Making and receiving offers

 

maison-et-objet-paris-2015-market-for-the-home-2.0.jpgThere are two ways to look at a prospective house sale. The first is antagonistic. The buyer wants to pay the lowest possible price. The seller needs to get the most money they can from their sale. These two camps are in opposition, and if both bring this attitude to the negotiation, it can be very hard to satisfy both parties. The other perspective is collaborative. The buyer wants to buy, the seller wants to sell, and both sides are looking to achieve the same objective. Adopting this attitude will make things much easier to resolve. Both perspectives are, in some sense, true, but the first way can lead to intractable problems and stubborn negotiating that gets in the way of agreeing a sale. A constructive approach offers a ‘win-win’ solution, where everyone is happy with the deal.

The buyer’s perspective

Before making an offer, know exactly what you can afford. If you need a mortgage, speak to an Independent Financial Advisor (IFA) and get a Mortgage Approval in Principle (AIP). This will let you know how much you can borrow, and how much you can expect pay back each month. If you are a cash buyer, or are getting your money from other sources, you need to do the same calculations to truly know your financial position.

Remember – buying a house is only a means to an end. For most people, the aim is to build a new life in a new home. If you find the right house, focus more on the outcome and less on the negotiation itself. Of course you want the best deal, for less money. It’s natural to offer low, and to do your utmost not to pay more than you have to. But it’s hard to weigh the value of finding the right place. If you buy with a mortgage, you only need a little extra cash to make a much better offer. For example, if you are borrowing 80% of the purchase price, £5000 more will only cost £1000 in cash, plus a little extra each month. Some buyers get so caught up in ‘doing the deal’ that they lose sight of how little it will actually cost to improve an offer. Concentrate on what you are trying to achieve in the long run, rather than worrying about ‘winning’ the negotiation. If you find the home you want at an affordable price, you are already a winner.

For investment buyers, it’s almost the exact opposite. You should only be looking at the numbers. An investment property is a business, and you should try to dismiss the emotional appeal of a particular house. There, it comes down to the maths of whether you will attract tenants, and whether the rent will cover the cost. Even so, being direct and honest about your position, rather than trying to haggle, will give you a much better chance of achieving your goals. Investment buyers, though, should be willing to walk away if the numbers don’t work.

The Seller’s Perspective

Constantly ask yourself ‘what is it you are trying to achieve?’  If you are buying a new home with the proceeds from the sale, you should have a good idea of how much money you need to make. If you receive an offer which is too low, perhaps you can make a lower offer on the home you need. If there’s a chain, it’s easier to ask five people to take £2,000 less than for you to accept £10,000 below your price.  A good estate agent can help a lot in these cases. If you want a quick sale for personal or practical reasons, it can be better to accept a reliable buyer at a lower price, than to hold on in hope of something higher that may never come. Knowing your own priorities will help guide you towards the best decision.

Naturally you want the best price. The Estate Agent is working for you, not for the buyer, and although agents want a sale, their advice on the state of the market and the quality of the offer should be taken very seriously. If you are holding out for more, it’s useful to have something in reserve. Including furnishings in the price can give the buyer the justification for a higher offer. Buyers want a deal, too, so have something extra to give in order to get what you need.

It can be good to be flexible or creative. A buyer may be able to afford a larger mortgage but may not have ready cash available. If your home is just over a stamp duty threshold, perhaps you can offer to pay the duty, so that the buyer can offer more for your home but has less cash to pay up-front. Maybe you can offer to pay the removal costs out of the sale price. In both cases, the buyer can use the money saved to add to a deposit, allowing them to borrow more for a higher purchase price. If it costs you £5,000 in stamp duty to get £10,000 more for your home, you have clearly done well out of the deal!

Unproceedable offers

This is when a potential buyer makes an offer, but can’t go ahead with a sale until they have a buyer. Sometimes, the obstacle can be a link much further up the chain. They are hard to evaluate: on one hand, it’s great to have a potential buyer lined up, but on the other you might be waiting for months before everything comes together. If you receive an unproceedable offer, you may be willing to accept the price, but it is usually a good idea to leave your home on the market. The estate agent of the person who has made the offer has almost certainly told them it will be easy to find a buyer. It may be true, but be sceptical to guard your own best interests, and ask your own estate agent for their opinion. At very least, suspend marketing only to a deadline to give your prospective buyer some time to complete the chain.

