Navigating Real Estate: Our Buying and Selling Property Tips.
The topic of buying and selling property tips is a subject I should have written about many years ago, as I’m regularly amazed by how many people make simple mistakes. Of course, buying the right parcel of land to build on, or purchasing an existing property at the right price, has always been a challenge, but never more so than today. Since COVID-19, it seems that there’s an urgency for most in the building and construction industries to maximize their profits, sometimes cutting corners, or perhaps price gouging in case another pandemic arrives. Whatever the reason, it’s really hard to know if the sales marketing lives up to the promises, and whether what you’re buying is really worth it, especially in the eyes of the banks.
It’s true that at times the building industry can often resemble the wild west. However, it’s also the world’s largest industry; it’s creative, tangible, and even spectacular at times, employing a diverse mix of individuals with varying skills and backgrounds – all feeding off the machine.
“if it’s too good to be true, it probably is”
Yesterday, I was asked to watch a YouTube video spotlighting troubles in Australia’s Real Estate Industry. One aspect I picked up on is under-quoting, a practice that markets a property well below its market value in order to garner greater interest. Of course, it is an unwelcome practice that disappoints 99% of potential buyers, who, if I’m being blunt, should know better. Remember the saying, “if it’s too good to be true, it probably is”? It’s no different with real estate agents who inflate property values to secure a listing, only to sell for the more realistic lower market price. Both practices are unsavoury, but ultimately we, as prospective buyers or sellers, should know better.
Am I in a position to defend Real Estate Agents? Not really. Do I appreciate the representation of some individuals in this YouTube documentary? Again, no. But let’s not forget that the real estate industry can be likened to a shark tank in most countries, where competition is fierce, and only the strongest survive.
It’s a real estate agent’s job to paint a rosy picture of each property they’re selling, but I, like many, have witnessed untruths, withholding of crucial information, misrepresentations, and my personal favourite: offering unqualified opinions about a property’s quality and value. Not only are these statements often against their code of ethics and industry membership, but they can also lead to disastrous financial repercussions for the purchasers and vendors alike.
I understand agents should only repeat what the vendor has told them verbatim, and they should not offer any opinions.
Despite regulation, the real estate industry in New Zealand has some loopholes. Most real estate salespeople are classed as self-employed, even though they will likely be working under the umbrella of a larger national or international real estate agency group. If something goes wrong, the self-employed agent usually gets hung out to dry, so recovering any lost value is unlikely.
Sorry, New Zealand, I’m going to use you as an example again. Agents will often ask you, ‘the vendor’, to pay to market your own property, which can easily end up stretching well into 5 figures. This, coupled with typical commissions ranging between 2% and over 4%, can be a very costly exercise. However, you can always sell your own property privately, saving on commissions and huge marketing budgets just as easily and still command a good sales price. For example, I recently sold a land holding privately. I think I paid a few hundred dollars on an online property advert, I created a good property memorandum, and invited offers by a certain date. I sold the property in just under four weeks and just needed a lawyer to do the conveyancing, which you will also need when selling through an agency. No fuss, and a really nice purchaser. So it is possible if you’re willing to field a few duds.
If you decide to hire a real estate agent, here are some interview questions I would suggest asking:
Interview Questions for Agents:
- Get clarity on their sales commission and admin fees, and compare accordingly.
- Ask about their client database and how they plan to promote your property. The best agents I’ve worked with have good national and international client databases.
- Discuss their advertising strategy and see if they’re willing to cover the costs, or at least reimburse you at sale.
- Inform them about the important aspects of the property, and then quiz them afterwards.
- Assess their communication skills.
- Check the agency’s cancellation period; the less time, the better.
- Clearly communicate your viewing times and preferences, and check they can adhere to that.
Ask the agent what their agency does with your property data. Many agencies sell or give your data to third parties who use that information to build property market and sales information databases that they then on sell. This is a concern for me as both your data privacy and potential security of your home are available for all to see. Think carefully about what information you want in the public domain and what information you want handled privately – especially internal images or videos.
I found my own family home on one such online subscription portal owned by a well-known Australian and New Zealand-based property market and sales information company who not only misrepresented my property with inaccurate data, but refused to remove the information when we requested them to do so. You can see why I’m less than impressed with this company, and why I feel we need to tighten our data privacy controls to match Europe’s GDPR!
Advice For Purchasers
My Advice For Purchasers: Do your own homework. Don’t take anything anyone tells you at face value. Conduct thorough due diligence, don’t skimp on independent assessments, check out the neighbourhood, review council records for future changes, and try to avoid getting emotionally attached.
Advice for Vendors
Don’t believe that real estate agents will necessarily fetch you a higher price than selling privately. If you know your property’s value and are willing to handle inquiries, you can save a significant amount of money and hassle. If selling privately doesn’t work, you can always hire a Real Estate agent later.