The biggest mistakes sellers can make

After years of homeowners having a relatively easy time of selling their houses, market changes in the last year or two still take some getting used to.

And some sellers are making mistakes that are costing them in time, money and stress.

Kevin Lampen-Smith, whose job it is as head of the Real Estate Authority to educate buyers and sellers on how the property market works, says that, if anything, sellers now should be less likely to make mistakes.

“There’s more time in the market, now, it’s not as rushed as it was five years ago,” he says. “So when it’s no longer so hot, you should create time for yourself, you can take that extra time.”

Here are the mistakes to avoid:

1. Don’t understand the competition

Lampen-Smith says people who are thinking of selling should take the time to understand what’s happening in their own corner of the market by visiting open homes. He points out that you need to get your own sense of the value of the property compared to others that buyers are looking at.

“That means that when the agent brings an offer, you will be under pressure, but you will have a better idea of whether [your property] is worth price A or price B.”

Harcourts Birkenhead Point agent Travers Smyth says vendors need to understand that housing markets are very local – other suburbs, even neighbouring ones, can be quite different from your corner of the world, so what happens for friends across town may not be the same for you.

2. Don’t understand your property, warts and all

You know your property’s good bits – that’s part of the marketing plan - but Lampen-Smith says you also need to honestly assess the problems.

And, much as it hurts, you need to disclose these to agents, so that they can disclose to potential buyers – if you don’t both parties may be in trouble. Yes, a buyer does due diligence, but if you hide known faults, you and your agent could be in trouble.

Bayleys Ponsonby agent Chris Batchelor says that grade A property still flies out the door, but the minute there are negatives on a property, buyers find reasons to walk away. You and your agent need to leave no stone unturned to remediate what you can.

Smyth says that the red flag for both conveyancing lawyers and bank funding is incomplete paperwork on a house – no consents or certificate of completion for work done, drainage or other defects noted on the LIM. He recommends getting a LIM as soon as you’re thinking of selling, so you have plenty of time to work on it (rectifying anything with councils is a slow process).

Premium Real Estate agent Jelena Freeman adds that attending to delayed maintenance, stuff you’ve stopped noticing, is part of this too.

“Every time a buyer sees something wrong, they just subtract that amount from the price,” she says. “They are making more excuses now the market has cooled, using things as leverage to offer less.”

3. Don’t understand the process and what your agent can do for you.

Many people buy and sell a home only a few times in their life, so REA’s education site settled.org.nz was set up to help guide owners through the process. They found that only 45 percent of owners admit to high levels of knowledge of how the market works, but for people who have used settled.org.nz, this confidence jumps to 58 percent.

Lampen-Smith says that for sellers to stay in control of the whole selling process, they need to understand what their agent is doing on their behalf.

While they’re acting on sellers’ instructions, agents still have to disclose issues and meet ethical rules and obligations. When you work through the marketing plan, the method of sale and the price you’ve got in the back of your mind, disclosing stuff to your agent is your best move.

“Every property has its price,” he says. “An agent is not going to turn a doer-upper into a non-doer-upper; they’re not going to make false declarations.

“But what you can do is ‘pause’ the agent if you’re under time pressure. Understand the process, and if you need to take time, then don’t be rushed into considering an offer over-night.

“People want to sell the property, but don’t fear that there may not be another offer.”

Bayleys Ponsonby agent Chris Batchelor says that sellers make the mistake of trying to market their multi-million dollar asset as cheaply as possible. He says that only with thorough marketing can vendors be confident that the property’s been exposed to as many potential buyers as possible, so that when offers come in you can make educated decisions.

Smyth too has seen good spending in this market getting a better result. Despite over-all statistics, he still advises people not to discount auction process for some properties.

“It’s not an event, it’s a process,” he says. “Auctions identify cash unconditional buyers in the market right now. Yes, it depends on a strong bidder on the day, and on the price point.”

4. Don’t second guess the market timing

Lampen-Smith says that the right timing for a seller is when they are ready, with the homework done and clearly understand the market, their property and the process.

He says that coming into summer and reduced interest rates makes him confident that buyers are coming back into the market, albeit taking their time to do due diligence.

“There are always new buyers in the market, it’s constantly changing and bringing different buyers, but there’s always a buyer.

“Agents are working on your behalf, and really want to sell your property, but in their time,” he says. “But you sell when you want to sell. Everyone’s got more time, so you’ve got more time to get prepared and do due diligence.”

Smyth and Batchelor agree that many vendors over-think or try to predict a ‘right time’ to sell, always waiting for a ‘better’ time. Both agree there are still buyers out there.

“The present time is the best time,” Batchelor says. “You know the market, you’re ready. If we could predict markets, we’d all be billionaires, so when you’re ready, get the wheels in motion.”

5. Don’t think there’s only one price

Agents and the REA are clear on this – pricing a property is an art, not a science. REA’s Lampen-Smith describes ‘multiple sources of truth’ from all sorts of sources, including pricing algorithms, agent estimates and professional sources. And then to get that ‘unicorn’ price – well, he says that’s striking it lucky. Or not.

And when agents bring real market feedback on the price, that’s a fair reflection of what buyers are thinking.

“But it’s hard to say that the first offer is the best offer,” he says. “Every case is different. Sometimes we’ll know immediately that’s a great offer, other times we’ll sit back and wait for a few more. Once you get a few offers in, then you start to build a picture.

“The mistake some sellers make is to put their head in the sand and want more. When a property sits longer on the market, it comes back to price.”

Smyth sees properties where buyers have hung out for absolutely top dollar, only to accept lower money six or eight months later.

“Even it if it’s not your ‘dream’ price, take it,” he advises. “Vendors will naturally be a little bit above the market, but it’s important to be realistic.”

Freeman says take the first offer seriously as a basis for negotiations. Buyers have done their research so the chance of someone falling in love and offering ridiculous money is remote. But she always warns her buyers not to make the mistake of starting with such a low ball offer that the vendors are insulted – that just doesn’t help negotiations.

6. Don’t ignore staging advice

Freeman says that it takes guts for agents to tell a seller that their dated furniture, tired curtains and scruffy paint will affect the price buyers offer. She says that unless they’re serious renovators, buyers these days just don’t have the time or appetite for a before or do-up.

But while she’ll urge a re-paint, updated landscaping and beautiful street presentation, good fresh furniture and, of course, attending to deep cleaning and any delayed maintenance, Freeman urges caution doing an entirely new kitchen or bathroom – unless you’re prepared to stick to current, generic styling. She’d rather vendors polish up what they have so that the property doesn’t look like too much work, than embark on big changes (and never, she says, do a pool or major wall demolition as you won’t get that money back).

7. Don’t get emotional

Yes, say all our experts, you have an emotional attachment to your house; you know its lovely bits. But the minute you’re selling a house you’re in business: you have a product to sell; you need to present that to as many buyers as you can; you need to work prices and marketing with experts; you need to close the deal and move on. Nothing personal, you and your agent are here to close the deal.

Save the emotions for your next house purchase.