When selling your apartment, did you know there are more than just commission costs? We know, at Apartment Specialists, that, at the end of the day, you want to know how much you’ll be getting in your back pocket when your apartment has sold. You might be surprised to know that you may even get money back. We’ll help you to get a broader picture of what these other expenses are, understand ALL the costs when selling your apartment, so you can take them into account.
The knowledge of what costs you will incur during the process of selling is so important and it is more than just the agent’s commission.
The costs involved are more than just the commission. There are several others involved but don’t let that deter your choice to sell.
Marketing costs generally are around $600 when a property is selling for under a million and around $2300 for property over and above that price.
Lawyer’s fees can range from anywhere between $800 and $1000 for a property with no mortgage and up towards $1300 for a property with a mortgage. Where there is a sale that is more complicated for example a building that may need more due diligence due to building issues these lawyers’ fees may be upwards to $2000.
Lastly, a cost that is overseen when your property is tenanted during the decision of sale being made, your tenants may leave before settlement date leaving you with no income for several weeks. This is where you need to ensure you are prepared for this and/or bring the settlement date forward if able to.
And the good news; you may sometimes be eligible for money back. If you have covered your Body Corporate fees for the year and sell part way through the year you will receive the overpaid amount back upon settlement. Rates are the same deal and will be reimbursed if any are overpaid.
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 most important like for like 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.
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. If you sell during this time, it can cost you anywhere from $20,000-$50,000.
In this quick video, Andrew Murray at Apartment Specialists tells us exactly when to avoid a campaign to sell your apartment and why! Listen in to find out when the sweet spot is to get your apartment on the market. Apartment Specialists knows… that’s why we’re the specialists.
Apartments are different to houses and can be sold most times of the year, we recommend the only time you avoid is December through to early January.
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.
Apartment Specialists provides you with list of information that will help you figure out the best time to sell your Auckland apartment.
Andrew Murray, Apartment Specialists. Today we are talking about a question I get asked every single day – I know I have said it quite a few times – but this is one every apartment owner always asks, “Is now a good time to sell my apartment?”
There are quite a few answers to that question. I know it seems like a very straight forward one. But they are actually – it is not that straight forward. Because at the end of the day it is actually what is best for you being the owner. Now, there is my personal opinion on what is going to happen in the apartment market – and there is what is best for you.
These two things are completely different. For example, the best thing for you may be to sell your apartment right now because you need the money to do other things. To go on a holiday; it may be a family situation; it may be to put the money somewhere else where it is going to make more money. There are so many different situations though. In that regard, it is irrelevant to what I think is going to happen in the market. Because you are selling because it is the best thing for you.
My job is to give you all the information you need to help figure out what is best. I.e. should you auction your apartment? Should you list it with a price? How should you do it? Should you dress it? How should you market your property? Should you sell it?
If there is a window of six months. Should you sell it now? Should you sell it in six months? If it is a hotel lease, should you wait until you get it out of the pool? Or should you keep it in the pool? All these kind of questions.
Then there is a second question: Should I sell my apartment now? Now that is where I say – Okay, if it was my apartment, and there was none of these other factors, that is when it is very different.
My personal opinion is that there is still more in this market to go. We are still always moving but the thing is – the apartment market is a very different one. It is one that actually does not hit you hard on the back of the housing market. It rides on supply and demand. If there is a lot of apartments available, the price goes down. It is all about the developments.
As you know, the developers are selling off the plans again – which means there is going to be new apartments coming to the market. They are not there yet. They have not been bought yet. I know they are being planned to be built. So I would not sell now. I will probably wait a while. Wait until you start seeing the cranes in the sky. Then I would assess the situation. And then look at – okay, maybe it is time to accept. Or maybe you want a lot – you want to talk long, long, long term.
It all depends on the purpose of your purchase. If it is just for income and you do not care about capital gain then it does not matter. Unless if it’s going to affect he rental situation for example; if you have all of a sudden, had a flood in your apartment, well that could lower the rent. It is a big, big question that cannot really be answered in general terms. That is something that is very specific to the particular person’s situation, the particular person’s goal with their investment, and the particular person’s apartment.
For example, there could be a development going on in front, in a couple of years it could lose its view. That would be advantageous if capital gain was the sole reason for you to sell now. The answer is – I cannot give you an answer. But it all comes down to you being a specific owner, and me giving you the information to help you figure out what is best for you, and you making that decision. Lovely. Cool.
