Selling A Property
As a consumer, selling a property is likely to be the largest sum of money that you will be trading with, even if in most cases, the money will be transferred straight to another house or flat. Although you may want assistance from a professional, it’s wise to keep close contact with the deal. You have the largest vested interest both financially and emotionally, and it’s important to stay in control of all aspects of the sale, including the negotiation. Use this chapter as a guideline to develop your own personal plan for the sale of your property.
DO YOU SELL PRIVATELY OR THROUGH AN ESTATE AGENT?
This book is about negotiation techniques, not general advice-giving, and the choice of whether to sell privately or go through an estate agent is a personal one. Whichever you choose, the important thing is that you have a big influence on the deal. Where else would you allow hundreds of thousands of pounds that belong to you, to be completely in the hands of a stranger? If you go through an estate agent, then take control of what you feel comfortable with, and make sure you let them know clearly what influence you want from the outset. With increased competition (i.e. more estate agents and on-line offerings), lower commission rates can be had, and it’s worth shopping around to see the best deals that you can get.
A private sale gives you additional money, as you will not have to pay agency commission. More houses than ever are being sold in this way, and details of how to do it can be found on the internet and in bookshops.
PREPARING YOUR PROPERTY
So far, this book has helped you understand negotiating when you are buying something. This chapter takes the unusual step of helping you get a good deal when you are selling.
Preparation is vital in negotiation – and that includes preparing your property to gain the best price. I will not spend time looking at long-term high investment ideas like loft extensions and new kitchens and bathrooms. Instead, I will suggest quick fixes that should help increase the value of your house or flat.
You need to think about what’s in it for the buyers (read Chapter 4 on buying a property to help you see it from their perspective). Often, they enter, thinking: ‘Is this a place where I would like to live? Has this got potential? Has it been well kept?’ They may even think: ‘The décor isn’t to my taste, but could we live in this whilst we take our time to change things to our style?’ What would you, as a buyer, most value about the place and the people if you were looking for a property?
Here are a few examples of potential cosmetic changes:
- 1.What about a lick of paint? – Neutral colours will be best as personal taste can differ.
- 2.Tidy up! – A few hours (or maybe days, depending!) of spring cleaning, tidying up and de-cluttering could have benefits. Replace any broken bulbs – there’s nothing worse than showing someone around at night with a torch! If you haven’t the room, speak to a friend who can ‘store’ some stuff while you show people around, or pay for storage.
- 3.Freshen up with flowers, and cut the lawn, put in window boxes, tidy garden, etc.
- 4.Clean the front door and pathway – first impressions count.
- 5.Put a throw on the sofa – but only if the throw is in better condition than the sofa!
WHAT PRICE TO PUT YOUR PROPERTY ON THE MARKET FOR?
Whether you go through an estate agent or sell privately, putting the property on the market for the right price is important. Sell yourself short – and you can lose thousands of pounds. Aim too high — and you could take ages to sell and still have to come down in price.
Research the websites that specialise in real estate value and look at the local papers’ property sections to give you an indication of the price of houses similar to yours in your area.
When you have decided on the price, think of reasons why your house or flat is worth the amount you want to charge. What is it that makes you feel it warrants that price, or makes it especially attractive compared with others in the area? Is it that the road you live in is quieter and more sought after than the neighbouring roads? Have you done any recent renovation work? Preparing these justifications could come in very handy later on in conversations with potential buyers, especially if they are interested in your house, but object to the price.
CHOOSING YOUR ESTATE AGENT
If you decide to use an estate agent, you need to make sure you choose one that suits your needs. It may not necessarily be just about what price they put your house on the market for: i.e. just because they suggest the highest price doesn’t mean they’re the best. They could be, or maybe they haven’t a clue about the area, and are guessing high to get your business.
Estate agents tend to suggest valuations. If you like the agent, but the price they are suggesting does not meet your needs, you can always negotiate. For example:
‘If you put the property on the market for £500,000, then we will agree to use you.’
