There are commonly 3 taxes which can be charged when property is bought or sold.
Goods & Services Tax (GST)
Capital Gains Tax (CGT)
There is no Stamp Duty in NZ (but it is charged in Australia).
CGT only applies if you bought after November 2015 and sell within 2 years.
GST applies when an apartment is on a commercial lease.
When selling your apartment, it is important to know what taxes you may or may not have to pay as this effects the outcome.
There are three main taxes involved when selling your property/apartment in Australasia but not all or any will apply to you necessarily.
New Zealand is a great place for property as the taxes charged are lower than any other first world country.
There is no Stamp Duty which is a tax charged on purchasing a property in Australia or the UK.
Capital Gains Tax only applies to you if you bought after November 2015 and sell within 2 years.
However, the one tax to look out for which many owners forget or are unaware of is GST.
Goods & Services Tax or more commonly known as GST applies to you if the apartment is bought with the intention to be used for what is called a taxable supply.
I.e. for a commercial capacity.
For example, a guaranteed rental, commercial lease or an apartment in a hotel lease.
The important thing here is if your apartment was intended to be used as a taxable supply make sure you talk to your accountant, as there is a good chance that when your sell your apartment a 15% tax will be applied or passed onto the next purchaser both effectively reducing what you are left with.
As an owner you have to find an agent that best suits you and your needs when selling your apartment.
Finding an agent and building a relationship and setting expectations that both parties are happy with is the first and most important aspect of selling your apartment.
Once you have found an agency the rest is fairly simple. You will need to sign a listing agreement and as this is a legally binding document we suggest you get a lawyer to look over this for you. The difference with Apartment Specialists is that we don’t lock you in. You are in control.
The agent will advise you with all the details of the campaign, marketing, the current market and so on.
The final step is making sure you are kept up to date – setting these expectations and how much involvement you would like is up to you and we tailor these to suit you as an individual.
What happens with you sign a sole agency agreement with an agency? Here are 3 examples from owners that we worked with who wanted to sell their apartment. Unfortunately the agencies with whom they signed just didn’t deliver at all or in a timely manner and this is due to the sole agency agreement in their contract.
Signing and selling my apartment with a sole agency agreement and what that means for me. This is important to understand as a Sole Agency agreement is legally binding. At Apartment Specialists we don’t lock you in.
It is important to understand and know your rights as an owner when selling your apartment and what it means when signing a Sole Agency Agreement.
This is because it is a legally binding document and sometimes owners don’t realise this and what implications this may have.
The most common clause in an agreement is signing with an agency and being locked into 90 days with the agency. This means if you are not happy or you feel the agent is not working for you, you can’t change until that time period is up.
We trust in that if the service is good why would you want to leave.
The choice should be yours.
In any other industry this would not be accepted, so why real estate?
How is the value of your apartment calculated? Oftentimes real estate agents will look at the sales statistics for the apartments in your building and base the current value of your apartment off these previous numbers. But how can sales in your building alone be an accurate gauge on price?
The value of your apartment is usually calculated by a number of factors including recent sale prices, sales in the buildings and the buildings in similar areas.
Firstly, we look at apartments that are the same, these are usually in the same building. Most agents stop there; we go further and look at other buildings that are similar to help us gauge the real market value of your property.
This is where our expertise are superior, we have the knowledge of all the buildings in Auckland and understand our market well.
Calculating size, carparks, level and so on are all important factors to consider when valuing a property as well as record prices in the building and recent sales in both your building and other that are alike.
We can market your apartment without even entering the building as we have floor plans of all buildings in Auckland and know these buildings inside and out.
What is the difference being a specialist for you, an apartment owner looking to sell? With thousands of apartments in the Auckland CBD and surrounding suburbs and at least 100-150 apartments selling every month, you need the right information so you can make the best decisions for you.
Apartment specialists looks at the value of apartments, not just in your building, but of those in the surrounding buildings as well. The apartment market moves all the time and we make sure we’re aware of it when valuing your apartment.
There are over 26,500 apartments in the Auckland CBD and fringes and around 400 buildings which will become up to 450 in the coming years. Each month there are 100 to 150 sales of apartments.
We know this by understanding our market well. This is done by constantly keeping up to date and being in the know. It is not just about being an agent but about being a specialist in the market.
