Are You Ready?

Planning to take the next very big step in preparing for your retirement?
BY MICHAEL OSBORNE

If you are a regular reader of this magazine, you will have seen some of the wonderful things that you can do when you retire. You might even have considered moving to a smaller house or unit or into a retirement village. But how are you going to fund this big move? Sell the family home is the usual answer, and to help you maximise the potential of your property, we are providing a few simple pointers to assist you in achieving your aim. A home is the largest and most personal capital asset that many people ever own and should be treated accordingly.

Selling your home
Selling is not something to be done lightly or in a hurry. Among other things, it involves an element of risk and a commitment to a fairly complicated procedure. The consequences of cutting corners or ignoring expert advice when it is readily available can be expensive. Whatever the reasons for sale, the main objective is to determine the best and most realistic price and to get it in the least expensive and most efficient way.

An overvalued property will stay on the market for months without a serious buyer. An undervalued property will sell quickly, but the owner will, in effect, be subsidising the purchase price. Studying real estate listings and advertisements in your area and visiting auctions of similar properties will give you some idea of what sort of price you could expect. Housing prices are affected by many factors – interest rate levels, inflation, concerns about unemployment and economic security, and in a recession, caution about making long term financial commitments. So it is in your best interests to get the most accurate valuation possible.

Reaching potential buyers
Having decided to put your home on the market, the next step is to determine how you are going to offer it to prospective buyers.

The choices are:

• Sell through a licensed real estate agent

• Advertise and sell it privately

• Handle the sale yourself, but enlist the services of an agent to help you

Obviously handling the sale yourself will be less expensive, particularly if you do your own conveyancing. But against the savings, you should weigh carefully the extra work and risk this could involve.

Most people are only too happy to let a licensed real estate agent worry about the sale and have a solicitor handle the legal aspects, like drawing up the contracts and organising searches for sewerage, RTA assessments, local council and title. Using a real estate agent will get you:

• A proper market appraisal based on the agent’s extensive knowledge of the area, market movements and recent sales of similar properties.

• Organised viewing days with the agent present to handle queries from prospective buyers, and/or set appointments during which the agent will conduct interested parties over your premises. Remember that in order to close a sale successfully an agent may end up spending far more time with prospective buyers than you would and most people don’t want to deal direct with the owner.

• Advice on improvements you can make to the property, which will increase the value and also make it more attractive to buyers.

• An advertising programme using the right local papers and specialist real estate publications (including those from the agent’s group)

• Advice on the various methods of sale

• A commitment to selling your property

Auctions, tenders and treaty sales
You should ask which sales method best suits your home, for instance you could: Put it up for auction This means that interested parties will have to bid against each other meaning that you could get a higher price. You fix a reserve price against the possibility of not being offered a sufficient amount, this allows for the sale to be cancelled and/or negotiations with the highest bidders. The big advantages of an auction are that they are quick, usually involving a three to four week marketing period with predetermined viewing times, and that the buyer is legally obliged to sign a contract and pay a deposit on completion of the auction.

Sell for a fixed price by private treaty This means that the agent or agents will enter your home on their books and advertise it at a price determined after a consultation with you. This method may take longer than an auction and you may have to put up with a procession of viewers, including those who are ‘just looking’. The interested parties who put a small holding deposit on your property while they seek finance can also frustrate you. However, one advantage of this method of selling is that in a rising market you will eventually get your price. Although if the market is static or falling, you may have to wait months.

You should aim for a shorter selling period as prospective buyers will come to suspect a property that has been on the market for some time and, you will be put to the extra expense of maintaining the property in pristine condition until it is sold.

FOR PEACE OF MIND Invite tenders This is a procedure usually used in commercial transactions or confined to properties expected to bring very high prices. It can be an expensive process because of the need to advertise prominently and in some cases, the supply of coloured brochures.

Fees and other expenses
A real estate agent is legally obliged to look after the interests of the vendor while at the same time dealing fairly with the purchaser. Under State laws the agency must display their fees and charges where they can be clearly seen by customers. They are negotiable and you can, for instance, agree on: • A fixed fee – to cover all the costs and charges involved in selling your home. • A sliding scale fee – depending on the price at which it is finally sold. • A combination of both. • A lower fixed fee – but you agree to pay for the advertising. Before deciding on an agent you must check if they are licensed. You should visit several in the area and note their fees. Ask any friends who have sold their home recently, as word of mouth is sometimes the best recommendation. Remember that the agent with the lowest fees and charges may not be the best for you.

Sales agreements
A sales agreement contains an estimate of total fees, charges and expenses. This is important to help you determine a proper budget for selling. It would be a tragedy to sell and then find, after settling the agent’s and solicitor’s fees, repairs and other bills, that you haven’t enough left for your new dwelling. Before signing any agreement, you should read it carefully and make sure you understand all its obligations.

There are several types of agreements and most agents will tailor individual agreements. They are:

• An exclusive agency agreement – this entitles the agent to commission no matter who sells it.

• A sole agency agreement – the agent has exclusive rights to commission. It means that for the negotiated period the agent has the sole right to sell it. If, at the end of this period, it remains unsold, the vendor can renew the contract or change to another agency.

• An open agency agreement – this means you sign up with a number of agents. The agent who makes the sale gets the commission.

Selling privately
This means you accept the risks and costs normally assumed by the agent. You can do everything yourself except draw up the contract, for which you should use a solicitor. You must have this contract before you put the property on the market. If you want a valuation placed on your property you will need the services of a valuer.

Selling is not something to be done lightly or in a hurry. Among other things, it involves an element of risk and a commitment to a fairly complicated procedure.

Valuers usually operate independently with a set fee and provide a written report explaining why they have placed a certain value on the sale. An independent valuation is not always necessary.

Getting ready for the sale Your main objective is to get the best price for you property. Agents will advise on certain important things to achieve. Many of them are cosmetic – like mowing the lawns, replacing worn doormats, and removing excess articles from wardrobes, cupboards and shelves. Pruning and cleaning up gardens can have a highly visual impact. First impressions should be favourable and after the Three P’s (Position, Position, Position) comes the next most important Three P’s – Presentation, Presentation, Presentation.

The value of check lists
Make a list of what you and your friends feel are the features of your home – central heating, double-glazing, access to transport and shopping, neighbours, and landscaping or local community. The most important list is maintenance: Outside – check the lawn and landscaping. Dirty or worn paintwork will detract thousands so spending a few hundred dollars on paint can add to the value. Check that all windows and screens are clean along with the BBQ area. Clean and tidy the garage and storage areas. Check and repair the roof and fencing along with the brickwork and cladding. Inside – call in a pest exterminator; check walls, ceilings, doors and flooring. Make sure of the plumbing and the electricals. Have a garage sale. The small expense and time involved in doing these things are a good investment that will produce dividends with a higher price and a quicker sale.

Disclaimer: this information is to be used only as a guideline. Always consult your solicitor and only use a licensed real estate agent when selling your home.