PREPARING THE PROPERTY FOR SALE
The more move-in ready a home is the better. Some are already move-in ready while others could do with a refresh. Of course, properties do sell “as is” but usually for considerably less & how much less can be a real surprise to the seller. If you are selling on the Sunshine Coast, Asset Agents can pop out to your home and discuss what would be best & from that you can make some decisions. Sometimes homes just need to be decluttered.
SALES METHOD
Right now in 2023 because the market is declining, most of our Sunshine Coast clients are choosing to Auction. Which initially sounds wrong doesn’t it? As the market declines, it’s easy to price a property incorrectly and then chase the market down while a seller keeps reducing the price but not reducing it enough to engage buyers. For example, data might show comparable homes sold in Dec for $800k. So you decided to advertise for $799k to find you have no buyer interest, you then adjust to $775k, to find you still have no buyer interest. Then you wonder if you need to adjust to $750k but then you are not sure & it certainly feels low to you.
What’s happening is a comparable property in Dec that sold for $800k is now worth less, as the market drops, by March 2023 it’s worth considerably less. By the time a seller adjusts to $775k, their property might now only be worth $750k & they have missed that window.
I see this all the time.
SO IS AUCTIONING THE ONLY WAY TO SELL IN 2023?
No, of course not. You can still achieve a sale by pricing the property. You just need to ensure the pricing is very sharp and you make big swift adjustments, fast. Which can be confusing.
WHAT IF I NEED A CERTAIN NUMBER?
This is super common. People do a budget and work out to sell they need X. Which is fine and normal. I’d suggest only going to market if your X is below what you think your property will sell for. So for example, if you hope to sell for $800k and the number you need is $700k go for it. But if your number is $800k then hmm maybe don’t sell.
ARE WE IN BUYER’S MARKET?
Yes, we are. What that means is buyers are not in a hurry. While they are still buying they are only buying when they see the value and your value and their value might be different. So if you go to market in 2023 you need to be prepared to meet buyers on price. This does not mean you are giving it away or it’s a fire sale. Just that the market has now declined and to sell you need to adjust your expectation on price to where buyers’ expectations are now.
Lots of properties are still selling right now because this is what sellers are doing.
BUYING AND SELLING IN THE SAME MARKET
If you buy and sell in the same market the net result is the same. You may sell for a little less but you will also buy for a little less too
WHAT ARE MY CHOICES?
In the global financial crisis. We would tell people they have 2 choices. To sell or to stay. It’s really that simple. Why many sold is they just wanted to get on with life? Who wants their life to be revolved around the prices of real estate anyway. Many people decide to stay until the market improves. It’s odd as it might be years. And then what would that achieve for them if they are buying in the same market.
Back to Auction. First I need to explain while we do a fair few auctions we would not be considered an auction-only agencies. We still sell properties with prices on them. The reason this article outlines auctions in more detail is that they are really misunderstood.
AUCTIONS PROS
SPEED
Right now buyers know they have a lot of choice and time. Having a set date, the property will sell certainly makes buyers take action in fear of missing out & as the market continues to drop in 2023 the sooner you sell the better. (Buyers just assume the auction date is the date it’s all over, but keep reading and you’ll see it’s not.)
MORE BUYERS
With no advertised price we get more buyers to enquire. This is because buyers with a very low budget will show interest & while this property might be out of their budget having them attend an open home and even register to bid, can assist buyers with a higher budget to take action. No price simply means more buyers showing interest from a low price point to a high price point.
COMPETITION
Following on from “more buyers” an auction creates competition. While in a declining market, the level of competition might not be very many buyers. Often, buyers don’t realise that which can assist in them wanting to buy the property prior to the set auction date.
RESERVED
Many sellers don’t realise they are the ones in control as they set the reserve price. Which real estate agents are not allowed to discuss.
I suggest to sellers to only set the reserve price close to the auction date once they’ve had a chance to hear buyers’ feedback. I also suggest you have 3 reserve prices.
