If you’re about to move onto the next chapter and sell your first home or investment property, you might be feeling mixed emotions about seeing the ‘for sale’ sign go up as you reflect on the memories you’ve made in that particular phase of your life.
On top of the emotions that can come with selling your first home, there are a lot of important practical decisions to consider that can help maximise your chances of a smooth sale and securing the right price. That’s where it could be a good idea to learn through the experience of people who have been down this road before. With this in mind we’ve asked a group of Australians to reflect on their key lessons learned, and to offer some of their top tips for first-time vendors.
Keep your buyer’s motivation in mind
“Before you even come to selling your home, don’t overcapitalise when building or renovating. Always keep in mind who your potential target market might be should you decide to sell your home. Try and find an agent who is honest and backs up their opinions with factual reports. In our case, our first home sold well under what we thought it was worth, because when we first placed the house on the market, we hadn’t understood the motivation for the buyer to purchase our home in a semi-rural suburb.
Once we understood we were looking for tree changers who were motivated by downsizing their mortgage, we were able to price accordingly and sell within the month, after sitting on the market for 12 months at the higher price point. Had we priced appropriately from the start, we would have saved a considerable amount in agent fees, meaning the lower sale price would not have been so significant.”
– Nicole Cox, Home Decorator and Founder of The Builder’s Wife blog
Make the most of your mortgage offset account
“Our first property ‘swap’ was much easier than we expected it to be because of one thing: we’d made extra repayments not into our initial loan, but into the attached offset account. While it’s important to carefully read the terms and conditions to make sure you’re getting a good deal, offset accounts can potentially offer a range of benefits. Need a deposit? It’s there. If you buy before you sell, enough money sitting in an offset account could even avoid the need for any bridging finance. Trust me: it could be cheaper and far less stressful. And a top tip from me: if you decide not to sell but to retain your first property and rent it out, the fact you’ve never technically paid the loan down means you could get the full whack of investment tax deductions.”
– Nicole Pedersen-McKinnon, Journalist, Founder of The MoneyMentorWay.com and her Smart Money YouTube channel.
Get the property price guide right from the start
“When we were selling our first home we had thought the most important part of the process would be the final negotiations or auction day. Our mistake. The most important factor at play was negotiating the price guide at the start of the campaign with the agents vying to sell the house.
Ultimately, what we learnt was that the price guide was read differently by us and buyers. We only wanted to sell at the top end of the price guide, and had a notion the lower figure was just to lure in buyers to create more competition. Conversely, buyers saw the lower figure as a sale figure that would secure the property.
We wouldn’t have sold at the price we did, but had to because we’d already broken that first rule of thumb in real estate: never buy before you’ve sold.”
– Lucy Macken, Prestige Property Editor at Domain
No big deal… I just sold my first house. No one is shocked because y'all know how amazing I am. I'm sure this the most boring tweet because you all knew that I would be a real estate BOSS the minute I decided on it. On to the next…. you buying or selling a house? I got you. pic.twitter.com/7iuDYyAIMK
— Estate Owner (@brookeashleyb) September 13, 2018
Do your homework, no excuses
“I sold my first house in Norman Park, Brisbane, having moved to Melbourne years earlier, and was anything but intimate with the Norman Park market. There was no online property site then, and I relied on feedback from real estate agents to set an asking price and accept the eventual offer. To this day I don’t know if it was a good deal. It’s a lot easier now, with websites offering a comprehensive history of market action and current listings, to complement good old-fashioned word of mouth.
So, in my view there’s no excuse these days – do your homework before you talk seriously to real estate agents. Go online to see which agents are selling homes in the area. Get a feel for what people are saying about agents they used; seek advice from new neighbours who dealt with agents as a buyer and former neighbours who sold through a local agent. Get a feel for the quality of the service they provide and their commission and other costs. Then fully research recent sales and current listings.
You’re now ready to talk to your shortlisted agents, to negotiate commissions and costs. More importantly, you are ready to challenge the price estimate the agent might be giving you. Is it unrealistically high to win your business, or low to achieve a quick commission for the ski holiday? How the fit with the agent feels is important, but the facts will put you in a position to stress test your gut feel.”