Next week, we will talk about – you are going to sell your apartment, but you have got tenants. How are they going to be affected? Are they going to be affected? Will they move out? It is something that is a concern of most people when they are going to sell – what do they do with tenants. I will cover that very briefly and then how we look at it.
When renting your Auckland apartment, there are factors that you have to consider like apartment presentation, terms and duration of rent and who your tenants will be. It is important to get it right so that you raise the value of the rent thereby raising the value of your apartment.
Andrew Murray from Apartment Specialists. Renting your Auckland apartment.
Now, this is done so badly in this industry. It is done badly by rental agents and people who are actually renting privately. And that is really, really, frustrating for me because when I come to sell an apartment that was under rented it effects the value hugely.
Now I don’t just mean if you’ve got a shoe box apartment or your apartment is a student apartment – or even if it’s an owner-occupier apartment or a very large apartment. Because if the rent is not getting – not what it should be – then I have to fix the value. I have a lot of international buyers who still buy very, very large apartments. And there are one or two who are looking for a capital gain. They are looking for all kinds of criteria that are different. And the returns they expect are so much different than the local market.
So there are still methods across the board. So what can – how can – I was thinking how can I help you guys sort of – give you a few tips in regards to getting this right. Now first of all, there are some things you would not actually think affects renting your apartment. A big thing is – a big misconception – is that you’ve got to furnish your apartment. Most owners think – it is better that you have your apartment with no furniture because most tenants turn up with their furniture. That is not actually the case.
There are so many international people – people from different cultures – you’ve got people who are just not going to lag around bringing furniture up to the 14th floor or 4th floor or where ever the apartment may be. What if the furniture does not fit in the apartment? A furnished apartment always gets more rent. And it always increases the value of the apartment.
Now I don’t mean you’ve got to buy the best of the best. You buy something that looks good. You can do a Kmart or Warehouse job. They have great and very durable furniture in there. I wished we had Ikea here – it would be perfect. When I went to the States and Australia that’s what they all use.
Furnish your apartment. It’s all about presentation. Get a professional photographer. Even if your rental agent doesn’t suggest this, you suggest it. There’s a guy I can use, flip me an email. It will cost you about $150 to 230 plus GST which is virtually nothing. It will put your apartment above all the rest.
The third one is how you rent your apartment at the time of the year. Okay, you want to be renting your apartment – if you can – for a year, from the time it is at the peak. So for example your peak rental period is the end of January through to the end of march. So you want to be renting your apartment each year at that time. If not, you know – have a long tenancy – that’s two to three years. Okay, So maybe if your apartment is out of sync with that you want maybe to fix a tenancy that matches up with that period. Maybe a four month fix now or something like that. So it comes into that period. Now that is very, very crucial. So ask your rental agent or flip me an email and I can explain it down further to you.
Now another one is your type of tenant. Now it’s not about being racist. It’s not about being you know fussy – either of those. Okay so who do you want into your apartment? Would you live with these people? Would you have them in your house as guests? And It’s not about being discriminant. It’s about who is going to look after your apartment. What demographic are you looking for? So, advertise through that demographic. So even if you are in a student complex – you can still go for a young couple – or something like that. It is all about the choices you make when looking into the applications. You don’t have to give your reasons. But make sure you do background checks. Make sure your agent does background checks. And you see those checks – so that you can make a choice for yourself.
And another one is if you are going to a rental agent, which I would advice, keep them accountable. Ask them what they do – what they do for the fee they charge you. Okay now there are so many rental agents out there. There’s hundreds of them and only a few who are really good ones. And I’ve recommended a lot of different apartment agents. Some have let me down which has been disappointing because it’s been a reflection on me. I don’t do rentals myself but I can happily refer you to some of the good ones out there. If you want me to flip me an email to email@example.com and I can get you in touch and give you the advice that you need. But make sure you get the right rent for your apartment not just for you – not just for me when I come to sell it – but because you should be.
Thanks for that. Next time I’ll be talking about – if you choose to sell to your apartment and you get tenants – what happens to those tenants? Are you worried that they are going to leave? Are you worried that they stop paying their rent? What happens to the sales price and what should be happening and – how would you ensure that that’s not even a concern.