We look at apartments that are the same, these are usually in the same building and look at other buildings that are similar to help us gauge the real market value of your property. Calculating size, carparks, level and so on are all important factors to consider when valuing a property as well as record prices in the building and recent sales in both your building and other that are alike.
By being well informed, we can help you make the best decision that works for you and selling your property.
If you’re looking to sell your apartment in Auckland, although there’s no real ‘right’ time there is definitely a period you want to avoid which. we recommend the only time you avoid is December through to early January. If you sell during this time, it can cost you anywhere from $20,000-$50,000.
Selling at the wrong time can end up costing you more than you may have anticipated. However, apartments are very different to houses and most of the year is a good time.
However, the only time to avoid would be the December, early January period – the holiday period, this is due to a lot of events happening in people’s lives, end of deadlines, holidays, family commitments and so on.
Third on the series of questions of owners on “How Do I Sell My Apartments?” – aside from professional photography and putting the apartment in the best light possible, you’ve got to use feature ad. How important is it and How to Use a Feature Ad to Sell Your Auckland Apartment is a matter that we will dwell on thoroughly in this podcast.
Hi I’m Andrew Murray, Apartment Specialists. The third part and the question I get asked all the time is “How do I sell my apartment?” Online presence, as I say it each time, is so important to sell your Auckland apartment. So, A. You’ve got to have professional photography; B. The professional photography has to be putting the apartment in the best light; and C. You got to have a feature ad. Now what I mean by that is you pay another $69 on Trade Me. And now that is virtually nothing. And it means that when your apartment is searched for – after those first couple of weeks when it is further down to list – it comes up a lot higher. So it is an absolute must.
It is kind of like – if you don’t have a feature ad – your apartment is going straight to video. As in it is not in the cinemas. No one really knows about it. And the common saying in real estate is that you can’t sell a secret. So I will go straight to the point. What I’ve done is, I have actually got two apartments here that are in the same building. Very similar but one is slightly superior to the other. The slightly superior one is already under contract and it’s gone unconditional – I just put it up on Trade Me just purely to show this. And you will see what I mean.
So we’ve got the first one. It is bigger than most. And you can see both. If you look through – both professional photography, both the same complexes – but one is a feature and one is not. So let’s go back to the first one. The photos look great. Now this is a tenanted apartment which you’re seeing. We did a lot of work with the tenants and they let us come in. Look around their things. All that kind of thing in order to stage the apartment, it came up great. I won’t go through all the photos and bore you. Anyway, let’s go to the other one. They were basically put up right after each other so exactly the same time, yesterday morning. Let me look at this one. You see this is a superior one, looking fantastic. This one has got a view.
I prefer this one to the other one. Now, this is the one that is actually already sold. Look at it. Let’s look at the views on them both. First one, 374 views. Still very good probably because of the presentation of the photos and it looks really good. Now, second one, 1122. That just says it all. If Trade Me charge $600 to make a feature ad, I would still recommend it purely on those numbers as it’s huge. Thank you for listening to this.
Now I hope you understand how important your online presence is. There’s a lot more factors that go into it, but these are the basic three things. Professional photography of the Auckland apartment in its best light, and it being a feature ad. Thank you.
When selling your Auckland apartment it takes professional looking photos and a little staging to add glitz and glamour to your property. Many apartment owners consider this to be an optional add-on but more and more buyers are making decisions based on what they see online. Many buyers in this market have to do their research online as they don’t live in Auckland. Others would rather gather information online than waste their time driving around and travelling long distances to look for apartments. That’s why it has become a necessity in the Auckland apartment sales market to include quality photos in your online marketing. This will provide buyers with a valuable image of the apartment you are selling.
Why You Need to Market Your Apartment with Quality Photos
There are often many apartments being sold in one building at one time. You need to make sure your apartment presents well and stands out from the rest. A recent successful example of this is:
In one particular building the apartment listed to the right of the one we sold was listed for $250,000 (and it is actually a better unit). It has been listed since April 2013 and at the time of writing this guide it still hasn’t sold. We sold our client’s in under two weeks for $265,000 purely because we made the apartment look it’s very best.
What’s the first thought that comes to mind when marketing your Auckland apartment? Isn’t it that you want to get the highest price for it? What if it’s a rushed sale? Do you have to lower your apartment’s value simply to sell within a given timeframe?