– Steve Mickenbecker, Group Executive of Financial Services at Canstar
Be careful to only add value that counts
“I was 20 when I bought my first house in 2005 in Ashgrove, Brisbane. It was before I worked in real estate so I was as green as they come. It was the first house I looked at and was listed for $365,000. I offered them $358,000 and they rang me back the next day and took it. To this day I still kick myself for not offering less, although realistically I know I may have missed the house if I’d tried that.
At the time I was looking for the biggest block of land I could find, as close to the CBD as possible, for the lowest price, and this big old Queenslander ticked the boxes, being on 807 square metres and roughly 8 kilometres from the city. I rented it out and planted a hedge, returfed the yard and put new gutters on the roof because the old ones had rusted so badly.
I sold that house just a few years later for $469,500, a week after it went on the market, for a profit of just over $100,000. I deliberately didn’t sell it myself even though I was working in real estate by then – the reason being that I was too attached to it and could see every little thing I thought was wrong with it. The problem with that is that sometimes you spend unnecessary money thinking it will add value and it often may not.”
– Dean Hamilton, Real Estate Agent at LJ Hooker Stafford
A little can add up to a lot
“Working as an architect back in the 1980s, my first foray into property was designing, building and selling four townhouses in Alice Springs. Planning with the end in mind, we decided to spend 5% more to create an ‘oasis in the desert’ – building the apartments around a beautiful, green courtyard while also using light, cool colours – in stark contrast to every other dry and brown apartment in town!
The strategy paid off. The properties sold quickly and for around 15% more than expected. It taught me a valuable lesson that I continue to apply in property to this day – sometimes it’s worth spending a little more if it helps create unique appeal that makes a lot more!”
– Bushy Martin, Author, Founder of KnowHow Property Finance
Be open to negotiating with your potential buyers
“Temper your desire to have negotiations go all in your favour when selling. Two potential purchasers of my first home had what I decided at the time were unreasonable demands, including a 5% deposit request and another to keep a few furnishings.
My initial ‘how dare they ask’ reaction was curtailed by the real estate agent and solicitor who encouraged me to agree to these requests. The result was a purchaser who paid the full asking price, and all went through without a hitch.”
– Phil Davies, Independent Financial Adviser and Founder of Liquidity Independent Advisers
Ever considered staging furniture? You should
“Investing the time to find the right agent was key. We picked a local agent we’d seen in action before, over the high profile, flashier agents armed with free branded water bottles, and it paid off. Our agent started working his contacts before we signed with him, and he had a group of interested buyers through our house before it even went on the market. We ended up selling it for $35,000 more than our dream price on the evening of the first open home, after six solid offers came through.
How did we get there? The decision to invest in landscaping our yard several years earlier certainly helped. At the time I was concerned we were overcapitalising by dolling up our humble three-bedroom Queenslander, but in the end it went a long way to sell the ‘feel’ of our home to prospective buyers, who tended to move through the house quickly and pause on the deck looking over the yard. In fact, the whole promotional video shot by drone, focussed on the outdoor spaces.
We also took up our agent’s suggestion of renting staging furniture, despite multiple friends telling us it was an unnecessary expense given the price bracket we were working with. The house was unrecognisable after shifting out our tired ‘family-friendly’ furniture and bringing in a professional to deck the place out and work with its strengths. I feel it really helped us put our best foot forward and secure quick interest in the house when it went on the market.”
– Nina Tovey, Editor-in-Chief at Canstar
Presentation is key
“I bought my first house in Adelaide when I was 24 and sold it two years later after I got a promotion and had to move to Melbourne. Given the price difference between Adelaide and Melbourne I called it a ‘promotion to poverty’. I sold the house pretty much while I was still living in it and am sure I would have achieved a much better price had I de-cluttered, brought in some nicer furniture and pictures for the wall, tidied up the garage and got in a gardener to properly tidy up of the garden and put in some fresh plants. I was too focussed on not spending any money to sell, but in the end probably cost myself more by not presenting the property at its absolute best.”
– Melos Sulicich, CEO of MyState Bank
Compare Home Loans From 1.89%
Image source: LightField Studios (Shutterstock)