Andrew Murray talks about the process of Auckland apartment valuation and factors affecting such valuation.
Andrew Murray, Apartment Specialists, the Auckland apartment market. How are Auckland apartments valued?
Now, it’s done by square meters. Yet how do you compare apples with oranges? For example, as all apartments are different – different apartment buildings. For example,there’s about 300 unit titles in the Auckland area and between 250 and 300 buildings in the Auckland CBD. Now each one of those buildings is similar to another building. And you can probably group all these apartment buildings into probably about 10 or 12 different categories depending on quality. If they’ve got issues, if they don’t. Are they leased out – are they Maori leasehold, are they Ports of Auckland leasehold. Are they character? Are they high end? Are they owner-occupier? Are they students? That kind of thing.
So what a valuer does is look for sales of similar apartments. Not just in the building of the apartment, but on ones of similar buildings. So a character apartment – they will look at ones with similar sizes and similar quality on another character apartment where they will use those sales. They will maybe use three, four, five, six different buildings. They now find those sales, and they will divide the sale price, taking away the car park value which is generally between $50,000 and $60,000. And they will divide that price by the square meterage. And each sale will bring a figure. So it can be 5000 per square meter or 5.68, or 6.5 for example. Then they will take the apartment that they are valuing and measure the apartment and times that square meterage by that value.
So let us say they find five sales that are very comparable in the same building, and in different buildings. Then they will take that square meterage values and average it out. And then apply that to the apartment they are valuing. And then times it by the area in square meterage. And it gives them a reasonably accurate figure they can rely on. So that’s how a valuer values apartments.
There are few complications here. For example, when you’ve got a deck. A deck can make a difference to a value of an apartment. But it can also mean that the actual area is smaller because banks only value – or valuers only value on the actual square area – not counting the deck. The deck, they value at a lower rate, often $2000 or $3000 per square meter.
So there is obviously a lot of gray areas in valuations. And the hard thing with valuers is, they have to look backwards. They are looking at what has happened previously. So if you are in a moving market – whether that’s up or down – they are looking backwards. They are looking at sales that have occurred in the past.
So, often evaluation would not be able to give you the up to date value of the apartment. It will be giving it to maybe a month or two months or three, four, five months behind.
And that is what’s really difficult and really frustrating for me because a lot of my deals will fall over because of a valuation. Because that valuer can’t value today’s prices because they have to look in the past to come up with a value.
Yeah, hope that gives you a little bit of insight on square meterage and finding comparable sales not just in the building but in comparable buildings.
Okay, next week I am going to talk to you about how to rent your apartment privately if you do not want to go through a rental agent.
Tips and pointers on how owners can sell their apartments privately to get the best price for their apartments.
Andrew Murray, Apartment Specialists. How to sell your apartment privately.
You’re probably thinking why am I talking about this, “you’re a real estate agent”. Well, whether you like it or not, a lot of people have had bad experiences with real estate agents. That’s a shame but that is a fact. And no matter how much convincing I do and proof I show them that I can get a higher price, they will still prefer to do it themselves. And that is absolutely fine and it’s their choice. Yet I often see listings come up on Trade Me and advertised – and I just want to help the people who are trying to sell them privately – because it also affects my job. Because if a low sale comes into a building that I am working in, it makes it harder for me to sell mine. And often lowers the values in the building.
So the first thing is – know the value of your apartment. Now this is very, very difficult so the only way you can really do this is to get a valuation. So spend the $500. Get a proper registered valuation from an apartment specialist. Flip me an email and I can put you in touch with one that specialises in apartments. Especially when the market is moving and also because the recent sales in your building may not reflect the actual value – and in most cases they won’t. So that’s number one.
Number two – presentation. Nearly every single private sale I see coming through, the photos aren’t professional photos. The apartment isn’t in good light. And that is one of the most important things. Make sure that that presentation is done. That is paramount. Creating relationship with the tenant, having 13, 14, 15 photos, making it a feature on Trade Me because that gets twice as many views – things like that.
The third one is have an information pack. Have all the information ready for the purchaser. Have all the previous minutes, have the pre-contract, the disclosure and the long-term maintenance plan. Understand the long-term maintenance plan. Speak to your chairman. Know your building and what’s going on inside out. And not only sell the apartment, sell the market. Know what’s happening. Know what the construction costs are. Know what the view plans are. Know what’s happening in the district plan. Know this inside out and do your research because the unfortunate thing is a private sale in Trade Me – if you look on how many views they get on average – it’s less than a real estate agent. And that is because a lot of the people don’t like to deal with somebody who is selling it privately.
