Selling your property at your expected price within a reasonable time frame is becoming more challenging every day. How often have you passed by a property with or without a for sale sign and asked yourself, “Is this property not sold yet?” Well, it is even more common nowadays, especially for bigger homes and landed properties. The reasons could largely be attributed to price. Still, it may not be price alone, and it could be any of the factors discussed below. To achieve a successful sale, vendors are strongly encouraged to take a few minutes and write down or think about the objectives of why they want to sell. How long can they stay up to achieve their desired price? Have they sought to know what is happening in the market and appreciated its realities? Would they be willing to be flexible with the offers? Any necessary documents or consultation may be required. Is the property prepared in the best form for the market? If you choose to do otherwise, you have created room for unwanted surprises throughout the sales process.
I have been part of many transactions where a vendor fell short of one or more of these factors. The result has always been unbearable. Most recently, I am broking a transaction that has taken nearly two years. The reasons are simple but, at the same time, very complex and indiscernible. The prospect is unsure whether his offers
Therefore, I share six practical steps you should know when commencing a property-buying process. As a purchaser, this article can also help you focus your discussion around these factors to identify and assess the vendor’s objectives and flexibility to avoid or prevent the ensuing drama.
1. OBJECTIVES OF SELLING
The foundation of a successful sales process is understanding why you want to sell your property. In the time you have to close the deal, your objectives will practically guide you. Without a clear goal for why you are selling, you will be unable to evaluate offers and conduct market analysis to determine the market value of your property. It will encourage you to sketch out a reasonable negotiation strategy, seek approval, or make an important document available for vetting or due diligence. Ignoring these steps will negatively affect your sales process and achievable price. For example, failing to set a clear goal for the timing of your sales will affect the quality of leads or prospects from which to select a qualified buyer. Your purpose is so significant that you can use it to evaluate whether the transaction was successful in the end of the transaction.
2. FIND AN APPROPRIATE TIME TO SELL
Every product launch or marketing campaign requires good timing. In other words, the success of your marketing or sales campaign depends on the timing of the launch. No matter what the design, packaging, and price, if you miss the right time to enter the market, your offers may not reach the right audience. This principle holds for property sales too.
Imagine trying to sell your property in a community that does not have a good access road during the rainy season, when the road is in its worst state. Not only do your prospects not drive to the property, but their impressions of the neighbourhood may also change for good. Furthermore, they may discourage their friends and family from viewing other properties in the area. Moreover, delaying a massive property transaction until the election process. In Sierra Leone, like many African countries, market pessimism and speculation intensify, discouraging substantial transactions from commencing or closing for fear of unknown eventualities before, during, and post-election. This may have advantages, as speculation surrounding this philosophy may result in a supply or demand surplus, affecting the price.
3. CONDUCT COMPARATIVE MARKET ANALYSIS (CMA)
Comparative Market Analysis is a must before developing your offer. Unfortunately, it is not only disregarded in this country; most property owners do not rely on this data even when it is freely shared with them. CMA studies records of relevant property information related to sales or leases in a given period. It enabled one to compare the recent rental or sales information of properties of similar features with the interest properties to determine current capitalization or Cap rate, rental indexes, or other intended objectives. With this information, you can determine the value of a freehold or leasehold interest in properties or, by far, come up with a comparative or average property value. CMA considers many factors, mainly the size of the property, location, building constituent, access to and proximity to utilities, current and expected income from similar properties, and selling price or listed price, among others. To learn more about how to perform CMA, click here to read my article.
4. DEVELOP A NEGOTIATIONS PLAN
Negotiation should not be a “do” or “die” event when you want to sell a property. This will be much easier if you have a clear objective for selling a property and know how much others have sold for relative to the time of sale. Negotiation considers three key goals. They are as follows: 1) What is your most desired outcome (your best price), 2) What is your least acceptable alternative (your last offer), and 3) Best Alternatives To a Negotiation Agreement (what would you take if you didn’t get the last price).
It is vital to have in mind a Plan B—an alternative you can consider if negotiations fail and an agreement cannot be reached. It is never wise to enter a tough negotiation without knowing your plan B. In fact, this will direct the negotiation strategy you will use. Whether you intend to use:
i. Competing strategy
ii. Collaborating strategy
iii. Yielding strategy
iv. Compromising strategy
v. Avoiding strategy.
To match your strategy to the specific situation, it will all be based on your objectives and the results of your CMA. Every situation is different. Therefore, buyers must vary their negotiation style according to the prospect they are dealing with and the outcome they want from the negotiation.
5. SEEK NECESSARY APPROVAL AND GET THE DOCUMENT READY
One of the most frequent bottlenecks in selling a property is failing to provide relevant documents or obtaining necessary approval from other parties with vested stakes in the property for sale. Not securing the required documents to sell a property has caused unexpected delays in transactions and often led to business cancellations. This situation may occur when the buyers have alternative properties to choose from or lose access to financing before the document is available. In the past 8 years, I have witnessed or been involved in transactions where the failure of the parties to provide title documents (conveyance or vested deeds, etc.) on time or obtain the right to transact with the property (Letter of Administration, Power of Attorney, etc.) resulted in the cancellation of the business.
Sometimes, it is also necessary to communicate beforehand with prospects about the document you may need to complete and the approval process you are working on. Depending on their situation, the prospect may understand this and exercise reasonable patience. Do not leave it until the last minute! Often, some prospects might disappear once they notice this for fear of fraud or the lengthy time involved.
6. PREPARE THE PROPERTY TO LOOK AT ITS BEST FOR SALE
Although this is very important for a successful sales transaction, it is often overused or wittingly avoided. The two extremes are both disadvantageous. On the one hand, there are times when vendors over-renovate or build to a specification that costs much more than the targeted client can afford. Your property must appropriately target a particular class (low, middle, and high-income individuals or corporations).
The effect of over-improvement is that it often leads to additions that do not relatively add value for the buyers. Suppose buyers do not see the benefit of the additions. In that case, they may not pay for it even though the item may have significantly increased the cost. Still, prospective buyers cannot accommodate extra charges and see no value for money. For example, renovating the kitchen to fit European standards and painting the property.
On the other hand, failure to prepare the property for viewing may scare potential buyers with reasonable offers away. A property with visible signs of disrepair, such as an old, leaking roof and ceiling, dilapidated walls and failed columns, a dismantled kitchen, etc., are signs that it is in a bad state of repair and, therefore requires a considerable capital outlay to put it into a ready move-in state. If your property is in this condition, even a structural engineer’s opinion on the soundness of your building may not reverse the prospect’s impression; as such, their offers will be based on physical observation.
As for landed property with overgrown grasses covering the perimeter of the land, and a grass-covered and unclear access road, your prospect may not be able to decide quite well on the landscape’s topography, which will reflect in their offers.
The considerate position is to assess the building and determine possible renovation costs; compare this with the estimated achievable sales price with or without the renovation and see if it is prudent to upscale it before the sale.
Preparing your mind and property well before a listing is critical for a successful sale. Failure to do so will increase your risk of not achieving or compromising your objectives, or you may even be unable to sell.