First your crazy dream price, second your price you feel is probably fair based on feedback from buyers and last your kicking and screaming price you would sell for but would not be very happy about.
The idea of an auction is to ensure the reserve is realistic base on the feedback from the market. While I am not legally allowed to disclose to buyers what the reserver price is, they still constantly ask. By setting the reserve close to the auction date, it allows me to tell buyers you have not set a reserve yet while allowing you to set it based on what buyers have said.
UNCONDITIONAL SALE
No conditions like finance, building & pest or subject to sale.
3 CHANGES TO SELL
In our last few auctions, 2 sold prior to the auction, 3 sold at auction and 2 sold 3 weeks afterwards. Many people don’t realise the auction date is not the only opportunity to sell. As you can see above you can sell prior, on the day or shortly afterwards. Making the auction princess an even smarter strategy.
SELLING PRIOR TO AUCTION
The idea is to encourage buyers to make offers prior so they don’t have to compete on the auction day against other buyers. When a buyer makes an offer prior to the auction, if it’s not at a level you’d consider accepting it’s important you don’t counteroffer as this would disclose your reserve. Instead, I explain to the buyer their offer would not be considered at this stage however they should still register for the auction, in case the seller’s position of price changes.
Any offers prior to the auction date need to be either cash or have conditions that would be unconditional prior to the auction date. Accepting an offer prior to the auction date would need to be considered if the offer is very high OR there is another interest that is very low. I call these auction stoppers.
SELLING AT AUCTION
An auction can take 10 minutes, but the longest I have had a few times now is 50 minutes. Not all auctioneers are the same. For over 10 years I have used Gordon McDonald due to his skill to pause an auction and speak privately to the seller and buyer to get a result. While an auction has pressure, Gordon is not there to pressure a seller. I’ve seen Gordon suggest to the seller we pass the property in. This can be for various reasons like having interest subject to finance at a much higher sale price if the property does not sell at auction.
When you sell at auction, it’s SOLD. A cash sale is not subject to 5 days of cooling off or any conditions, like finance or B&P.
SELLING AFTER AUCTION
Not every property sells at auction. As the market gets tougher in 2023 less will sell at auction. Many people don’t realise that the third stage of an auction campaign is selling soon after the auction date. We find that most properties sell around 3 weeks after an auction.
An auction creates a lot of buyer interest & will also help a seller understand where the market sees value, which can then be used to correctly price the property if not sold on the auction date.
BUYERS DO NOT WANT TO COMPETE AT AUCTION
Most buyers hate auctions because they do not want to compete against other buyers. In Qld, real estate agents are not allowed to guide them on the price, so they need to bid at the level they see the value in a property. The truth is a property auction is really fair. It’s an open public transparent process for all the buyers to see where other buyers are at and make a bidding decision around that.
If a buyer does not like auction but likes the property & would like an opportunity to own the property they will still participate on the auction day.
AUCTION CONS
AUCTIONEERS ARE MORE EXPENSIVE
We have used Gordon McDonald for over 10 years now. Sometimes I’ve used other auctioneers to save some money then regretted it. There has been many times we’ve been able to sell at auction due to Gordon’s ability to pause the auction and speak directly in private with buyers and the seller to get an agreed price under auction conditions. It’s something other auctioneers just don’t have the skill.
Gordon’s fee is now a staggering $990 inc GST. He does auctions most days of the week and is booked out weeks in advance. If I try and book him for a Saturday in 6 weeks time he will already be booked. I usually hold my auctions on Sundays for this reason.
SMALLER BUYER POOL
Prior to and during the auction campaign we can only engage with buyers who are pre-approved, so the buyer pool is smaller. While this is in the cons list there is actually a positive as we are only dealing with serious buyers that are ready to act now.
LOW OFFERS
Just due to the nature of auctions & no advertised price buyers will make low offers. We will tell you about them but not act on them. It can be stressful for sellers when we get these. In one of our recent auction sales that sold prior to the auction, the buyer’s first offer was $200k less than what they finally offered to secure the property under auction conditions prior to the auction date. It’s not always about a buyer’s first offer. It’s about their last offer.
