditional or unconditional. Tenders force buyers to put an offer price on a contract that is their ‘full and final offer’ - with no knowledge of what anyone else is offering. This compares to auctions which are public spectacles in which the winning bidder secures the property for a small (relative term) amount more than the unsuccessful bidder. Finally Tenders allow the vendor to calmly and in their own time examine and consider the submitted Tenders and accept, reject or negotiate with any of the submitters.

I have sold by Tender in the past and therefore had a preference. However I listened to my agent. Blair accepted all of these views as well as hearing (or knowing) my reluctance to the Auction method. He articulated very well the benefits of an Auction. It was a focused method which had a deadline. It ensured buyers were focused. He spoke of the recent sales experience with very similar properties in the area that he had sold by Auction. He also shared the experience that Tenders were less common and therefore could create wariness in the minds of prospective buyers. We were persuaded, not easily I should add, that an Auction would be the best method.

Another component of the platform of sale is the duration of the campaign. Given our pragmatic approach to recognising that you have to accept that the market will only deliver buyers who are ready to buy; it was our decision to go with a 3 week campaign. This would allow sufficient time for all interested parties to view and assess the property whilst keeping the whole process moving along at a good pace and keep marketing impact high.

 

Positioning of the Property

Positioning is all about identifying your buyer profile and creating the look and feel to attract them to view the property. In our area of Auckland there is a very common minimalist villa renovation-look which dominates - white surfaces, lap pools and large bi-fold sliders. Our house (as a reflection of our own taste) is what we judge to be a more sympathetic modernisation of a character villa appealing to people who want modern convenience without loosing the heart of the property. This recognised that our house may not appeal to city dwelling young families but more to older generations who crave the convenience of the city suburbs but like the character detail. Positioning is not so much about choices as to how you might position a property as few people will be re-designing or renovating prior to sale. It is more about recognising who the prospective buyers may be and how to best appeal to them.

 

Presentation of the Property

Presentation is all about creating impressions. Put it another way its about creating an experience which ideally limits criticism of the property. It may be hard to believe, but often people judge properties not on the attributes which are easy to see and tend to be presented in the listing details, but in the drawbacks and general criticism. Don’t like the curtains! the bathroom is too small! there was a strange smell! could see the neighbours messy back yard etc! 

Presentation is about literally ‘courting’ prospective buyers when they check out the property at an open home. Working hard to minimise criticism and capture the hearts of those prospective buyers.

 

Promotion of the Property

For me this was the easy part - online. That’s it!

A key part of promotion is quality materials. This starts with professional photography. Blair recommended Open2View which I have high regard for and was happy to agree on. As well as a comprehensive photo shoot I also insisted on floor plans. These in my view should be mandatory - I find them invaluable and feel that they provide a great reminder for prospective buyers are they reflective at home after a day of open home visits.

The online marketing was naturally Trade Me Property and Realestate.co.nz - again with the solus  focus online the judgement was that a plain listing was not enough so a Super Feature on Trade Me and Premium package on Realestate.co.nz were booked.

The traditional elements of a street sign and brochures were not in despite - they are a necessity.

With this comprehensive package of advertising and photo portfolio the question was still asked by Blair as to an advert in the NZ Herald. I did not criticise Blair for bringing this up. I can see the rationale for the belief that there could be a random opportunity of a buyer viewing a Weekend Herald; for them to see a house and fall in love with it. However I remained true to my principle. I would not pay for print, that did not stop Blair placing a quarter-page advert at his own cost!

Our investment in marketing totalled $1,850. This included costs for a premium featuring on Realestate.co.nz for $400, listing and premium featuring on Trade Me Property for $400, Photography and floor plan from Open2View for $650 and then signage and brochures for $400.

 

Performance of the Marketing

The ultimate performance of the marketing campaign is judged in the result of the final sale, as to how much interest was generated and how competitive was the interest from prospective buyers in wishing to bid for the property. That outcome I will share in the final article.

In assessing the performance of the marketing campaign I will let the numbers speak for themselves.

Online advertising and profiling consisted of four websites. In addition to the premium advertising on both Trade Me Property and Realestate.co.nz the property was featured on Open2View and the Bayleys website. Across the 3 weeks a total of 6,174 views were made of the property with Trade Me Property accounting for more than half of all views as detailed in the chart below showing cumulative views across the four sites for the 3 weeks of the campaign:

 

The chart reminds me so much of the typical performance curve of online listings which I analysed on Realestate.co.nz a number of years ago. The peak interest for a listing is in the first few days as the combined impact of email alerts and ‘top-of-search’ result pages drive huge awareness. That awareness and consequential views declines to a plateau very quickly. This firmly demonstrates the critical importance of ‘launching’ your home onto the market with a fanfare and grabbing the market opportunity quickly. There is an often-heard comment within the industry that the “the first offer is often the best offer” - this may have even more credibility than some may accept as early interest is high from real committed buyers who want to act.