If you want to buy a home but haven’t yet found a buyer, it’s still worth making an offer. First, you will have some idea of whether your chosen home is affordable. Second, you virtually guarantee that the estate agent will keep you informed of any other offers or developments. Most important, you have a real idea of how much you need to get for your own home. If your unproceedable offer is accepted, you may be able to take less for your own home to complete the chain. But be quick – even if you have your heart set on a home, you can’t expect the seller to wait forever.

A last word on negotiation

For both sides, remember that negotiation is only the means by which you both arrive at an agreement that suits everyone. The more honest and collaborative the process, the less likely it is to break down later on. You both win, or you both lose – very rarely is this not true. Be honest with yourself, and know your own mind and financial position. Be prepared to compromise or to walk away. It’s easy to get caught up in the detail, but is it really sensible for a deal worth hundreds of thousands of pounds to fall apart over a couple of hundred quid? From the minute an offer is made, both buyer and seller want the same result – ‘sale agreed’!

 

 

Advertisements

Putting your home on the market – A checklist for marketing your home

Marketing

Once you have decided to put your home on the market and chosen your estate agent, here is a rough guide to the things you should do!

Preparing the house

  • Tidy up and clean up before your valuation
  • Attend to any obvious repair work
  • Consider any ‘neutral’ redecoration required
  • Start packing away as many of your personal possessions as you can
  • Clean the windows
  • Thoroughly clean the kitchen and bathroom
  • Make sure all the light bulbs in all the lights are working
  • Sort out the front of the house, including neighbouring gardens if need be!
  • Dress each room properly – i.e. for its purpose. Put a dining table in the dining room, and beds in the bedrooms, even if you have used these rooms for other things.

Working with the agent

  • Have the house clean and tidy, ready for internal photos and measurements
  • Tell the agent about any special features that should be mentioned
  • Decide what you want to include in the sale, eg oven, washing machine, curtains, etc.
  • Put together a file of all documents relating to the house – utility and council tax bills, guarantees on the central heating and double glazing, etc.
  • Order a Home Information Pack – your home can’t be advertised without it.
  • Get a key cut for the agent
  • Clarify viewing arrangements – will the agent do them? Must they get your permission first each time? Do you need to take the dogs out? Make sure both you and the agent know exactly what to do.
  • Check the agent’s details as soon as they are available to make sure nothing has been missed. Address any problems that you’ve spotted before the agent begins

Preparing yourself

Remember that you are moving on, and for everything that you leave behind there will be a whole new range of possibilities opening out ahead.  Although it may be unsettling having strangers coming round to your house, it won’t last for long, and when it’s done you’ll be building a new home for yourself elsewhere.  The hassle you are about to go through is a necessary challenge, and will be well worth it for the end results that it will brings.  If you are worried, let the agent know that they need to respect your sensibilities.  Draw on the strength of those around you, your friends and family, and look ahead to the next stage of your life.

 

Hunting for house hunters

digital-marketing

– why marketing is the key to choosing the most effective agent.

The job of an estate agent is to sell your home, to the right buyer, for the highest possible price.  That seems straightforward enough…  but the agent’s ability to do that depends upon how many ‘potential’ buyers get to know that your home is for sale.

Imagine, for example, there are ten potential buyers in the market for your kind of home…  but only two of them can afford to pay the asking price.  Will your chosen agent be able to tell every buyer about your home??  Or will they miss a few…  including, perhaps, the buyers able to pay the best price!?

The answer depends entirely upon two things – the advertising and marketing strategy of the Estate Agents, and the quality of the follow-up of enquiries by that Agent.

Different ‘potential’ buyers look for houses in different ways.  A good agent covers as many bases as possible for each home they are selling.  You should know how and where an agent’s advertising works, and how they follow up each enquiry.

This is a broad summary of the principle forms of advertising and marketing.

The Internet

This is far and away the most important part of any agency’s marketing plan.  More than 85% of house hunters use the internet as part of their property search, and it’s estimated that over 70% of buyers find their new home online.  The reasons are straightforward – a house-hunter can specify detailed criteria as to what they are looking for, and can look for houses at any time of the day or night.