STRESS
Auctions are stressful. For sales agents selling with an advertised price is much less work and far more relaxed. Sellers tend to put a big focus on the auction date, which creates stress for them. While they should try not to do this, it’s just human nature. Sellers can also become stressed when price feedback is below what they had hoped for.
AUCTION MYTHS
ONLY PEOPLE DESPERATE SELL AT AUCTION
We’ve had most of our best sales results via auction and the owner is in control and protected by the reserved price they set. While sellers would set a reserve based on price feedback from buyers, they can also choose to ignore this and set a really high reserved price.
SELLERS HATE AUCTIONS
Actually, this is true. I find that most sellers don’t fully understand how an auction works and once it’s been explained to them in full it makes a lot more sense for them to consider it. Then once they sell via auction they are glad they did.
I WILL WAIT FOR MY PRICE
Even in a booming market having a property on the market for a long time has a negative impact on its sale price. This is compounded by a declining market. Whatever your house will sell for today, it will sell for less in 12 weeks time so it makes sense to get a sale urgently.
I WON’T GIVE IT AWAY
I hear sellers say this all the time, which is hilarious. I realise they really mean they have a price they expect but it also needs to be a price that is within the current market for buyers to engage.
I’M NOT IN A HURRY TO SELL
Lots of sellers feel the longer their property is on the market the higher the sale price they will get. In a declining market, the opposite is true. The more you wait the less it will sell for.
AUCTIONS DON’T WORK
It’s true auction clearance rates have already started to decrease as the market declines and will decrease further. All auctions work, it’s just that not all properties will sell at auction. Auction clearance rates are properties that are sold at auction. They don’t put into consideration the ones that sold prior or the ones that sold shortly after. An auction campaign is a lot more than an auction day.
MY PROPERTY IS NOT SUITABLE FOR AN AUCTION
Every property is suitable to be auctioned but not every seller is suitable to take their property to auction. Auctions have a level of stress involved and sellers need to be prepared to listen to feedback from buyers on pricing as a successful auction is based around the seller being prepared to listen to the market and meet them on price.
AUCTIONS COST MORE
The only additional investment is the auctioneer & while that IS an additional $990 inc GST. Auctions can often cost less. Why? Because if you price your property and the price is wrong, your property is on the market for an extended period of time in a declining market, by the time the property has been adjusted correctly it’s very likely the price has now fallen further than if you had sold at auction sooner.
OTHER AUCTION FACTS
NOT ALL AGENTS ARE AUCTION AGENTS
There is a skill a salesperson needs, to carry out an effective auction. Having open homes and hoping someone will register to bid on the day is not how an auction campaign is run. A skilled auction agent will work very hard throughout the entire campaign to get offers prior, track and update the sellers with buyer feedback, and get buyers to register to bid and get backup contracts from buyers that want to make an offer subject to conditions if it does not sell at auction.
NO ONE WILL BID
This does happen. This is every sales agent & seller’s fear. Not having any registered bidders. Or worse not having anyone show up to the auction. Over the years I’ve been to a few auctions where it’s just the owner, sales agent & auctioneer. Generally when this happens while it’s a little bit of a punch in the stomach, usually, the week after is busy with buyers asking if the property sold at auction or not. This is what auctions do, they create additional interest with people that could not participate and were hoping it would pass in and be for sale after the auction date. It’s stage 3 of the auction campaign.
QLD LEGISLATIONS
In Qld, real estate agents are not legally allowed to guide buyers on price. This is in place because often real estate agents get it wrong. Prior to this legislation, it was common for a sales agent to tell buyers they expected a sale around say $850K and then at the auction either no one attended as all the buyers thought the price was too high OR the opposite it sold for considerably more.
Yes, it’s really frustrating for all parties but the entire concept of an auction is to let the market decide and for the sellers to set a reserve around this.
Oddly with the owner’s permission. Sales agents are allowed to supply buyers with a list of comparable properties. But this can also be misleading if comparables are supplied and the market has now dropped.