Our agent was very effective at not only providing the stats of web views he also prepared and delivered a written weekly report (not an online dashboard - which I would have loved). This report provided the following key stats which I think are the KPI’s of the property marketing process.

A very interesting analysis of the marketing. So we 42 visits to our property over the 3 weeks. Without doubt the largest driver of visitors (19) identified their source of info as the web and the largest driver of that was Trade Me Property.  It was interesting to note that what is not detailed on this report was email enquiries. There was just 1 from Trade Me Property. To my mind this was a success! Let me explain. The listing provided all the necessary information and we held weekly open homes. The photos and floor plan gave all the necessary insight into the property - so why would you need to send an email. Email is not a key indicator of performance, if the marketing is well executed.

 

With the 3 week campaign completed, 42 visitors groups and 6,174 online views the key question was. Had we done enough to attract a buyer and was there a buyer out there who's appreciation of value in the property matched our expectation of the value of the property? That test would come on the day of sale.


Previous Chapters:

1. Method of Sale

2. Choosing an Agent

 

Future Chapters:

4. The Sale!


Do tenders distort the property market?

by Alistair Helm in


Tenders_bad_for_buyers.pdf - Dropbox.png

This ‘letter’ to the Dominion Post headlined 'Closed tenders a disaster for buyers' was sighted this week on Twitter. It is, I judge from a member of the public, as I am sure that no real estate agent would make such a statement in the media.

I was taken somewhat aback by the statement within the letter that "tenders inevitably distorts the residential housing market". I disagree with this letter writers opinion, especially when I personally believe that tenders are in fact a much more preferable marketing strategy for a property than the much more favoured Auction.

At this time there are 283 properties for tender on the market nationally as compared to 1,820 for auction. that from among 37,443 properties on the market across the country as marketed on Realestate.co.nz. Within the Wellington region (as the home of the Dominion Post and the likely home of the author) the number of tenders is 89 with just 44 auctions. Put in context Tenders represent 4% of all property on the market in Wellington and just 0.7% nationally.

The letter claims that in a tender buyers will “offer as much as they can to ensure they beat everyone else” – well that is also true in auctions. In auctions however the pressure of the event (the theatrical event) adds even more impetus for buyers to act irrationally and bid more to beat everyone else. It goes on to say “the more desperate they are the crazier the price they’ll offer” – well in my view the heat of the auction adds to craziness precisely because the bid is public and the auctioneer constantly reminds bidders that “it's only an extra $1,000” to secure the house of your dreams”.

The letter makes the claim that “a few properties sold by this method in an area will upwardly distort price signals for all other properties in the area” – the fact is any sale that is legal and is between a willing seller and a willing buyer is a signal of the property market, regardless of the marketing process. To believe that tenders (or for that matter auctions) are distorted is naïve.

The statement that the winning tender has “no idea how much more they’ve paid than their nearest rival offered” is true whereas with an auction their is public knowledge, however in the most popular form of property sale being negotiated sale, there is no such public knowledge in the case where there may be multiple eager buyers. Further to this point I would contend that a tender actually does provide the seller with a price truly reflective of the true value that a buyer places on the property, entirely based on their belief of what that house represents to them. Whereas an auction only realizes at best, a thousand dollars more than the loosing bidder was prepared to pay.

The letter states that tenders are a “disaster for buyers”. I find this statement hard to wear. The property process is all about selling properties, as the reality is that buyers have to accept that they can only buy from the selection of property available for sale at that one moment in time, not from a choice of all properties. That being the case, buyers have to accept that the property market is and always will be focused on the sellers. They naturally want to get the best result, the highest price, the fastest sale, the least conditions. Tenders are thereby a great solution. They set a timeline, they allow all potential buyers to show their ‘hand’ when it comes to what they value the house at and to present their best and final offer. It affords them the patient time to consider and reflect on the offer, not be potentially ‘harassed’ and pressured at an auction room.

As a final comment to the writer of this letter I would draw their attention to the Scottish process for selling property. In that market all properties are sold by closed tender and have been for many decades. Properties are advertised (without traditional real estate agents) as being 'for offers over £X,ooo' - that system works very efficiently, I can attest as I have in the past bought and sold property in Scotland.