Create your own criteria sheet, listing what is important to you when deciding upon an estate agent.
Take time to get them to come over and value the property, and effectively interview them to ensure they meet the criteria you have set out. If none do, you may have to review your list!
Choosing an estate agent
Listing your criteria for choosing an estate agent.
SUGGESTING YOUR OWN COMMISSION STRUCTURE
Once you have agreed what price to put the property on the market for, you can start to consider the agent’s fee, as although the percentage may seem small, it soon adds up to significant sums. For example, a sole agent fee of 1.5% on a £500,000 house comes to £7,500. In the UK, you also need to add VAT, which at 17.5%, will increase the amount you pay to £8,812.50. In this case, negotiating even 0.25% will save you £1,250 (£1,468 including VAT). One way of achieving this or of making the system work in your favour is to suggest to the estate agent that you establish your own commission structure or bonus scheme. There is nothing in the rules to stop you doing this. For example:
An example of matching your needs to a commission structure that suits you.
If you do set a date for closing the deal, agree what action you will take after that date. Either way, get the re-structured commission structure in writing before you sign up.
Obviously, agents are completely entitled to say no, but if you make the structure sensible and include a genuine incentive for them, you have more likelihood of succeeding. Make sure you cover all eventualities, for example:
Sell the property for
SPEAKING TO A DECISION-MAKER
A decision-maker is someone who has the authority to say yes or no to company decisions. It does largely depend on the decisions you want to make as to how high up the ladder you need to go in an estate agent’s: in a small outlet, perhaps as far as a partner or owner; in a large multi-shop company, maybe the manager. This is especially relevant when you want to negotiate commission rates, as only they are likely to have the authority to change the terms of the deal.
Finding the best route to speaking to a decision-maker can be tricky: you do not want to upset the individual assigned to you, as their skills may be of use later on in the sale. So always think of it from their perspective: if I were in their shoes, hearing that the customer wants to speak to my boss, how would it be best received?
The example on the next page implies you may move your business elsewhere, if your requests are not met, but it doesn’t commit you to it.
You: ‘Hi Steve. I think you would be great selling my property and I have every confidence in you doing so, but your commission rate is likely to stop me from using you. I realise that Karen Masters heads up the agency and before I potentially move my business elsewhere, I would like to speak to her about this and then you to run with the sale after that.’
Agent thinks: Mmmm ... he obviously rates me, which is nice to hear. I am not in a position to negotiate commission rates, however Karen will be really pleased I have not lost us business and she has the opportunity of saving it. He values me enough to tell her he wants me to negotiate the business.
HORSES FOR COURSES
When you have chosen your estate agent, allow the specialist salespeople to show the prospective buyers around, if you feel they can do a good job.
Whoever is going to be the primary seller, make sure you get to know them, and as much as possible, gain a good rapport (see Chapter 3), as this could prove invaluable. Also, it is worth asking them to feed back information on the comments of the prospective buyers, which will help the sale go through at the price you want.
There are several benefits to being at home when the potential buyers are coming over. This is especially true when they are seeing the property for the second or even third time, as they have become more serious contenders. This also depends on the state of the market at the time, as in periods of high demand, some people are making offers after just one visit, for fear of losing the property.
A word of caution here: gaining a benefit from being around depends upon your people-skills. By this I mean being unobtrusive, relaxed, subtle, and appearing helpful while not overly pushing for a decision. This is tougher than it sounds, as we are talking about a home that you have heavily emotionally and financially invested in here.
Having given the warnings, I would say the benefits outweigh the negatives, as you often get buying signals (see Glossary) and you are also best equipped to answer any questions they may have about the property.
Typical buying signals include:-
- A.Asking if fixtures and fittings are included in the price. This is a heavy indication that they are interested. Think of your answer here. It depends what you want to indicate.
f there is no way you want to include this in the price and are prepared to lose the sale if it comes to it, then just say:
‘No, the price we are offering is based on the property,’ and ...