A second consideration is that agents who advertise online get lots of email enquiries, and so have an active and ‘live’ database of house-hunters that can be reached by the click of a mouse when another suitable property comes on the market.

There are two basic components of internet marketing.  The first is the agency’s own site.  The second part of online marketing are the ‘Portal’ websites.

The agent’s website

ft.png

Every agent worth dealing with has a homepage.  Most of all, this should be simple to use.  Go to the agent’s home page, and see how easy it is to search for property.  If it’s straight-forward, that’s fine.  If it’s a struggle to find how to search… or indeed, a struggle to find the agent’s home page at all…  then you should seriously consider rejecting that agent straight away.  An agent that has a clumsy home page…  or no home page at all…   may miss out on the best buyers.

Property Portal Websites

These are websites that hold many properties from different agents.  Advertising on these sites costs each agency a good deal of money (which is why not all agents are n all sites).  Finding out which sites an agent is on should be a significant consideration in your choice of estate agent.

There are new portal businesses being launched all the time, though there are a few which dominate the market.  These are the most well-known and commonly used sites:

Rightmove.co.uk

6logos_rightmove

This is far and away the dominant site.  It has, by its own reckoning, 85% of the property portal market, and is the 7th most popular website of any kind in the UK.  It’s success is down to the user’s ability to search by location, price, and minimum number of bedrooms, plus some other criteria.

Your first question to any agent should be, ‘are you on rightmove?’.  If the answer is no, then don’t use them.

Your second question should be, ‘what other sites are you on?’.  Rightmove has, at most, 85% of the market.  So what happens if your ‘best’ buyer is one of that 15% that doesn’t use rightmove??!

zoopla.co.uk

pobrane (2)

Zoopla is the UK’s most comprehensive property website, focused on empowering users with the resources they need to make better-informed property decisions. Launched in 2008, Zoopla has since been one of the fastest growing websites in the UK, now attracting over 40 million visits per month and has collected numerous awards and accolades along the way, including being named one of the Top 10 UK Tech Companies (Guardian) and one of the Top 10 Most Innovative UK Companies. It is another well-known website used by estate agencies, future buyers and tenants.

Zoopla grew dramatically when it purchased Findaproperty.com, Primelocation.com and Propertyfinder.com…. the third, fourth and fifth largest portal sites at the time!

One of the more interesting facts is that, while Rightmove is the top site and Zoopla second, and nearly everybody uses one or the other, there aren’t that many buyers who search on both. So, only by advertising on both Rightmove and Zoopla, can an estate agent reach all the buyers in the market

 

 

Primelocation.com

pobrane (1)

This site is now also owned by Zoopla, and is the only brand they have decided to keep after buying out their major competitors (see above).  It was founded by a group of independent estate agencies in London, and originally covered expensive properties only within the M25.  It still has market kudos for the upper end of the market, and is still used widely by buyers in the south east, so may be important if you are selling a home worth upwards of £300,000.

All Zoopla properties are advertised here, but its brand origins make it even more important if you are hoping to sell more expensive properties to a wider geographical market.

On the Market

1_Standard_RGB

On the Market is an interesting tale of a good idea that didn’t quite go to plan. Started by a group of estate agents under the name ‘Agents Mutual’, Onthemarket was supposed to challenge the dominance and Rightmove, and therefore to lower costs for estate agents and their clients. In order to do that, they introduced three controversial policies; first, that OTM agencies could only advertise on one other portal; second, that agents were signed up for long periods, often five years; and third, that OTM would advertise properties exclusively for a couple of days before other portals got to see them.

So, what went wrong? Well, for starters, the ‘one other portal’ rule means that Rightmove remains unchallenged, and virtually all OTM agents are also on Rightmove (a very small number chose Zoopla)… so there’s not much point in looking at OTM, because you’ll find those properties elsewhere.

This, in turn, meant many OTM agents found they lost a lot of custom from the site they dropped… but were locked in to those long contracts. Some chose to break the ‘one portal’ rule  – OTM is taking them to court (see OTM Ordered to pay court bond). Others agents have combined to take OTM to court for lost earnings and broken promises (see Rebel agents explain the case against OTM).