A common solution to this is for real estate agents to ask buyers what their preferred budget is and then if the property is within that range to suggest they view and make an offer.
MARKETING
Do any Sunshine Coast real estate agents still offer FREE marketing? Possibly. But when you are trying to get the highest sale price for one of your most valuable assets, one of the biggest mistakes anyone can make is to under-market their property. Even more so in a declining market.
So what marketing is important?
PHOTOGRAPHY $350
This is the foundation of a quality marketing campaign. Like real estate agents not all property photographers are the same. Anyone can buy a camera and say they are a real estate photographer. We’ve sold properties where another agent has tried and failed and sometimes all we have done differently is taken better photos. That’s how important quality photography is.
COLOUR FLOOR PLAN $175
Measured and professionally drawn. These are available online and on the printed brochure.
SIGN BOARD $175
We mainly use a professional printer board with auction on it. Which can then be peel off with For Sale under it, in case that’s required.
BROCHURE $325
We use high-quality brochures because we believe that selling a product worth several hundreds of thousands of dollars is an important reflection of the quality of the property being offered. Buyers always comment on these.
SOCIAL MEDIA $200
During the campaign, it’s now important to invest $200 to advertise the property to the community around the property. Social media is now like the old Just Listed flyers.
ONLINE $1,700 + $77
Realestate.com.au offer about 4 ad sizes. For over 10 years now we have only ever used their largest ad. So when people choose to sell through us they can only be on realestate.com.au by investing in the largest ad size. Because we make this commitment to realestate.com.au we get their largest ad at a discount.
What many people don’t realise is how this ad size really works. It’s not just about bigger images or being on page one. The biggest ad is the only ad where if a buyer searches “sunshine coast” they will be exposed to your property. Something like 80,000 buyers a month do this search. We have sold lots of properties to buyers who had never heard of certain suburbs and it was a Sunshine Coast search where the buyers found the property.
Many sellers ask us “Are we on all the other real estate sites?” We use to be & could easily be now. The truth is buyers just don’t enquire through them. The only other site that we get the occasional buyer lead from is domain.com.au.
$1,700 inc GST is roughly what realestate.com.au charges for their largest ad. Their price varies depending on the specific suburb.
$77 inc GST is what domain.com.au charges for their smallest ad.
BUILDING AND PEST REPORT $550
Doesn’t the buyer pay for this? For over 7 years now even on our non-auction properties, we have encouraged our sellers to invest in a B&P report. Interestingly the sellers who don’t often wish they did once the buyer has had one done. I’ve had many examples where we’ve sold a property for a great price subject to a B&P for the buyer to then pull out and for the property to then sell for considerably less. This could have been avoided if the seller has invested $550 on a report.
AUCTIONEER $990
I admit this is a lot to pay. But I would not use anyone else. Too many times have I seen Gordon be able to get a result at auction that an auctioneer would not have been able to.
TOTAL MARKETING INVESTMENT
While the above is an example of what we charge for marketing, other agencies will be different. For example, we don’t know any other Sunshine Coast agencies that has property brochures as good as ours. Many don’t realise how crucial good photography is and will just book anyone for $150.
Of course, while the above is very common for our clients. You can pick and choose. No brochure, no social media, no floor plan, no domain ad. If needed we can help you cut back on marketing to make it as affordable as possible.
WHEN DOES MARKETING HAVE TO BE PAID FOR
Real estate agencies can’t fund sellers marketing. Marketing is an investment in the property gets the highest price. It’s a similar thing to painting a house. This would be done to help maximise the sale price but a seller would not expect a sale agent to pay for it.
Marketing needs to be paid upfront because the real estate agent has to pay all the suppliers upfront.
SELLING YOUR SUNSHINE COAST PROPERTY
Asset Agents can do a free sales appraisal which is a good place to start to get an idea of the value of your home, discuss the market and what other questions you may have. We have a no-pressure approach so you can reach out to us knowing we’re simply here to help.
