Why is it difficult to value rural property?
As a firm of agents you would perhaps be surprised to hear us say that it is very difficult to value rural and often unique properties. Unlike a housing estate where similar properties may have been recently sold, rural properties are often unique and can be much more difficult to value – particularly since it is impossible to predict what someone might be prepared to pay if they fall in love with the property! It is therefore how you get them to fall in love with a property that often provides the key to maximising the value of rural properties.
Why shouldn't I instruct the agent who values my property at the highest figure?
Most people selling property want to maximise value and where there is an element of unknown value the temptation is to put it on the market with a high asking price to reduce the risk of selling too low. Sadly a common tactic used by some estate agents is to over value property in order to secure instructions by playing to these concerns and the natural instinct is to want to believe the one who values your property at the highest figure.
However, this approach risks the property sitting on the market for a long time because people realise that it is over-priced and the property then becomes stale. Selling agents usually then seek to persuade vendors to reduce the price, eventually coming down to meet the market or changing agent and reducing the price. Once a vendor has reduced the price, they are on the back foot and risk losing control of the sale process and are therefore not likely to secure the best deal.
Why should I use a conservative guide price?
You will have heard people say "You can come down but you can't go up" however this is only the case if you put an "asking price" on the property. An asking price can create an artificial ceiling above which you will not sell. If, however you adopt the approach of using a "guide price" you can avoid putting a ceiling on the price that is achievable. Using a conservative guide price (significantly below the figure we hope to achieve) should create substantial interest. High asking prices will often put off potential buyers because they realise that the property is over priced and it sends a signal to the market about the vendor's interest in sale. If you limit the number of viewings by adopting a high asking price you have immediately restricted the number of potential buyers.
From the interest generated by a conservative guide price, a good agent can create competition and should be able to achieve a price well above the guide price.
But surely I need to get people who can afford to buy?
A common concern of potential vendors that we talk to regarding putting a conservative guide price on their property is their fear that whilst we will generate plenty of interest it will be mainly from people who are looking in a lower price bracket.
Certainly this is quite a significant factor when selling at the lower end of the market where the purchase price is driven very much by mortgage affordability.
At the higher end of the market although affordability is still a significant factor for many, we have found that even prospective purchasers who make it clear that a given price is their absolute ceiling, once they have fallen in love with the property more often than not they can be persuaded to review their finances to be able to lift their bid.
Prospective purchasers never cease to amaze us in terms of where they have the ability to generate funds to take them above a previously stated absolute limit including selling a holiday home and asking relatives for their future inheritance early!
What is the best Method of Sale – Private treaty/Tender/Auction?
The answer very much depends on the type of property and the circumstances, aspirations and flexibility of the seller. Not all solutions work to best advantage for all properties and so careful consideration is needed.
The most common means of selling residential property is by private treaty. A property is offered for sale subject to contract and when a sale is agreed it is referred to the respective solicitors.
Auction can be used to very good effect and this can be seen by the number of properties that now sell by this method. This will often suit dilapidated, tenanted or unusual property however it relies on the buyers being able to meet the auction timetable with 10% of the purchase price payable on the day (since contracts exchange at the fall of the hammer) and can thus limit the number of buyers. However, as you are limiting to those who have the funds, in cases where timeliness is important, such can be beneficial.
Tender can be either formal (contractually binding) or informal and will generally involve buyers being asked to submit their best offers.
For the majority of rural properties we will generally advise launching by private treaty in order that we can then assess the level of interest and judge whether private negotiation, auction or tender would be the most effective way of maximising value and concluding the sale. In our view it pays to remain flexible and be prepared to put in the work required to produce the best results.
In any negotiated sale it is very important to remain in control of the sale process and keep under bidders' interest to help maintain pressure on the purchaser to exchange and thus to reduce the risk of them seeking to renegotiate.
How can you stop sales falling through?
