How to sell Melbourne property

I'm selling a property, Melbourne eastern suburbs, a flat. A few REAs have provided advice about this, a big range of prices $600-800,000. Marketing has a big range as well, under $2000 to $7000. Something like $4000 should be enough. Clearance rates have been a bit low of late, so if it does not sell then new tenants will be needed. For this reason it's a good idea to keep the tenants, who have been there for ages and are very good. If the buyer is after an IP then the tenants will be an advantage. Alternatively, if the tenants have gone the property can look more appealing, at a cost for furniture. Also, if there are no tenants the buyer can move in quickly.

I'm unsure if an auction or private sale is best. An auction is immediate, no cooling off period, and some buyers get caught up in the heat of the moment. A private sale has one advantage - the bidder does not know what the other bidders are offering.

Two questions.
1 Keep the tenants or not?
2 Auction or private sale?

 

Definitely no tenants as some people are looking at a place to move in at settlement and may not want to wait til lease finishes.

A flat is generally pretty small so either leaving it empty or staging will definitely make it more appealing than the way the place would present with a tenant in (real life licing)

Tenant is not really an advantage as anything can be rented out for the right price (unless the tenant is really paying over the odds) and letting the potential buyers know how much you were getting a few months back will give them piece of mind if they were an investor.

Auction and private sale (private auction) is pretty much the same thing if done by a skilled agent and you should do well as 600-800K is the sweet spot at the moment especially for first home buyers

Also find another agent, with that quote they clearly do not understand the market especially right now that its not really moving anywhere quick. The bottom to top end be different by over 30% sets off alarm bells

Seems like you are not needing to sell (need to find new tenants if doesn't sell) maybe consider going with one of those small Asian agencies that are everywhere nowadays while keeping tenants in and telling the agent what price you wanted and if they get it then you will sell ( these agencies should give you free marketing in this scenario so no sale no fee).

 

Thanks for that advice, most helpful.

My point about keeping the tenants is that if the property does not sell then I still have an income, and selling is not so urgent. This needs to be offset against a buyer moving in immediately after settlement. The rent is about average for the market.

The REA price for PS vs auction is not an issue. At an auction the buyers know what is bid and can just go a bit higher, below what they would buy it for if they did not know what they were bidding against, as in a private sale.

The price range $600-800,000 was for several agents. I think that the low price is from an agent that wants a certain sale rather than maximising the price. The low agent said 1% to $500,000 + 10% over this. Recent like sales have been in the $800,000 region.

I'm selling as I want to buy a new PPOR and then lease the current PPOR. The current PPOR was bought before 1985, so no CGT – I'm keeping this one forever if I can I could get a mortgage for the new PPOR but the maths from selling is better. The current PPOR would have higher rent than the IP.

I'm unfamiliar with the Asian agencies. Can you give me some details, please?

 

For this agent if sells for 800K that's 35K commission. Even paying half of this would be extremely generous in current market and definitely get away with paying more like 12K commission.

In regards to agency depends where your place is and could definitely point you in direction of one of these "Asian" agents

 

That works. However, if it does not sell with tenants in place quickly, private sale I suppose, could the marketing be changed at no cost to say it's now an auction?

I had not given anythiing more than laughter to the REA that made this offer. Really, he said $600-650,000 and then has low pice if $500,000. The agent that has the highest EPR says percent to $800,000 and a percentage of anything over this.

 

@Burramys it would be optimal to give the purchaser the option to keep the tenants. Most of our investor clients prefer to buy with a good tenant included. Saves a lot of hassle. Then again, having vacant possession as an option will appeal to owner occupiers.

 

Agreed. As an investor, I've always preferred to buy property with an existing lease (assuming they're decent tenants). Takes some of the risk out of the equation...

 

Personally its an easy choice for me. Unless there were some extraordinary circumstances, I would never compromise on attracting the widest range of buyers possible by having tenants in there. Certainly not just to save a few bucks in rental income.

 

Thanks. For some reason my email notifications stopped. The REA says that 30-40% of sales are to investors, and that vacant possession is best. The rent foregone is $2-2800, plus staging is $4000+. So the question is, would the extra sale price offset this $4000? The sale price will hopefully be in the $750-800,000 range - hoping for more! - and $4000 is not that much.

 

For a flat / unit staging should be less than $4k+ for the selling period.
Check out posts on staging, usually they charge by number of rooms / areas staged (ie furniture rented) so for a flat / unit (doesn’t say how big) estimate should be closer to 2-3k.
Good luck & yes I recommend staging it.

 

Sure will, staging works in 2 ways. It will sell faster and most likely for more.
We just staged a 3bed plus study/outdoor for $2600. Multiple offers after the first open and sold within a week . We had worn carpet in the study which they covered up with a rug and also brightened up the room, pot plant hiding a damaged marked wall, and the overall apprerance looked fantastic. Most people cannot visualise how a room will be complete unless shown and you are doing it at it's best.
At the price range you are selling at it's a given, you will not regret the small fee to maximise the outcome.

 

Craig and Barny, thank, I'm persuaded. One idiot tenant dropped a hot iron on the carpet and it melted. A pot plant over that, perhaps. I liked "It will sell faster and most likely for more." In any case the cost of staging and other sale costs will reduce CGT. I may start the process so that the tenants are gone mostly in FY19, no rent for perhaps three months, less CGT, which will be quite significant. FY18 is fine, no need for more tax reductions, just another rental year.

 

I think that's the smarter move.

I tried to sell our front dwelling over the weekend with a tenant in place and a lower price for a quick sale, unfortunately it limited the potential buyers to mainly investors only which is about 30-40%. So I was missing 60-70% of potential buyers instantly. The tenant does not display the dwelling at its best and I need to brighten up the space with some mats/colourful pictures etc. I would imagine that potential buyers walked through and concentrated on the tenants belongs rather than the space so staging is a must for me.
New plan is to also vacate the tenant asap, stage it, and ask for top dollar.