Good advice makes all the difference
With more than two decades of helping Wellingtonians navigate the ever changing property market, we’ve put our experience to work for you and created this educational guide to help you better navigate your property selling journey.
Please note that this guide is not intended as legal/financial advice. Whatever your next property move is, we hope this guide is helpful.
You’re most probably familiar with the term ‘property cycle’, but may not know exactly what it is, what factors influence the cycle and what it means to both buyers and sellers.
In very simple terms property cycles are controlled by two competing forces. Supply (the number of properties for sale) and demand (the number of people looking / able to buy a property). If demand exceeds supply, property prices will increase. If new supply comes on the market, from developments or property owners and it exceeds demand, prices will drop.
As our population grows, demand also increases for properties – both for renters and home buyers. As people start to buy and rent properties the value of property slowly increases – the simple forces of supply and demand.
There is no exact science when it comes to predicting when a property cycle is going to turn, however there are some factors that can influence the cycle, for example, supply vs demand of our current housing stock, migration, willingness of home loan lenders, local unemployment rates, how much money a buyer can borrow, interests rates, local infrastructure projects and both local and international economic factors. It’s these factors that economists take into consideration when making forecasts.
The Wellington Market Overview:
One of the key functions of a real estate agent is to give potential clients a clear indication of what their property is worth, often referred to as “Property Appraisal”. There are many factors that an agent will take into consideration when appraising a property, some of the more important ones are.
An agent will assess your property’s proximity to schools, public transport, recreation, and nature; if it is near a park or an ocean, harbour or a lake. Does it have a view? Is it in a high crime area or in a less desirable area such as an industrial zone?
Buyers will undoubtedly request a building report and if there any major issues they will be identified. Your property does not need to be perfect, but a well designed, well presented and maintained home will attract a higher price.
The agent will assess the size of the land and the size of the building structure. The size of key areas such as living area, kitchen, bedrooms, balcony, bathrooms, and garage will also be reviewed.
In most cases the more bedrooms and bathrooms a property has, the higher the appraisal value of the property. However, an agent will also assess the size of bedrooms and additional features such as ensuites, study areas, aspect or view, etc.
Buyers love new appliances and quality renovations because they contribute to the lasting value of the property. For instance, a new kitchen renovation may add another 20 years to the life of a kitchen, something that is good for everyone involved.
Zoning restrictions will also affect the value of the property. Are buyers restricted with what they can do to the property? This can also have an impact on the property appraisal.
Typically, this is the most popular selling season. The cold winter weather has passed, gardens are starting to bloom, and people are feeling optimistic. If your property has a beautiful garden this time could be ideal to showcase your outside area. It’s also a good time to sell a property that may struggle in the cold or one that can be a bit dark in winter.
Come January, after buyers have had time off from work, we find many are keen to fulfil their new year’s resolution with a property change. So, putting your property on the market at the end of January and into February can mean your property stands out in an undersupplied market, during a time at the end of January when buyers have more time to spend searching. Additionally, if your property is near the beach, has a pool or garden, summer is the ideal time to show your property off at its best. Properties that are cold and dark can look much more attractive on bright summer days.
Autumn is proving to produce excellent results for sellers. Buyers have well and truly settled back into work and school and their focus often shifts to bigger decisions like buying a property. The weather is cooling, the leaves are turning, and gardens are still looking amazing. Late summer / autumn represent a sweet spot for sellers as they enable sellers to miss the competitive spring selling season but still benefit from a keen buyer market and good weather conditions.
Whilst it has a reputation of not being a good time to sell, winter does offer some key benefits for sellers. The market is often quieter with less stock available. Buyers who are keen to purchase in winter are often highly motivated and given the lack of buying options are often willing to pay more. Homes that present well in winter – perhaps they have a fireplace, or a cosy and warm atmosphere – do well in the colder months, you just need to make sure the open homes are scheduled when there is maximum warmth and light, and the property is kept cosy.
So, what are the key questions to ask and decisions to make when choosing who to partner with?
Local agents understand the unique property cycle of the local market and are best equipped to appraise your property. They also must have local experience and understand local buyers; what they are looking for and what they are prepared to pay more for. They will have a local buyer database they can work with and also know how to reach out of area buyers.
Selling a property can be a stressful and challenging process, however having an agent who you feel comfortable working with is important to help make the process as stress free as possible.
Communication is key when selecting an agent.
Agents’ fees or commission is the agent’s payment for successfully selling a property. It is only payable if a successful outcome is achieved. The commission is calculated as a percentage of the property’s sale price. Each real estate agency structures their commission to individual sales staff very differently. It is crucial that vendors ask and understand how this commission structure works and how much a sales agent gets as often this determines how much inter agency teamwork is actually present. Inter-agency teamwork is incredibly important and can be the determining factor when it comes to whether a vendor achieves an outstanding sale price.
The strategy you use in order to sell your property is incredibly important and can have a significant impact on the overall outcome of the sale price. Ensure your agent explains the costs and benefits of each sale method and has clearly defined goals and outcomes as to why they are recommending a certain sale method. Real estate sales strategy is not a one-size-fits all approach and the sales strategy should reflect this.
Auction is a popular method of sale in big cities such as Auckland, Melbourne and Sydney, where many local and international buyers compete for properties. Auctions only work if you are assured of multiple, cashed-up buyers. Currently, just 3-8% of Wellington homes are sold by auction. That number has declined rapidly since 2018. An auction delivers a price determined by the price the second-highest bidder is prepared to pay.
An open tender has a finite timeline but offers you the flexibility to sell prior, if you get an offer at a level that is at the top end of your expectations. Sale by open tender gives you two bites at the cherry; if you do not sell early at a level you are happy with, you can go through until the tender date. This method attracts buyers in the early stage of the selling process, including people who are under pressure to buy or who have missed out on other properties and are prepared to make an exceptional offer to take a property off the market.
Tender is a good method of sale for a property that is clearly highly desirable to many buyers and where those buyers will wait for the tender’s closing date.
By negotiation means the property is open for negotiation at any stage. If the property is unique with little comparisons in the market, by negotiation is a strategy that effectively forces the buyer to establish what the property is worth to them. Our view is that buyers need some guidance and this strategy does little to help a sale process.
Selling real estate comes with a number of costs – some are unavoidable and necessary, and some are optional. When selling your property it is important that you understand these costs upfront, what the costs entail and whether you should invest hard-earned capital in these costs. Ensure you discuss the costs and have a clear understanding of these prior to making any decisions.
The main costs you will incur are:
In today’s competitive real estate environment, real estate agents need to be experts at marketing your property. Gone are the days of putting a listing on TradeMe and in the paper and leaving it to chance that the right purchasers will come through your door and pay the record money for your given property. Marketing a property requires careful consideration and a clear bespoke strategy dependant on the property type, expected price and clearly defined demographics. There are many elements to a world-class marketing campaign for a property, and we will cover off a few of the basic components. Please note there is much more to a successful campaign than listed here and it is absolutely crucial that the agent you engage is a property marketing expert.
At Tommy’s, we value good relationships, people and the community. All Tommy’s agents, are community-minded which is why Tommy’s has built up a reputation for giving back. We work hard to do what we’re best at for Wellingtonians, so for us it’s also about finding a way to give something back to our community, because we really do care.
Thank you for taking the time to read this guide. We hope this guide has given you a better understanding of how to kickstart your home selling journey. If you need any real estate advice, talk to Tommy’s agents – we’re here to help and will be able to point you in the right direction.
A good agent knows their market. A great agent turns that knowledge into results, for you. We’re the agents for 1 in 3 successful Wellington house sales between Khandallah and Seatoun.
