The Sydney Morning Herald ran a story this week suggesting that investors are starting to look at selling their investment properties, following a year of red hot property gains – a kind of property market profit taking, so to speak. So if you’re mulling over selling a property or two, here’s some advice for doing a good job of it.
Who are you selling to?
When you’re presenting your property for sale, it helps to have your ideal buyer in mind. Are they more likely to be an owner occupier, or an investor? Each kind of buyer is looking for different things and although your agent will be able to adapt their pitch accordingly, it helps to have a strong ‘product’ for them to present.
What owner occupiers look for
When you sell to an owner occupier, getting them to fall in love with the property is the best way to maximise the sale price. Owner occupiers imagine themselves in the property and the task of the agent is to help them make that emotional connection first, then point out the logical features and benefits that back up the decision that the owner occupier has already made in their mind. Actually, it’s quite fascinating how people make decisions and there’s a whole body of research behind it, but suffice to say that humans make an emotional decision first, then seek to rationalise it later. Owner occupiers are most interested in kitchens, bathrooms, decks and entertaining areas as these are the places they’re imagining themselves having homely experiences, either with company (in the kitchen & entertaining areas) or some nice quiet pampering (in the case of the bathroom).
What investors look for
Investors, on the other hand, are probably more challenging for an agent when it comes to getting a good price. If they know what they’re doing, they won’t go for the subtle presentation tricks, like baking biscuits just before the open home to create that homely smell, or investing in those stunning shots of the property on dusk, with all the lights on. The investor will be interested in return. So they’ll be looking for a low maintenance property in good condition that’s likely to retain a ‘quality’ tenant. And by quality I mean someone who’ll take care of the property and pay their rent on time. Ideally, the difference between the rent and the cost of running, maintaining and insuring the property will be as large as possible.
Local amenities are important to both owner occupiers and investors. As the old saying goes, ‘location, location, location’ but it’s very true. Access to transport, schools, cafes and shopping precincts are all important to people who will occupy houses, be they owners or tenants.
Mowing, trimming the trees, washing down the exterior and doing a general tidy up of the garden is a low cost improvement that won’t necessarily get you extra money, but it does discourage the perception that your property is poorly maintained and the potential buyer should start going through it with a fine toothed comb.
Doing an interior tidy up is important too, for the same reasons as the exterior tidy up. Investors will appreciate a tidy house as it suggests a good quality incumbent tenant; and owner occupiers will find it much easier to fall in love with a place that feels like a home, rather than the Black Hole of Calcutta.
Make sure you choose a good agent – local knowledge is not really that important these days as it’s amazing what you can learn in half an hour with Google Maps and realestate.com.au . A good agent is someone who is quick to identify the selling points of the house and how they’ll ‘reposition’ any weaknesses of the property.
Marketing the property is an area where too many people cheap out and it really is to their detriment. It really is worth spending a couple thousand on some quality photos and video to market your property and to invest in some premium listings on realestate.com.au or domain.com.au if it’s going to broaden your pool of buyers and get them excited about coming to see the property, where your agent can work their magic. You only get one chance to make a first impression and that thousand dollars or so can net you ten times that at sale time, with the right buyer.
Tips for advanced players include considering some bigger projects to add disproportionate value. But here be dragons: it can be easy to overcapitalise and not get your money back. Ideas for bigger projects include renovating bathrooms and kitchens, landscaping, building decks, replacing roof and guttering and repainting.
One last point is that timing is everything. The best times to sell a property are usually in October/November because people like to be settled and in the new place for Christmas; and also in February/March when people have decided to look for a new place in the new year. Investors will buy throughout the year but will have in the back of their mind that demand for rental properties follows roughly the same cycle as that for owner occupiers.
– Owen Davis
About Owen Davis: Owen Davis is the Principal of DFG Property, a full service property management, finance & sales firm based in Sydney. Owen has over 15 years experience in property financing, real estate and property management. More than a third of his clients are among the top 10% of property investors in Australia.