The third point of the plan, giving OTM exclusive marketing for a couple of days, actually works against seller, because it means the major portals – and so the majority of buyers – don’t see newly listed homes straight away.

All in all, OTM has been beset by problems, and one can only pity those agents locked in to long contracts with a site that isn’t helping them…. Pity… but avoid!

Other websites

There are a growing number of other websites around, too.  Bubbling under are the relatively new players in town- nestoria.co.uk,  and globerix.com. Some, like ukpropertyshop.co.uk and email4property.co.uk, are used to advertise the agents, rather than the specific properties.  Finally, some agents use known sites like Google, Yellow Pages (yell.com) or the Thompson Local, to advertise their own sites.

Any and all of these sites might be of benefit in bringing in buyers, making sure that your home is seen by everyone who might possibly be interested in it.

The Local Newspaper

In the ‘olden days’ (ten years ago!), this was perhaps the key way that house-hunters would find suitable properties.  But the local paper is a very clumsy form of marketing.

First, it’s reckoned that over 90% of ‘readers’ of the property section AREN’T planning on moving home.  They are just browsing, seeing what’s available.  I know I’ve done it (even before becoming an Estate Agent!), and I’m sure you have too.

Second, there is no real organisation of the properties within the paper.  If you want to look at all the three bedroom houses with a garage, or at all the homes priced between £150,000 and £160,000, or at all the homes near Ladysmith Road School….   Good luck!  You’ll have to browse each and every advert to see what you can find…  with no guarantee that the ads will contain enough information for you to know.

Third, very few of an agent’s properties are actually advertised in any given advert. Many people think agents advertise everything, but in practice a single page advert costs over £400 per week, and may only have space for two dozen properties, when the agent has two hundred up for sale.

In fact, very few buyers actually see the home they buy advertised in the local paper.

This actually raises a very important issue about adverts in the paper, which, perhaps, not all sellers realise.

The adverts that each agent runs are not necessarily about marketing your home directly…  but they ARE about attracting all possible buyers of your home to contact the agency…

In other words, if an agent has four 2-bedroomed terraces for sale, in the same area for around the same price, it isn’t necessary or helpful to advertise them all.  An agent might well just advertise one in the paper.  What is essential, though, is that the agent takes the correct follow-up information, so that any enquiries about that property are also informed about the other, similar homes on the market.

Moreover, if potential buyers call an agency in response to an advert, the agent must find out the kind of property they want and add them to the database.  Then, if another suitable property becomes available, that prospective buyer should be informed immediately!

Sellers tend to over-estimate the importance of the local paper, even if they themselves are using other sources of information to house-hunt.  In practice, as long as the agent is advertising regularly, there is almost nothing much to choose between agents in terms of their newspaper advertising!

The Office and its Shop Front

295130_104250459729244_1339020460_n

This is the second major part of a traditional estate agency business.  Its importance is changing.  Once, it was a principal site of passive ‘advertising’.  The shop front is – literally – a window on the properties available inside.  Even so, the number of buyers who ‘walk in’ to enquire about a house in the window and then end up buying it, is relatively small.

In fact, the principle value of ‘walk-in’ customers is in giving the agent the chance to talk through the house-hunter’s specific requirements.  In this case, the value of the office is dependent entirely upon the quality of the agency staff, and their follow-up marketing.

An office lends credibility to a business, and provides a constant marketing presence on the high street.  More than that, though, it brings the agent in personal contact with the ‘market’… the buyers and sellers in the area.  For agencies that are built around customer service, this contact is an essential part of knowing and understanding the unique needs of each customer.

Other Agency Advertising

There are an infinite number of ways that an estate agency can advertise itself, from the sponsorship of a local rugby team to the buying of advertising space on the back end of a bus!  The important thing to remember, as a home seller, is that buyers are attracted to an agency by this kind of advertising.  As a general rule of thumb, if you start noticing that one or other agency has a high profile, then the potential buyers in town will do so as well.  An agency with a high profile will attract more house-hunters, and so has more chance of attracting the best buyer at the best price.

Sign Boards

13720508_1354088417954571_1170255274_o.jpg

These are invariably a very effective way of advertising your home.  A remarkable number of buyers know where they want to live, and will spend their first days ‘house-hunting’ driving around their preferred streets, looking for suitable homes in the market.  All estate agents use signboards, so this isn’t a means of differentiating between agents.  At the same time, it once more throws the emphasis back onto the agency’s ability to handle and follow up on enquiries.