And some reasons are because they’re not protected. As a private seller, you don’t have declare issues because you are not going to lose your licence. And also the negotiation process can be a bit uncomfortable. Now don’t let that put you off because you can still sell it privately if you do a really good job. But you’ve really got to know what you’re selling. You’ve got to know your stock. It’s like if you walked in anywhere, you think of you as a purchaser for something else. Any product, and you’re going to – say it’s a phone – and you want to go into a shop and buy a phone. It’s a particular brand of phone but – if that person that you’re buying it off – if they didn’t know that phone, you’re not going to be very impressed. So in the same light, know your apartment. Know what should be rented for, etc, etc. I won’t go on. Okay.
Now, the next one is try to create multi-offers. So flip me an email and that’s probably a conversation I can have with you on how to enhance the probability that multi-offers will occur. And that’s through how you do viewings – how you show the apartment. Anyway, so the most important thing is understand your value. If you don’t, get a registered valuation. I’d do that anyway no matter what if you’re doing it privately. And presentation and know your building and the market and your apartment complex inside out – what’s going on – and that kind of thing.
Anyway, hopefully that helps. Feel free to give me a call on 021-424-892 and I don’t mind having a conversation with you about how to sell your Auckland apartment privately and how you can do that. Because very rarely do I ever see it done properly and it can be.
Next week, I am going to talk about how apartments are actually valued. I’ve spoken to a lot of owners and actually had to take them through this process I’m going. Okay how does a valuer value an apartment. I think you’ll find it quite interesting.
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.
In this podcast, we will talk about the common methods used by agents when selling Auckland properties and the policies they follow.
Andrew Murray, Apartment Specialists. Myth: All agents are able to sell your apartment.
Now in the Auckland apartment market, there are over a hundred apartment specialists. Now, unlike the housing market, these specialists represent all different demographics – different cultures, buyers that don’t go to newspapers, don’t go through Trade Me and only buy through particular agents because of relationships – and that I mentioned earlier.
When selling your apartment, an agent will nearly always say, “Yes, I do sales with other agents.” But the simple fact of the matter is, they don’t. You’ve got one of the major agencies – it’s their policy to not let other agents from other agencies actually bring an offer. I have actually called them and sent emails saying, “I will give you a listing price. I’ve got a buyer from overseas who’s going to pay really good money and give you a listing price for your apartment.”
And I get a response back saying, “Sorry. It’s not our policy to sell to other agents or give you a referral fee.” At the end of the day, every agent is out there doing a living. It’s a job for a reason. This is not doing what’s best for the vendor – now that’s an extreme.
Then you have the majority of the agencies in the Auckland apartment market which do conjunctional sales. So they will let another agent from another agency through the apartment. But the thing that they don’t tell you is – they will restrict the commission and that ranges from 20% or 30% or 40%.
So for example – if I have a buyer who’s going to pay top dollar for an apartment that’s been listed by another agency, I’ll ring them up and I’ll go, “Can I take a buyer through and will you do a conjunctional sale? They’ll say yes – they may only give me 30% of the commission.
Now if you ask yourself, if an agent has a really good buyer who’s going to pay top dollar – and that agent is trying to make a living, are they going to direct their buyer to a property where they’re going to get paid less or where they’re going to get paid freely?
So the key question is, when you’re choosing an agent to represent you, ask them not only do they do conjunctional sales – which is very important – but do they share the commission fairly and evenly?
Actually put a clause in that agency agreement saying, “That you, the agent, will share the commission after expenses, 50-50, with another agent from an other agency”. And you actually put that in your ad. What that does is – it means that you’ve got a whole market looking for you – which ensures that you get the highest price for your Auckland apartment.
Now I hope that’s been helpful – quite an insight. It’s hard to know what’s going on in the real estate industry unless you’re in it. Hopefully that’s given you a little bit more.
Next week, I’m going to talk about something that very few people are aware of. All apartment agents get paid differently, even if they’re in the same agency. And there are reasons for that. And that also has implications for you being a vendor.
Anyway, I’ll talk about that next week and talk soon.