Mistake #6 – Not Knowing What Your House is Worth Before Speaking to Estate Agents
Do you know what your house is worth? If not, it’s no good going straight to an estate agent for one of their “free market appraisals”, especially if you’re thinking about selling.Unless you’re a big fan of fiction, I would urge you to indulge in a little bit of research.
This really is the cornerstone of any sale and can literally be the difference between success and tearing your hair out in frustration and disappointment. Why am I making such a fuss about this? Well, the word of an estate agent when he (or she) is trying to secure your business is worth nothing! Rely on the word of an estate agent and you leave yourself wide open to being taken advantage of.
Now of course there are honest agents out there but my experience is that they are the exception, not the norm. If you go in having a low expectation you’ll protect yourself against being manipulated and make yourself into a savvier seller to boot. It’s the oldest trick in the book – estate agents will pitch their valuation figure at a level that they think you want to hear. It may not be realistic but that doesn’t matter (for now), it’s all about winning instructions.
In a world where all estate agents basically look the same (offer the same service, have the same sales patter) the only way to differentiate themselves from their competition is by convincing you that they can secure you a higher sale price than the next man. Typically an agent will come to your house, flatter you with an inflated valuation, get you signed up to a contractual relationship and then push for a price reduction a couple of months later down the line.
What are the asking prices and how do these properties compare to your home? If you can be bothered, go and view these properties. Pose as prospective buyers and you’ll not only get up close and personal with the competition but you’ll also get a feel for the kind of service your local estate agents really provide – this can be a very enlightening experience!
Completing these tasks will quickly give you a realistic idea of how strong your local market is and how much buyers would expect to see your house advertised for. With this knowledge you’re now ready to approach estate agents and it’ll be impossible for them to pull the wool over your eyes.
Mistake #7 – Not Taking Control of the Estate Agents Property Valuation Appointment
If you’re going to sell via an estate agent the first real contact you’ll have is when you invite them into your house to give you a property valuation and a speech about why they’re the best firm in town. This is a significant moment in your sale. It’s when you will have the best chance to negotiate their terms of business, cut their fees and pin down the most realistic sale price.
It’s a good idea to start from the assumption that an agent will tell you almost anything to secure you as a client. That way you’re focus for the meeting will be on the agents ability to show you fact and evidence of their skills – not their ability to spin hype and hearsay. Nowhere is this more important than with the valuation figure the agent presents. Any agent can pluck a number out of thin air but only good agents take the time to logically explain how they’ve reached their suggested valuation figure.
The best way to start the process of finding the right agent for you sale is to insist they bring the “comparable evidence” they’ll be basing their valuation on. “Comparables” are the particulars of properties (like yours in your area) that the agents have recently sold and are currently selling.
What your home is worth is inextricably linked to these “comparables”. These are factual pieces of data and most reliable indicators of what buyers would be willing to pay for your property.When the agents come around there are a couple things to remember if you want to stay on track to finding the true value of your property:
1. Never tell an agent what you think your property is worth. Let them commit to a figure first.
One of the fist questions an agent will ask you is, “How much do you think you’re property is worth?” As mentioned before, agents know that the best way to secure instructions is to either pitch a flattering valuation figure or to agree with the vendor’s idea of price. Don’t give them the opportunity to manipulate their figure – instead, force them to be judged on their ability to form a sound professional opinion based on their knowledge of the marketplace and analysis of the comparable evidence available.
2. Let the agent know that you’re interviewing his competitors. Don’t tell him which agencies you’ve approached and don’t tell him anything that another agent has said.
This will put the agent on the spot, make him think harder about the valuation and remove any chance of the agent discovering useful information that could be used to influence you. Agents are attending valuation appointments every day of the week. It is at the core of their business and many have developed an extremely highly polished sales patter.
If you just sit back and let the agent control the appointment you’ll learn very little from their visit that will meaningfully help you choose between them. They’ll just say whatever is necessary in order to look better than the next guy. By following the advice above you’ll leave the agent nothing to work with but the facts.
The agent that can best handle those will be the best man for the job.
Mistake #8 – Overpricing Property and Testing the Market
Everyone wants to sell property for the maximum possible price and the way to do this is to price your home competitively.
Many sellers wrongly assume that the right way to sell for more is by asking for more. After all there’s always the possibility that an “out of town” buyer will show up on your door with more money than sense, right? Wrong!