Unless you have to sell your Auckland apartment within days you should always aim for the highest price. However, before asking for this, you have to attract many buyers and hold their interest. You have to excite international buyers via your online photos and you have to make local buyers want to get in their cars and view your apartment. Moreover, when it comes to rushed sales, you don’t have to lower your property’s value simply to sell it off. You need to aim for the highest price and promote your apartment through quality photos. This is what Apartment Specialists is about to show you how to do….
Below is a comparison of a living room in an apartment that we recently sold. These are before and after photos of the same room. The first photo shows you what the room looked like when we arrived. The second shows you what a little bit of staging can achieve.
Which room attracts you more?
A Guide to Flattering and Seductive Apartment Photos
Watch this short video before you start reading our guide as it will provide you with some great examples of the good and the bad.
You now know that photographs can be powerful bait when attracting the interests of buyers and property investors. We have come up with a simple yet powerful guide to help not only Auckland apartment owners but other agents in the Auckland apartment sales market. Use this guide yourself or ask your agent to follow it. You can do the staging yourself or hire a professional photographer.
Pre Photoshoot Preparation
Take Time to Build Relationships with Tenants
This is not related to photography but this is an important step when staging an apartment. Most Auckland apartment owners do not live in their apartment. Their apartment is often under a rental agreement. If a tenant lives in the apartment that you are about to sell and they do not cooperate, the thing is, you won’t get those professional looking photos that you want. They might not even allow you to take any until their lease expires. That’s why it’s important to build a relationship with them. You can then simply talk to them ahead of time, tell them that you want to take photos on this certain date, and if it’s okay, you will move their stuff around and then put everything back.
It’s important that you prepare a staging kit or props beforehand. I’ll be honest and say that some tenants do not have classic and sophisticated tastes when it comes to furniture and accessories. So it is handy to arrive with duvets, throws, pillows, bed sheets – anything that would likely improve the appearance of a room or a view.
When doing exterior shots remember to get photographs of the following:
Façade of the apartment building Exterior amenities (i.e. gardens and parking areas) View from inside looking out If there is a coutyard or deck, get photo of these areas View of the street from apartment looking down
Shots of whole room areas including:
Master bedroom Kitchen Dining area Living area Bathroom
Improve on your Auckland Apartment Sales with these Photoshoot Tips
Use Lights to Brighten the Area
When taking exterior photos, make sure you do it in the middle of the day when the sun is up and the sky is blue. The sun’s rays make the view more stunning. If taking interior photos, make sure that all lights are turned on and you use a flash. This will fill in any shadows and even the colours of the images. If you have contrasting colours in the background it makes the colours stand out.
The More Photos the Better
All buyers love to see more than just the façade of an apartment building, the more photos of the apartment the better. This includes all rooms and the interior and exterior views. If the apartment has a spectacular view of the sea, a park, etc then add them as well. They add value and excitement to buyers.
Move Things Around
When taking shots, always remove the clutter like dishes, clothes and all stuff that is not furniture or appliances. Remodel and move furniture and appliances in order to stage the rooms properly. This will make the rooms look larger and attractive.
Remember to Go Pro
If you are hiring a real estate agent or agency to market your Auckland apartment, ask for samples of photographs of apartments that they have sold. Now that you know that they have a huge impact on the value of your apartment you need to see what they can do. If you decide to go pro then there may be an additional cost but this will definitely be well worth the investment.
We would love to hear your feedback on our guide and see your before and after photos. If someone you know is selling their Auckland apartment then email them this guide or even better share it on Facebook.
I go in-depth about auction in this particular podcast so you will know what to expect when you’re dealing with an agent. This is another myth that you know about.
Andrew Murray, Apartment Specialists. This is quite a big one. When auctioning your property, only you and the agent have an idea what your reserve is. Now, that is a myth and it shouldn’t be a myth.
Now, I’ll explain to you – I’ve been in two major offices in the open CBD Market for starting my own company. Basically, both did their auctions in the same way. So, what would happen was, you’d have a meeting – you’d have your sales meeting – and those who were auctioning the properties would introduce their property. They’ll ask everybody not what it’s worth, but what would the reserve need to be to guarantee it to sell. And then, the agents would set out the price. Say, that’s worth 200. Say, to guarantee it to sell, it would need to be 180,000. And if it was a 500,000 property, to guarantee it to sell, it needs to be $440,000. Then it would be the agent’s objective to go and try to get that reserve.
