Sale / Lease Tips
There are a number of methods of selling or leasing a property, and each carries with it a range of benefits and drawbacks. The major methods include:
Exclusive Agency
This is one of the most effective methods of selling/leasing property.
By appointing a real estate agent on the basis of an Exclusive Agency agreement, the vendor/lessor should limit themselves to one agent bringing their property before potential purchasers/lessees.
This can be advantageous as the one agent will coordinate the lease/sale of your property, saving you time and stress. The exclusive agent will inform other agents on the availability of your property, coordinate the marketing campaign, arrange manage and organise agent’s inspections of the property. Exclusive agents tend to be more focused on marketing your property for the best possible outcome by virtue of the fact that they are working with other agents rather than competing with them.
Under an Exclusive arrangement, the vendor/lessor pays commission to the agent regardless of whether they sell the property themselves.
The Exclusive Agency method is recommended over the Open Listing method because the sale/lease of the property is in the hands of one party only, saving the vendor/lessor the confusion of having to liaise with more than one agent. Furthermore, an Exclusive arrangement will save the money and time which is involved in advertising and marketing when a number of agents are trying to sell/lease the property.
Auction is also governed by an Exclusive Agency agreement. The auction process requires the vendor to pay the agent to arrange effective marketing and advertising plans to maximise exposure of the property and the auction date to potential buyers/lessees.
Under the auction system, the vendor agrees to pay commission to the listing agent if the property is sold/leased before the date of the auction, at the auction or in an agreed period after the auction. The same conditions that apply to the auction process will also apply to the tender process.
There are many advantages to selling a property at public auction, in particular:
• An auction is a three pronged marketing push. The vendor has the option to sell your property before auction, on the day of auction, or in the event the property is passed in, directly after auction.
• There is an ability to set a reserve price and a settlement date to suit the vendor.
• As the reserve price is not disclosed it gives the vendor a chance to test the market.
• A written marketing plan with pre-agreed appointment times enables the vendors to arrange their lives during the lead up period.
• The auction process by its very nature creates a sense of urgency; buyers have a definite time frame in which they must act. Buyers see the other potential purchasers as competition rather than the vendor. Auctions create a competitive environment.
Arriving at a reserve price: It is the vendors right to set the reserve price, below which the auctioneer is not permitted to sell. Consult with your agents when setting the reserve price, as they will be familiar with recent sales of similar property in the area. Remember to be realistic when making your appraisal, bearing in mind supply and demand in the area as well as other general market considerations.
An open listing is where the seller lists their property with a number of real estate agents in the local area.
Under an open listing agreement, each agent can sell the property individually or work with another agent to sell the property.
Only the agent that introduces the buyer to the property will receive the commission from the seller.
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