Step forward the internet. These days virtually all house purchasers start their search for a new home online. Not only that, they’re doing their house hunting on the major property portals. This is bad news for the seller that tries to test the market because property portals make it so quick and easy for buyers to compare the whole of the market without ever having to leave their desk. Basically, today’s buyers are a very sophisticated bunch and the Internet enables them to spot an overpriced home from a mile off.
No one likes to overpay and if you’re tempted to “test the market” you’ll find that no one is going to even bother to view your property. On the other hand if you’re realistic (even a little conservative) about your price, you’ll have buyers beating down your door. With recent years of extreme house price growth the attraction of a property that looks like good value for money is potent.
The more buyers you attract the better because this raises your chances of sparking a bidding war over your property. This is the real way to get the absolute best price and possibly even break the record for your local ceiling price.
Mistake #9 – Not Reading Your Estate Agents Contract
Under section 18 of The Estate Agents Act, before any estate agents enter into a contract with you they must:
- Disclose their fee.
- List any extra charges (e.g. For advertising and ‘For Sale’ boards).
- Detail the situation in which you’ll have to pay their fee.
- Tell you if they or any of their associates has a personal interest in your sale.
This should all be put to you in writing. If it isn’t then the agent will not be able to enforce payment of their fees.
Also, if the agent uses the terms:
- “Sole agency”
- “Sole selling rights”
- “Ready, willing & able purchaser”
these terms (their meaning and their effects) need to be explained to you—again, in writing.The law governing how estate agents do business only requires agents to make you “aware” of their terms of business. Once this has been satisfied you are in a situation whereby your agreement with them could be considered legally binding. It’s not necessary for you to have signed anything!!
My advice is that once “terms of business” are settled, make sure you have that agreement drafted into a formal contract. Read it, check it and then have your agent sign it. This way you have a formal contract for your reference.
Many people find contracts scary and unintelligible. They are there for your protection and the terms within them are always up for negotiation. Use this to your advantage. Make sure you employ the services of an estate agent under terms of business that are fair. Too many people just accept the agents’ terms without question only to be bitten further down the line.
The UK has far too many estate agents. The industry has no barriers to entry and if you walk down any high street in the country you’ll be hard pushed not to find at least two agencies competing for business cheek by jowl. In actual fact this is good news. Estate agents need you far more than you need them and if you recognise this fact you’ll see just how strong a negotiating position you’re in.
Negotiate hard on the agent’s fee! Negotiate hard on their tie-in period! Negotiate hard on the cost of any additional costs the agent tries to charge you! You’ll be surprised at how easily an agent will yield to your wishes once you threaten them with giving your business to their competitor.
Mistake #10 – Not Shopping Around for a Conveyancing Solicitor
Too many home movers pay too much money for a second-rate conveyancing service just because they take the recommendation of an estate agent or wrongly believe that a conveyancer needs to be local to do a good job.
Nothing could be further from the truth!
First of all, if an estate agent recommends a solicitor you can guarantee that they are making a hefty commission off the back of their advice (typically this is between £200-£400). Secondly, there are very few “value for money” specialist conveyancing firms around in the first place and you can bet your bottom dollar your family (or high street) solicitor isn’t one of them.
High Street Solicitors have always had a stranglehold on the conveyancing industry (although this is now slowly being undermined) and their “ace in the hole” sales pitch has always been to scare potential customers into believing that without their local knowledge the success of the transaction is at risk.
For 99% of residential property transaction it does not matter if your solicitor is based on your doorstep or in Doncaster. Everything that needs to be done can simply be done over the phone, email or post.
The Internet has played a major role in helping consumers realise this and find a better deal. Competition is now fierce and if you shop around you’ll find that instead of paying £1,000 to your local solicitor you can find specialists (that will provide you with a far superior service) for half that cost.
These days there are also specialist firms that provide conveyancing services on a “fixed-fee” & “no-completion, no fee” basis. This is a massive benefit because property transactions are always unpredictable beasts. Only having to pay a solicitor if the transaction is successful will save you a substantial amount of money. In short please bear in mind 4 key points when choosing a conveyancer:
- Shop around because fees vary enormously and a more expensive service will not automatically translate into a smoother, faster move.
- Don’t automatically go with the firm your estate agent recommends. They rely on the income generated from conveyancing referrals and have slick sales patter designed to get you to sign up. You now know better!
- For less stress during the legal side of your sale stay away from discount warehouse conveyancing operations (these are the first companies you’ll come across on the Internet). They may look dirt-cheap but we’ve often found the service they provide to be slow, impersonal and in some cases riddled with errors. You’ll really benefit if you can find a service that provides you with the personal touch and a single point of contact.