The next week in another sales meeting, the agent will report back – different sales meetings or in different agencies at different trends are the ones that I saw – some would go, “What’s reserved?” or “It’s A plus-plus”, which means it’s better than you want it. Or, A-plus means it’s on the money or A, it’s pretty close. B-plus, it’s a little bit far away and B, yes there’s a bit of distance there. Other ones would be going like, “Yes, that’s exactly where you wanted it guys. Go get your buyers” and it’s going to the auction.
Now, it didn’t really sit right with me but that’s sort of how it’s done in the Auckland apartment market when it comes to auction. And what would happen was a whole mentality: that by telling an owner that everybody knows your reserve and knows it’s a low reserve, that’s going to bring in more buyers – it’s going to bring in more competition. Now I disagree with that because it’s bringing in buyers that want a bargain. They’re bringing in buyers who don’t want to pay retail. And so, that’s not the kind of competition you want. Yes, there is an argument that it does make the base of the auction and it can help in that way. But what it does is – it means that your apartment could sell for less than you really want to or what it should be selling for.
So, how to stop this or make sure this doesn’t occur is, why even get the reserves prior to the auction? Why not keep it in your head and you and your partners head? And if the auction gets to the price you wanted to, well then let it sell. If it doesn’t then go from there. Because if you think – put your mind in a bidder or in a buyers mind – you’re bidding for an Auckland apartment – and they already got in mind what they want to pay. If it is a good auction and the other buyer is also emotional – you got two emotional buyers and they’re pushing the prices up. You will at least know that it’s met the reserve. If anything is going to make the buyer say, “Oh, that must be market value” or “That must be what owner wants. I don’t want to go too much higher.” So how is actually giving the reserve to the buyers an advantage to the vendor? I don’t see the logic – maybe there’s a side that sees it, but if they do please write in a comment or tell me.
That’s a myth. So, when you’re auctioning your property, if you do choose to auction it as a property that is suitable, i.e. not an investor apartment where emotions involved, don’t disclose it. You don’t have to; keep it in in your head. Then, you can make the best decision for you.
I hope that’s helpful. Next month – I’m sorry next week – I’m going to talk about an interesting question. One that you probably wouldn’t expect from me. What’s my opinion on private sales? If you don’t want to use a real estate agent – because a lot of people have had bad experiences with them- how do you sell it privately? And I’ll just do a quick podcast on that.
In this podcast, I discussed about the myth of the sole agency and the reason why you need to get out of it.
Andrew Murray, Apartment Specialist, the Auckland apartment market. Today, I’m going to be talking about the myth of the sole agency. The fact that, you can’t get out of it. The thing is, you can.
I often get called by this guy, “Andrew, I’d like you to represent me. You’ve been recommended by Joe Blogg because the agent that I’m with at the moment is just not working for me”. For number of reasons, it could be promises they haven’t kept. Or it could be that they’re just not getting along.
Now, real estate is an interesting industry. And the Auckland apartment market’s where you can’t try before you buy. The agent promises the world – and if they don’t deliver – you’re stuck with them for 90 days. The same thing is this: if you’ve got a vendor that has to sell on a certain time frame for various reasons – generally because of financial commitments – and it means they have to go through an agent they don’t want to go through or they don’t feel are doing the best job for them. And often, this leads to accepting offers that they didn’t want to accept.
The key thing here is to remember as the vendor, you are in control. Make sure you are always in control because the problem with the real estate industry – especially in apartment market from my opinion is – the vendor loses control when they sign that sole agency and they need to get that control back. They need to better dictate the terms. They need to be able to hold the agent accountable.
So when you find the agent who you want to represent you, ask to have a clause added in the agreement saying you can terminate that agreement if you feel they’re not representing you or they’re not delivering what they promised. So it’s their business loss, because what other industry can you actually lock someone in? So remember that. And that should really, really help you because it’s also going to make them work harder. Because they know that if they don’t, they’ll lose the job or they’ll lose you as a customer. And that’s how it should be as it is in every other industry.
I hope that helps. That’s a really, really an important one that I feel very passionate about. And so remember that.
Next week what I’m going to do is, I’m going to talk about another myth – that you know your apartment is getting sold or undersold to a trader to be resold because you don’t. And I’ll give you a few tips on how you can tell.