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 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. 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.
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.
Are urgent sales really that disastrous? Is it really true that you are going to accept a low price if you sell your apartment urgently? Learn more from this podcast.
Andrew Murray, Apartment Specialists. You know, I get this question quite often – and a lot of owners think that – if I have to sell their property or their Auckland apartment really quickly, it means they’re going to have to accept a low price because of their contract. Now, unless you’ve got to sell it within days – which is very unlikely – generally a bank or whatever the situation is that’s making you have to sell it, we usually have how many months time. Now, this means you definitely don’t have to accept a lower price or lower than the market value.
The reason why I say that is, most of the activity that happens when you list an Auckland apartment happens in the first two weeks. You can see this by the amount of hits or the amount of views. For example, when you put an apartment in TradeMe, which is where most of your leads come from. Because with apartments – unlike houses – people search more on the internet than they do on the papers.
So the key thing there is to not panic and realize still – the fundamentals apply – which is presentation. So you’ve got to make sure that you take that week, to make sure that – say for example – what I do with an owner is, it takes me a week to make sure that I’ve got the apartment ready. All the information – I’ve got my sales pitch down, I’ve written the ad the best I can, I’ve got all the photos. So when it goes up on TradeMe, it’s got 12, 14, 15, 16 professional photos. Not putting up one photo and then adding them in five days time because it’s a rush. You’ve already missed the boat.
So the important thing for an owner to remember is you do not have to sell your – or undersell your apartment if you need an urgent sale unless you have to sell it in one or two days. And then what I’d do is I’d probably advise you to go to a trader and they can give you an unconditional offer very quickly. And I would gladly put you in touch with one and you won’t need to go through with a sales agent.
So I hope that gives you a little bit of justice. If you have to sell your Auckland apartment urgently, you don’t have to take that when it comes down to value. You’re just going to make sure you present your apartment properly. Do what you think is normal and just trust your agents to do a good job. And make sure that they explain it to you. And make sure that you follow how they market your property. It might take that time.
All right, next week we’re going to talk about another one. When an agent says that any other agent can sell your property. It’s a bit of a myth in this industry because it doesn’t actually happen. And I’ll explain to you why. Talk to you soon.
In this podcast, I’ll be talking about myths that you will commonly encounter in the Auckland apartment market and the whole real estate market in New Zealand.
Andrew Murray, Apartment Specialists. Today we’re going to be talking about myths. What you do not know about what happens in the Auckland apartment market, as well as the real estate market through the whole of New Zealand.
Now myth number one’s quite an interesting one. I would be very surprised if many people are aware of this. But the myth is, real estate agents get paid the same amount whether they sell Auckland apartments via auction or by price or by tender. Now that’s a myth. That’s not the case.
Agents get paid more to auction your property. What happens is an agency gives them 70% of the commission on offer to the listing agent. And then they only offer 30% to the agent who finds the buyer. That’s because an agency wants as many auctions. And I’ll be talking about that in the next podcast, the reasons why an agency wants more auctions.
Now specifically what does that mean? A listing agent gets paid more if they list a property by auction than with a price? Now, that’s actually a bit of conflict of interest because it means there’s an incentive to sell an open apartment or house by auction. Now to me it doesn’t swing. You’ve got to ask yourself – three years ago in the housing market, why there was still auctions when we all know that was the worst way to sale? There was no demand. And in the apartment market, why are there so many auctions? Auctions for leasehold properties when there are no buyers? And then it is just passed in again and again. And if there was a good buyer, they’ll only have to pay just above the other buyer who was most likely a trader or somebody who was just speculating.
Why does it have this effect? So what happens is, the listing agent gets paid more when they list it and they’re going to get 30% when they find a buyer. So what happens is, other agents who have a really good buyer – it’s all about paying the bills. That’s what agents do. You’ve got to think about it as your own job.
If you’re going to have a good buyer that’s going to buy property, are you going to direct it towards a property that you’re going to get 30% of the commission? Or are you going to direct it towards a property where you’re going to get more commission, or paid more? I mean that answers the question itself. And because of this, the IRA just come up with a new legislation to make sure that every agent – when they auction – actually declare that to the owner. Now whether that’s happening or not, I don’t know. That’s myth number one. A bit of a biggy and something you need to be aware of. And actually ask your agent who’s representing you, if they haven’t already told you that. Because they’re supposed to. Thank you.
Next week, we’re going to be talking about myth number two, and that is why do agencies want auctions?