What is an off market sale, you may ask and why are they becoming more common in Melbourne during the coronavirus covid-19 crisis? Plus how to participate safely.
Planning the perfect property sale campaign
A property market upturn is now underway in Sydney and Melbourne, so listing a property soon may seem a good idea. The local estate agent is likely to agree. But they might not be entirely objective. Agents are especially hungry for listings and, more generally, tend to be wary of recommending long lead times for the risk of losing a prospective client to another agent.
But is selling as soon as possible really the right approach? It could be if a property is a home that has been particularly well maintained and recently renovated and is therefore effectively ready to go. In these instances, an expeditious agent in command of the marketing process could be outside their client’s door welcoming in prospective buyers to the first open for inspection within two weeks – just in time for the start of the post-footy finals October spring market.
However, this scenario is the exception rather than the rule. Most prospective vendors will have circumstances where a deliberative approach is merited.
Preparation of the property remains key for vendors. Buyers are comparatively plentiful, but they remain discerning. Typically, significant value can be added to a property by relatively inexpensive cosmetic renovations: re-paint the internal walls and ceilings, lay new carpet or re-polish floors, install new doors on kitchen cabinetry, re-grout the kitchen tiles and some gardening. More time and budget is required if the property is a free-standing building with walls, guttering and roof tiles that need attention, but the patience and extra expense may well be a good investment.
Investors can face additional challenges and longer planning timeframes. If they have a tenant in the property, they need to decide whether to sell the property with or without the occupant and plan accordingly.
If the tenants are staying, it is generally preferable to sell a property without a lengthy fixed term lease in place. Selling with a long lease tends to rule out owner occupier buyers. Reducing the buying pool could be detrimental to the outcome given that investor levels in the market, whilst growing, are still modest.
There are further advantages if the property can be vacant in advance of a sales campaign: it can be renovated, there is no need to negotiate with a tenant regarding access for inspections or be concerned about a tenant’s furniture and clutter detracting from the property. Owners should ensure a notice to vacate is issued in line with state regulations. Typically, the proposed vacate date can’t be before a fixed term contract expiry date.
Of course, on the downside, a vacant property clearly earns no income during the campaign and the settlement period which can amount to several thousand dollars forgone, but the potential uplift in selling price from having greater control of the listing campaign usually outweighs this rental income loss.
With apartments, there are common property areas to consider: external walls and window frames, hallways, stairs, gardens and driveways are pretty much a feature of all blocks. But it can also include lifts, swimming pools and gyms in larger developments. It is hard to improve common property given the need to obtain approval from other owners. Some things can be effected in a few weeks by leaning charmingly on the owners corporation manager – mulching of garden beds and trimming of trees, fixing defective lighting in common areas, steam cleaning stairwell carpets or ensuring the owners corporation rules to keep hallways and laundry blocks decluttered are abided by.
Bigger common property jobs such as redecoration of common area walls can take several months to pass through an owners corporation’s bureaucracy. But patience and perseverance can pay large dollar dividends.
Unless they need to sell quickly, the key lesson for prospective vendors is to prepare their property properly or not bother. If that means taking weeks or even months to rectify cosmetic deficiencies or run down a fixed term lease and then wait for the next selling season, do it. Never be bounced into a quick sale by the agenda of others.