- 1.‘We are intending taking the fixtures and fittings with us for the new property,’ or
- 2.‘We were intending taking them with us as they are worth around x amount, but we are willing to discuss potentially leaving them behind, if we are able to come to an agreed price.’
Example 2 does leave you the option of negotiating with them on the items, but make sure x is more than you actually want to settle on, as there is every likelihood that they will want to haggle!
If it is possible you would include them in the price, don’t give anything away before you get a commitment or indication of sorts from the buyers. Giving away something for nothing is not a wise thing in negotiation. What would you want to get out of the deal? It may just be a commitment from them to buy the property. If so, maybe say something like:
‘Well, not officially; however, if you are keen on buying the property, let us know today, and we may be able to come to an amicable agreement.’
- B.When they are openly planning what they would do with the rooms.
Who would have which bedroom? What colour curtains? etc. They are effectively measuring up, and, as long as the conversation is flowing between them, i.e. the other person is answering positively, you are well on your way to a sale.
- C.If they make themselves comfortable. Maybe they sit down. If they don’t, but seem to be asking questions about the house or area that indicate interest, offer them a cup of coffee and make them feel at ease. The more they feel comfortable and at home, the more likely they are to want to make it their home!
Having said all that, if you cannot be around, quiz the agent as to what the prospective buyers say during the visit.
BE CAUTIOUS OF WHAT YOU GIVE AWAY
If you get to set your own commission rate, a selling deadline may be something that you include automatically (see earlier in this chapter).
CLOSING THE DEAL
Now at this stage, you have either got a keen agent working on your behalf, with whom you have hopefully built up a rapport; or you are negotiating directly with the buyer. Either way, you are in a position to close, and there may be an opportunity to bargain.
Bargaining usually occurs after the buyer raises an objection: in a lot of cases, it is price. In which case, an alternative price could be offered by the buyer, or they could just say that it’s too expensive and want you to make another proposal.
I am going to deal with these two scenarios separately; however, versions of these tactics can be applied to each.
A. When they just say the price is too high
Objections like these often mean they are interested and are either using an experienced negotiator’s tactic, or offering a signal that they would like to buy, but at a better price. I would normally recommend getting an offer out of them before you continue, but let’s assume they won’t. What you can then do is ask a question of your own. For example:
‘Really, compared with what?’
This will help you get to the crux of the objection.
They may reply:
‘Our budget of £495,000.’
So you know their budget, and now you can probe further:
‘If price wasn’t a problem, would you buy the property?’
Now you know that if you overcome this objection, you are likely to be on your way to that semi-detached you set your heart on! You also know that (assuming this is going to be their home), they have developed some emotional attachment as well, and unless they physically cannot borrow any more, there is a good chance it’s not their final offer.
As price is likely to be the main objection, it is worth having in mind some of your arguments to overcome this, and also the benefits that are linked with them. The problem may need to be probed further, for example:
‘I am assuming you have an additional budget for fixtures and fittings?’
If the answer’s yes, then you could ask how much they budgeted for kitchen electricals, carpets, curtains, sofas (or indeed anything else you weren’t intending to take with you). They may say £5,000 – well, then there may be a compromise to be had with your items:
‘If we were to allow you to keep our fixtures and fittings, would you be able to include that in your budget to achieve £500,000?’
If they are willing to go as far as £498,000, then you are only £2,000 away from your ideal return – or even less, if you have restructured the agency commission as explained earlier.
Perhaps they are renting, and think the process could take a few months, and in the meantime have to pay their landlord £2,000. Saving this could increase their offer to £497,000. Tell them that if they agree now, you can move earlier – and then your ideal return is only £3,000 away.
B. If they offer an alternative price
Brilliant – they’re interested!
It is important to find out what is the reason behind the lower offer. Is it because they physically cannot borrow any more? Or do they feel that is what your property is worth?
Listen to the reason and look for a solution.
If they feel the property is simply not worth the value you have placed on it, you can respond (unaggressively, note) with the justifications which you have prepared in advance. For example:
Our property is worth £500,000 because ...
