Set a per­sonal re­serve

The Weekend Post - Real Estate - - Real Estate -

FOR those of you who don’t tune into the Life­style Chan­nel on Fox­tel to watch Sell­ing Houses Australia ev­ery week, I firstly ask why not?

We’ve won awards and were the high­est rat­ing non-sports show across Fox­tel in 2013.

If you don’t watch, you would have missed a re­cent episode where the ques­tion “should you have ac­cepted that first of­fer” sce­nario raised its ugly, but oh so com­mon head.

That first of­fer can be any­thing from a re­al­i­sa­tion you re­ally could be on the move, to to­tal dis­gust that any­one could ever be so rude to think you would even con­sider it.

It could be an of­fer within hours of your list­ing go­ing live or the first one re­ceived in months, maybe years.

What­ever the sce­nario, what do you do?

There is an anal­ogy that of­ten your first of­fer ’ is the best – I wish it was that sim­ple.

For those of you sell­ing at auc­tion, gen­er­ally it is al­most never an is­sue when of­fers are com­ing in thick and fast, and the first one is a dis­tant forgotten start­ing fig­ure. With the auc­tion, where even the bribe of a bot­tle of cheap wine can’t en­tice any real of­fers to come to the fore, again any fig­ures in that sit­u­a­tion are not re­ally rel­e­vant.

How­ever, that first of­fer af­ter the failed auc­tion can fall into this cat­e­gory.

If you are sell­ing by pri­vate treaty there is no doubt that first of­fer can cause some se­ri­ous rea­sons for stress. The tim­ing of that of­fer has an im­pact too.

For ex­am­ple, if the of­fer is re­ceived very quickly in your mar­ket­ing cam­paign it is easy to feel ner­vous that you haven’t al­lowed enough time and a higher of­fer could just be around the cor­ner.

The op­po­site can be the case when, af­ter long pe­ri­ods of a to­tal lack of in­ter­est, an of­fer is sud­denly forth­com­ing.

It can be so tempt­ing just to bite off the buyer’s hand.

I have wit­nessed on many oc­ca­sions in my 24 years as an agent, the re­gret sell­ers feel for dis­miss­ing that first of­fer.

So what to do? I have two clear points you should con­sider

Firstly, set your own per­sonal re­serve, share it with no one, but be re­al­is­tic – es­tab­lish a value fig­ure that would make you happy to enough to sell up.

Yes, get the agent’s opin­ions, un­der­take your own re­search by look­ing at the ads and searches on­line.

If there is a par­tic­u­lar home or homes you know have sold re­cently that you be­lieve com­pare to yours, Google their ad­dress with the word­ing “sold price for …” and quite of­ten the in­for­ma­tion you want will pop up on your screen.

Even bet­ter, spend a lit­tle and pay to ac­cess de­tailed sale data for your sub­urb.

For ex­am­ple, per­haps you de­cide $500,000 is the fig­ure you would be happy to sell at. If you re­ceive an of­fer of this amount or be­low in a mat­ter of days maybe you should con­sider push­ing for more or be­ing pre­pared to walk away from the deal.

Al­ter­na­tively, maybe months down the line the first of­fer fi­nally is forth­com­ing, but only at say $480,000.

I would sug­gest a lit­tle ne­go­ti­a­tion ini­tially, if that fails, maybe con­sider it se­ri­ously.

But if very quickly you re­ceive an of­fer of $510,000 you know that your ac­cep­tance is wor­thy of real con­sid­er­a­tion.

With­out your per­sonal re­serve you sim­ply will have no bench­mark to work with.

It is true the longer the home is listed, un­less the mar­ket is boom­ing, wait­ing doesn’t nec­es­sar­ily add value. It can re­duce buyer ap­peal, as pur­chasers will feel no sense of ur­gency or com­pe­ti­tion.

Se­condly, from the be­gin­ning un­der­stand the value to you of a sale, not just the sale price but the value to you in be­ing able to move on, per­haps you have al­ready bought your new home, sell­ing to clear debt, down siz­ing play­ing the wait­ing game for a par­tic­u­lar fig­ure can oc­ca­sion­ally cost you more than re­fus­ing what you con­sid­ered a dis­ap­point­ing first of­fer.

There is also a per­sonal value, mov­ing on for well­be­ing and a life­style change can some­times sim­ply not jus­tify hang­ing out for a cer­tain sale fig­ure.

It can be dif­fi­cult to an­a­lyse the value or cost of a “sale now” sit­u­a­tion com­pared to con­tin­u­ing to play the wait­ing game, but in my ex­pe­ri­ence it is amaz­ing how of­ten I have seen the wait ei­ther prove fruit­less, or at best, a break even sit­u­a­tion oc­curs.

So please set your per­sonal re­serve and un­der­stand the true value of a sale is not al­ways purely about the mon­e­tary fig­ure.

As for our re­cent episode our sell­ers had done ex­actly this and set a re­al­is­tic re­serve, within days the first of­fer came in at $10k higher.

Re­al­is­ing buyer in­ter­est lev­els were high and they had time they played a brief wait­ing game and bagged an­other $15k over that.

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