You can't but there are a number of ways in which you can reduce the risk. There is a long way between agreeing a sale and exchange of contracts and despite what many an earnest buyer says, on a national basis a high proportion of sales fall through. Without preparation a sale can take upwards of 4 weeks to reach exchange although many take 6-8 weeks. There are numerous reasons why sales fall through including a change in the buyers circumstances, factors which are only disclosed at the legal stage (such as say restrictive covenants or boundary issues) or a survey that reveals unforeseen expense. If the preparation has been carried out in advance (as described further below) this removes a number of potential reasons for a sale to fall through and your agent should be able to put the buyer under pressure to exchange within a tight timescale. This ensures that the chances of exchange of contracts are fully maximised.
Preparation – contracts and searches
With the introduction of the Homebuyers Information Packs greater clarity was expected for buyers of most properties. However, the Government have U-turned and the resultant HIPS still fall a long way short of full pre-sale preparation that we recommend. In fact Sworders have been advising sellers for years to instruct their solicitor to prepare contracts and put searches in hand before going to market. Doing so can significantly reduce the time between agreeing a sale and exchange of contracts and mean that problems on title often associated with rural property can be addressed before going to market so that a buyer can not use them to re-negotiate. Even if there are issues, it is generally far better to disclose them at the outset.
An agent said they can get someone round who is looking for a property like mine without the hassle and cost of going to market – are they not best placed to sell my property?
Most agents will be able to make a call to a "hot" buyer without going to market and whilst this can be effective where an accurate value of a property is known, you are reliant on an agent to provide impartial valuation advice in a situation where an agent can make a fee for very little input. Whilst there are occasional situations where clients specifically seek an off market sale, unless they are to a special purchaser at a significant premium or the client needs a very, very quick sale, we will generally recommend going to market as the best means of maximising value.
Should I Use a National Agent or Local Agent?
If properly marketed with sound valuation, marketing and tactical advice, it makes little difference whether a property is sold by a national agent or a local agent - in fact with local knowledge and experience, local agents will often achieve significantly better results. What counts is targeted and effective marketing, experience of selling property, negotiation with buyers and knowledge of local market levels.
Why should I use a firm of Chartered Surveyors?
Chartered Surveyors are governed by the Royal Institution of Chartered Surveyors and as such operate to very high levels of professional conduct. Every professional member will have either a relevant property degree or diploma and have undertaken at least two years of structured training in the workplace before being assessed by a panel of experienced surveyors to assess their professional competence. Chartered Surveyors are property professionals and as such do much more than just sell property. A Chartered Surveyor should be able to advise on a wide range of relevant issues including taxation, town and country planning matters, valuation, property management, boundary issues etc
Every agent will seek to maximise the value of my property, won't they?
Unfortunately this is not always the case. Agents make money by selling property and whether they sell something for £490,000 or £500,000 will make very little difference to a percentage commission fee. Vendors often find that despite an agent's assurances that their property is worth well over a given figure when the agent is seeking an instruction, they are subject to significant pressure to agree a sale as soon as an offer that is within a few percent is achieved.
Not only do we generally recommend assessing the level of interest and offers before seeking to agree a sale because we have fully prepared before going to market we are able to impose realistic and short time limits on a buyer to maintain pressure and push them to exchange of contracts.
Why Use Sworders?
We are experienced Chartered Surveyors and specialists in rural property sales.
We are flexible and always consider all aspects of the property and the sellers' circumstances before suggesting a solution – which is not always a sale!
We have an enviable track record in adding value to properties by obtaining planning consents before marketing.
We offer competitive fee packages and are often prepared to consider a fee structure which provides an additional incentive to maximise value
We offer the option to sell the property by auction
.We work on a quality rather than a quantity basis giving the ability to invest the necessary time to ensure the process is properly managed and all opportunities are explored to maximise value
You will have an experienced Chartered Surveyor responsible for your sale.
For further information on our approach to property sales or to discuss your own property circumstances on a confidential and no-obligation basis, please contact Richard Couling on 01279 771188 or firstname.lastname@example.org