- 1.‘Three-bedroomed properties in the area have consistently been selling for between £490,000 and £500,000 over the past few months. Property inflation has increased by one precent in just the past month, adding a further £5,000.’
- 2.‘Ours is in exceptionally good condition (unlike many on the market). It has a recently renovated kitchen and a garden that has been well maintained.’
- 3.‘Two streets away the council tax is £500 more a year!’
- 4.‘Our neighbours are wonderful; there is no noise at night, even at weekends, as the avenue is well set back from the main road. This is not the case with most of the ‘for sale’ properties in this area.’
THE SIXTY-FOUR MILLION DOLLAR QUESTION
When do you close the deal?
There is no one answer to this, as there are many different types of buyers and sellers.
I have always detached myself emotionally from a house when I have been selling, and this allows me to take risks. Obviously, I have wanted to maximise my income, but have always felt sure that if I didn’t get an acceptable price, someone else would come along; or, alternatively, I would rather not sell. This is why having a ‘walk-away rate’ is useful, as when it goes lower, you know what to do, and everything above it is a bonus!
My advice is: if you cannot bear the thought of losing the sale, then make sure you don’t. If you feel you are being ripped off, negotiate until you feel comfortable. If you are keen to get a good deal, and are not fussed as to whether you sell now or in six months’ time – push it as far as you can go. Interpreting the state of the property market will help clarify things, and a careful eye should be kept on this when making decisions.
WHAT IF I FEEL THE AGENT IS PUSHING ME TO AGREE, WHEN THERE MAY BE MORE TO GET?
Well, hopefully, you have managed to build a rapport with the agent to try to prevent this from happening. However, they are there to sell a property and move on to the next, and you may still find them putting pressure on you.
Perhaps when they say: ‘It would be wise to accept £496,000’, you could reply:
‘I think you have really done a great job so far[making them feel good about what they have done ‘so far’]. However, £4,000 is really important to me, as I need this for a down-payment on the house I am buying [or similar – appealing to emotions]. I would really appreciate it if you could get this extra money, though of course I don’t want to lose the sale – can you give it a try? What do you think are your chances of achieving this?’[appealing to their sales skills].
WHAT IF THE ESTATE AGENT OR BUYER SAYS: ‘THAT IS THE FINAL OFFER – TAKE IT OR LEAVE IT’?
Decision time! In business, I have frequently heard this said when I, as the seller, have turned away custom because the deal was not right for us – only to find the client coming back with a better offer a few days later! However, if you want to sell, and are happy to accept the current offer, then you are at the very least taking risks if you try and push it further. The only possible exception is if you are lucky enough to be speaking to the buyer directly: gauge the reality of this statement there and then; make the difference seem small and that it’s a joint problem; and offer the opportunity of a compromise. For example:
You: ‘I really want to sell to you, and we are only £2,000 apart – it seems ludicrous, in a £500,000 deal, to fall out over such a relatively small amount, but it’s a lot to both of us. If I were to suggest a compromise, would you be in a position to consider it?’
If you use this or a similar approach, try to do the deal there and then, so as not to let them go away and have second thoughts. You may be OK with it; they could just decide to buy somewhere else!
LOOKING FOR SOLUTIONS TO OTHER PROBLEMS
Moving house is considered one of the biggest stresses in life (along with getting married, changing job and having a baby – I knew someone who did all four at once!) and the more tactics and solutions you can put in place to make the deal seamless, the better.
Look at ways to solve potential problems that may occur. For example, you may be in a position to buy and also have got someone to purchase your house; however, somewhere down the line there is someone holding up the deal. This can result in you losing the property you want.
In this case, consider what you could do. Can you locate the chain-breaker? Then, can you find out what the reason is? Is it that they need to buy carpets and wardrobes, and that comes to £3,000, but they can’t get an increase in their mortgage? Can you and the other members of the chain provide a solution? If it is in everyone’s interest to provide a solution that will conclude the deal, then what’s wrong with that?