Sales and Lettings Agents

Few sellers consider this aspect, but it can be a very important deciding factor as to whether your home sells for the best price.  Estate Agencies that run a lettings department have two huge advantages over agencies which don’t.

First, the agency is in direct and regular contact with property investors, whose properties the agency manages.  Whereas most people only buy a single home to live in, property investors and developers may own anything between two and two hundred different homes.

It’s obvious, when you consider it, but the agents who deal with investment buyers through the lettings department will know which investors are after which kind of properties, and will be able to let them know if your home might meet their investment requirements.

The second consideration is that an Estate Agency which has a lettings department will property understand the mechanics of investment properties, and is much better able to discuss the investment potential with that important sector of the market.  Investment buyers ask about rental returns, percentage yields, capital growth, optimum letting times, likely void periods, and so on.  The sales agent might not know all these details personally, but if the agency has a lettings manager, then the company should be able to speak the language of the investment buyer.

Although it is oft overlooked, in practice an Estate Agent with a lettings department is at a considerable advantage over one with no rental properties.

Agency Particulars – What matters and what doesn’t!

Again, every agent will provide property particulars, and these days pretty much every agent presents colour details.  It’s worth looking at, and reading, a few examples from any agency that you are considering.  Most details should include internal photos…  if one or two don’t perhaps the house is in disrepair, but if none have internal shots it’s more likely the agent is cutting corners on print costs.  How well-written are the descriptions?  Do the details highlight the features of each house, and at least encourage people to see for themselves?

Many people will request particulars before they decide to view.  Presumably the property already meets their broad criteria, so the principle purpose of the details is to encourage prospective buyers to go round in person, while being honest about the condition of the house.

It’s worth making sure, though, that the agent is striking the right balance.  Some agents, for example, will describe a downstairs dining room in a family home as ‘bedroom four’, so that the house appears as a four bedroom home instead of a three-bed.  This might encourage more people to view, particularly from internet searches, but unless the house is targeting bedsit buy-to-let investors, then it is more likely to prompt disappointed viewers than to find a good buyer.

At the same time, some agents include floor-plans in standard details.  This can be counter-productive, because often a 2-dimensional floorplan doesn’t properly show how some houses ‘work’ in real life.  Buyers love floorplans, but sellers should be very cautious of using them: a floorplan on a set of particulars is not likely to attract any more people to view, but might well put off one or two potential buyers!

Can you imagine any potential buyer saying, ‘I like the look of this house, but there’s no floorplan so I’m not going to see it?’.  Or are they more likely to say, ‘this house looked interesting, but I can see the floorplan and I don’t like the layout’.  Yet some houses work much better in real life than on paper! Unless your home is ‘deceptively spacious’…  that is, it’s much bigger than you’d guess from the outside…  then it’s often better not to have a floorplan on the details.

Incidentally, this is even more the case for the ‘virtual tours’ that some agents use for details on the internet.  Virtual tour photos are a 360° photograph of ‘fish-eye lens’ appearance that allows online viewers to rotate the image and focus in on certain details.

What they absolutely fail to do is to capture any sense of space, and so they can make even the largest room appear small and claustrophobic.  Virtual tours definitely won’t bring more viewers around than conventional photography, but they might well put off prospective buyers who, in truth, would find the home much more appealing than the squished-up image suggests.

Summary – Why marketing matters, and what matters in marketing

Marketing is the key to actually selling your home. The agency with the best marketing will reach the most prospective buyers, and it follows that they have the greatest chance of getting the best buyer and the best price. Internet advertising is by far the most important aspect of an estate agent’s marketing, and outweighs every other kind of property marketing in terms of effectiveness. Issues like newspaper advertising and the quality of the property details definitely play a role in encouraging buyers, and its good to find an agent that does these things well, but it’s much of smaller significance than the power of the internet. Ultimately, though, marketing only attracts potential buyers to enquire. Achieving a sale still depends on the ability of the agent to provide a good service to the potential buyers that it does reach. Shortlist your top three agents purely on their internet coverage, and then use other considerations to decide which agent you prefer.