Serious about success

“When selling a property, there will always be a combination of people who are seriously searching to invest, and those who are just window shopping or browsing. As an estate agent, it is vital to make a distinction between the two in order to concentrate on investing your time and efforts where it counts the most,” says Goslett.

On any show day for example, there will be a number of people who visit the show house merely out of curiosity, to get a feel for a particular market, or to get an idea of what is going on in the neighbourhood in question. However, Goslett says, they are rarely interested in actually making a purchase. “These individuals will usually take a quick walk-through of the home and leave, without asking the agent too many questions.”

On the contrary, Goslett notes that serious buyers will tend to spend a lot more time in the house, and they will usually ask the agent a lot of detailed questions about the property and the seller. “Serious buyers will most often make a slow and detailed inspection of the house, walking from one room to another. These are the individuals the agent should focus on – the more information an agent can find out about a buyer, the better their chance of making a successful deal. If the agent can find the underlying motives of the buyer, they will, no doubt, stand a much better chance of crafting terms that appeal to them,” he says.

Goslett notes that it is important to establish what type of buyer you are dealing with in order to customise the offer to suit their particular needs: “Being able to define the type of buyer will allow an agent to mentally adjust their sales pitch for maximum appeal, by offering all the relevant information the buyer would be interested in. It will also allow an agent to think ahead of how the buyer may utilise the property. For example, describing an extra bedroom as the ideal playroom would appeal to a family, however, for a buy-to-let investor, it might be better to describe it as another room to lease out as part of a commune set-up.”

Goslett points out that there are generally four types of real estate buyers:

Fix-and-flip investors: These are generally full-time property investors who are looking to make a good return on their investment in a relatively short period of time. “Properties described as a ‘renovator’s dream’, which are on the market for substantially lower prices compared to others in the area are best for these kinds of buyers. Other examples include properties with absentee owners, abandoned properties, evictions and repossessed properties,” says Goslett.

Buy-to-let investors: These buyers are looking for a secure long-term investment that will grow their wealth. “Cash flow is the most important consideration for this type of buyer – they generally are not interested in tying up a lot of capital in renovations, but would rather invest in something that can be rented out immediately and start earning them income. Flats, townhouses and cluster homes are ideal candidate properties for this type of buyer, as are well-finished homes in sought after areas that can be rented out to upmarket tenants,” says Goslett, who notes that points of interest for these kinds of buyers would be what kind of demand there is for rental properties in the area, what kind of rental income the buyer can expect from the property in question, as well as a summary of general property costs, including levies, rates, garden service, and so on.

Hybrid buyers: These kinds of buyers can be thought of as any agent’s dream buyer, according Goslett: “Generally speaking, they are not full-time property investors; they have 100% cash or a large deposit, and good credit records. They often stand in the wings, waiting for the property market to fall or for a really good deal to come along before they make an investment. “They too, shy away from properties that require a lot of improvements, as they would prefer it to be leased out as soon as possible. A breakdown on the property in question’s return on investment would be a great selling point for these kinds of buyers.”

Retail buyers: These are the average home buyers. They are earning enough to be able to qualify for a mortgage or have enough cash saved up to buy a home outright. The majority of these buyers however, will require financing, and as a result, it is important to determine whether they will be eligible for finance or not. Agents should ask whether they need to sell their home before buying, in order to judge how long it will take to finalise the deal.

Says Goslett: “There are a number of different sub-categories within this group that will allow agents to further refine their sales pitch, such as whether the buyers are families, young working couples, first-time home buyers, retired couples, and so on. General points of interest for retail buyers include how secure the area is (crime rate, private security patrols, etc.), what the levy/rates costs are, what appealing amenities are in or near to the area (schools, shopping centres, access to major highways, etc.), and how the value of properties in the area have fared over the last five or so years.”

Determining serious sellers is an equally important skill for any estate agent, says Goslett: “Adding a property to your books and marketing it properly is an expensive and time-consuming exercise – as such, it is helpful if agents can establish which sellers are resolute on selling and willing to negotiate, and those who are merely seeing what they can get for their property and not willing to budge, even if the asking price is unreasonably high. It is a delicate balance to strike and agents must always be aware of whether the output and expense will be worth it in the long run.”

He notes that there are a few telltale signs that set serious buyers apart from the rest: “First and foremost, it is a really good sign if the seller is willing to give you a sole mandate for three to six months. This will give an agent enough time to properly market the property and find a buyer.”

Goslett says that there are a number of questions agents can ask to determine just how committed the seller is to selling his/her property, which includes:

Why do you want to sell your property?

This will determine how “desperate” the seller is to move – has he/she put an offer on another property for example, are they cash-strapped, do they want to down-size, and so on.

Are you willing to negotiate on the asking price?

If the seller is open to negotiation, then ask them what the lowest price is that they are willing to accept, and why? For example, if the seller bought the property for a high price, and/or there is a lot of money still outstanding on the mortgage, there will be little room for negotiation. However, if the property was purchased a long time ago, and/or there is a small amount owed on the mortgage, then the seller might be in a better position to negotiate.

Are there any major flaws with the buildings on the property?

Determine any issues pertaining to damp, structural problems, plumbing and electrical defects, drainage problems, fire damage, etc. Ask whether the seller would be willing to fix these, or lower their asking price in order for the buyer to have them fixed?

Matching the requirements of a serious buyer with the asset of a serious seller is almost like completing a challenging puzzle, says Goslett. “Aside from working hard, agents also need to work smart, and gleaning as much information as possible from both the buyer and seller is the only way to ensure the correct puzzle pieces fit together.”

Article from www.remax.co.za