Investment Property Listing Strategy

Investment property listing can exercise your mind if you do not understand the process.

One of my clients wrote a very interesting email which I reproduce below:

"Very seldom are properties sold with a price these days.  This is done to suit agencies and no one else.  I find it very annoying and time consuming.  It means buyers have to spend a lot of time and money to investigate properties that they then often have no chance of buying because someone else pays way over the odds for it or the vendors want far too much for. 

Agents repeatedly tell me things like “I market properties, I don’t value them.” Or “the vendor is very motivated and will meet the market” and this is usually not the case.  And there are many other dialogues agents use to deflect the price question without ever really answering it.  And even if they do answer it, there is no guarantee that that is what the vendor will accept. 

Now when I have a property to sell, the first thing the agents are asking me is “How much do you want for it?”.  To which I should respond “I am an investor, not a property valuer.” 

The agents say the price is needed because it will come up in conversation.  Well  I wish they (agents) would talk price more often.  It will save me a lot of time.  But I hope they will just treat this like all the other properties that are for sale without a price and say something like “The vendor will consider offers” or whatever."

I can understand the exasperation and agony of my client. Agents apply different standards when talking to buyers and can talk in a totally different context when they talk to you as a vendor. I will discuss a few investment property listing strategies that can help you untangle some of the issues raised by my client.

When a property is sold through an auction or a tender it is sold without a listing price. It is the market which decides the price. Real estate agents love this investment property listing strategy because they get complete control of the property to sell and also in most cases vendor pays for the advertising.

An auction can be a great way to sell your property because it provides competition and at times people get carried away when bidding at an auction and can land up in paying more money than what the property is worth. I have seen people bid at mortgagee auctions and pay far in excess of the market value.

Some years back I was attending a property seminar in which a $10 bill was auctioned. Believe it or not the $10 bill was sold for $94 over nine times the face value of the money. The aim of the exercise was to demonstrate how inexperienced investors get carried away at auctions.

Auctions work great when the property market is on the rise and the demand for property is high. The property price should be in a range that will attract multiple bidders. If the price is too high there may be only one or two serious bidders and the auction process may not work as desired.

In a sale by private treaty you can either be ambiguous about the price or you can market the property with a price on it. Both the approaches have their positives and negatives.

It has been found that advertisement of properties with price on them invokes more responses. Many buyers shy away from properties that do not have a price on them as they feel that the vendor is not serious about selling the property. The biggest negative about putting a price is that you may under sell your property if you have not searched or been advised incorrectly.

Many astute investors try and get a feel of the market by telling the agents that they are not in the market but will sell in case the price is right. They play an ambiguous game that can frustrate the purchaser and the real estate agent. The advantage of this strategy is that you can test the market without committing to a price. This strategy works well when there is no pressure to sell.

You can use any of the investment property listing strategies depending upon your situation, urgency to sell and the type of property you are trying to sell.

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