3. How to get the best possible price for your property

By VICKI HOLDER, editor Weekend Herald Real Estate

Selling your home is one of the biggest financial transactions you will make in your life. Therefore, it's vital you understand your options and the costs involved before making a commitment. The following article explains how you go about targeting a buyer through promotion. It looks at the various ways of selling, addressing key issues to help you decide which method is right for you and your home. Finally, it explains why your marketing campaign is crucial to achieving the best price for your home.

When selling your home, the aim of the marketing campaign is to sell it at its best price, in the shortest possible time, with the least amount of stress. Most people choose a real estate salesperson to help them sell their home, as it means far less work for the homeowner, simply because the real estate salesperson has all the resources, experience and skills to do the job better.

An experienced real-estate salesperson can prepare a marketing plan that will maximise the price of your home.

When a vendor asks Christine Fowler, from Ray White Mountfort Estate Bucklands Beach, to help sell their home, she first tries to work out who the buyer will be and where they will come from.

"I look at how we can reach that buyer and get the most benefit from advertising. I put together recommendations for the marketing campaign, and from there we formulate a budget. The idea is to get the most people through the open homes."

Depending on the property and the vendor's budget, Christine's marketing campaign can include advertising in local and national newspapers and on the internet, as well as in her agency's own glossy brochure. If it's a grand property, she will look at the business press. She puts together fliers for mail-outs and uses the company's database to target likely buyers. She puts up high-quality pictorial signage. And there are the open homes. "Everything has to portray quality, from the presentation of the property to the way the agent presents," she says.

Auctioneer and trainer Ross Foreman agrees the need for good presentation is more important than ever. "The buying market is so demanding an agent must be able to cope with the pressure of telling their vendor to tidy up." They must also understand how to market both a "broad-based" and a "narrow-based property" (which will have huge appeal, but only to a narrow list of buyers).

Most agents now use the internet to advertise properties. "It's an incredibly cost-effective way to advertise," says Barry Thom, of Unlimited Potential. "The days of putting a picture in the real estate agent's window are gone. The media and the internet are windows on the world."

There are several different ways to sell a property. They include auctions, private treaty, tender, private sales and inviting expressions of interest.

Going, going, gone

Auctions are Christine Fowler's preferred method of selling because the current Auckland market is uncertain and nobody can accurately tell you how much your home is worth. "Real estate agents are marketers, not valuers," she says. "Our job is to market the property to get the widest range of buyers. True value can only be determined by the market.

"A good marketing campaign, where there's no price on a property, draws the foot traffic through a home. When you're marketing with a price, people will stop outside, look, assess the property and say: "It's not worth it." If it's not priced right, they don't even come in. Auctions achieve the best possible price."

The reasons for selling by auction are that you get unconditional, cash buyers, you have a quick, finite timeframe for selling, and the process creates a sense of urgency among prospects.

The vendor can present the property at its best during a pre-set number of open homes. Although an auction can be stressful, it puts the vendor in control. Vendors set the terms. Vendors decide on their reserve price - the price they will accept through the auction method.

During the auction process, competition between two or more bidders is open and transparent. The ideal is to have at least two keen bidders who vie against each other to purchase the property. A skilled auctioneer knows how to play on emotions and egos to drive the price up as high as someone is prepared to go. There is no upper limit on the price. (An article dedicated specifically to auctions will run next Saturday 2 December.)

Make an offer

Private treaty means selling with a fixed price. Buyers are invited to make offers against the vendor's advertised price. The salesperson and vendor have to decide on a price at which to advertise the home. If the price is not right, the property may be perceived to be overpriced and genuine purchasers may be scared off. The longer the property sits on the market, the more people begin to think there must be something wrong with it.

Bryan Richardson, manager of Bayleys, Newmarket, says: "In the current market, price is absolutely critical. In a lot of instances, if the vendor is committed to private treaty, we've advised them to obtain a registered valuer's report to support the asking price.

"Rarely, with a fixed price, do you get a situation where there's competition, as you are usually only dealing with one buyer at a time. And buyers have control over the process. They can put conditions into the sale to suit their requirements."

Conversely, if the home has considerable appeal to several buyers, salespeople can drive the price up beyond the advertised price, as happened with Jeff Vuleta of Saatchi & Saatchi. "I sold a home by private treaty not so long ago," he says. "We had an open home for two weekends. Thousands of people came through but we didn't have one offer. Then three lots of people came through and all wanted it. They got into an argument and from there it all went my way. It was ridiculously easy."

Tender mercies

With a tender, interested parties submit offers to the vendor. There are many similarities to auctions. There's no fixed price. The timeframe in which people have to make a decision is fixed. And vendors can set their selling terms. However, people can attach their own terms to their price, making the sale conditional.

Unlike an auction, the competition is closed. Prospective buyers don't know how many other people are interested, or what their offer is. Although the vendor is in control, there's a degree of uncertainty. Vendors have to contend with buyers' conditions and whether or not they are dealing with a genuine offer.

Many people prefer tenders because they are less public than auctions. Tenders give vendors a five-day period in which they have to decide which offer to accept. This may suit vendors who need to show offers to another family member or a solicitor who cannot be present.

Going it alone

The prime reason people decide to sell their home privately is to avoid the real estate agent's commission. But by forgoing a professional marketing service in the current market, private sellers have to work hard to find the numbers that will maximise the price over and above market value.

Recently, a couple in Mt Eden offered their house for sale privately. They put up a sign at the gate, with fliers available. Then they advertised in the local paper and attended the open homes themselves.

When they had no bites, they called on Julia Stewart from Unlimited Potential for help. Julia says the vendors did a lot of things right. But they neglected to take names during open homes. After following up prospects from the open homes, Julia found a prospective buyer. To prove this particular house represented the best value around, she sought LIM reports, organised valuations, negotiated and gave professional advice. She ran around doing many things that helped clinch the deal. "Because the buyer was pregnant, I even organised times for the couple to go into the home prior to settlement so that the deal was made possible."

Even those who consider themselves marketers are in unfamiliar territory when they attempt to sell property. Private sales often turn into agents' sales when disillusioned vendors turn to a real estate agency for help. By the time vendors call in a real estate salesperson, the property may have languished on the market, giving the perception that it may have something wrong with it and making it difficult to sell.

Express your interest

Another selling method, usually only used in homes in excess of around $3m, is where vendors test the marketplace by inviting "expressions of interest". Richardson explains: "Interest might be registered by presenting an offer with conditions. It would normally flow into a private treaty process. Vendors may use this to test the market to see what interest it will create in the marketplace."

* Part 4: The magic of marketing

* We welcome your comments and ideas. Please send them to Real Estate Summer Feature, The New Zealand Herald, PO Box 32, Auckland.