Selling one's property is an art. The property market in Marbella has always been quite competitive and many sellers without local experience should take expert guidance as to how to go about selling their property in a realistic manner.
Knowing how to sell a property is, unto itself, an art. The property market in a resort area such as Marbella has always been quite competitive, but in today's rather difficult market, even more so. This brief article is intended to share some essential points about selling properties, learned from our own experience as agents for more than 40 years in Marbella.
Marbella is not a big city like London, Dublin or New York with a captive market within 50 miles of the centre, but a city of only 140,473 registered residents (about double that, off season, counting the part-time residents) and a market spread out all over Europe and the rest of the World. It is precisely for this reason that in resort areas it generally takes a lot longer to sell properties than in big cities.
Most buyers are not looking for a primary residence, but a second or even a third home, i.e. a luxury item. This has always been the case in Marbella, but it takes on significant importance in today's more complicated property market, in a crisis climate. Where in some countries, many are forgoing luxury items, in others, economies are progressing.
In Marbella, properties can stay on the market from a few weeks to several years depending on the asking price, location, condition and general desirability of the property, and of course an owner's genuine willingness to sell.
Establishing an asking price
The first and foremost important thing to establish is a "sales strategy" - a plan! The backbone of this sales strategy is fixing the asking price. In other words, if you ask too much for your property, people will not even bother to view it and the result is that you won't even reach the market place. Ask too little for your property, and you are potentially giving away part of your assets! The right asking price is perhaps the most essential ingredient in the art of selling real estate and is the result of thorough market research. Don't settle for the figure you would like to hear, find out the true market value taking into consideration: what sales of comparable properties have been accomplished, and at what price? What are other owners with similar properties asking? Is your property unique, which will allow you to ask a higher price as it cannot be easily reproduced, or are there many similar properties being offered?
The more unique a property, the more an owner can ask for it and the stronger they can negotiate when trying to seal a deal. The less unique a property, the more the owners are going to have to resign themselves to the fact that there is a large supply of similar properties, and that they will have to price it extremely competitively in order to sell it.
Avoid quoting a "net" price
One thing to avoid, if you intend to use agents to market your property, is listing on a net basis, that is, "I want so much net to me and you agents add on your commission". What will happen is that you will end up with a property marketed at several different prices leading to confusion and mistrust of potential buyers. Agent A will show your property to Mr. Smith at €450,000. Mr. Smith then sees your property announced by Agent B at €445,000, then, Mr. Smith returns to your property to have a look at it from the outside and happens to meet your neighbour, who tells him your net asking price is €425,000! (But maybe you might accept €415,000!) Result: before the prospective buyer has even thought of making an offer and with an outstanding obligation to pay a commission to your agent who brought you the client in the first place, your asking price has been reduced considerably, your sales strategy shipwrecked, and the buyer totally confused.
If you list your property with your agents on a net basis, you are also telling your agents "your commission is your business", and obliging your agents to negotiate against you and the buyer in order to protect an eventual fee. Wise sellers will form a team with their agents and protect them, as they expect to be protected and advised by their agents and fix one sole asking price for the property, inclusive of commission.
Also: beware of agents who encourage you to list with them on a net basis. They will be looking after their own interests but not necessarily yours.
Exclusivity or not?
Should you give an exclusive sales agreement to an agent? If you are an absentee owner, or if you don't feel like playing a co-ordination role among various agents of varying ability, granting a sole agency can make your life a lot easier. You first have to meet an agent (if you don't already know one) with whom you can develop a good relationship of trust and confidence. Your lawyer or close friends may be able to introduce you to someone of that calibre. The quality of an agent's web site can give you excellent information relative to the professional values of the agent.
The motivation factor that you give to an agency by granting them exclusivity makes the agency more responsible to you as a seller in a way that they are not with their non-exclusive listings. Obviously you must ensure that both you and your agent agree to a specific sales strategy that makes sense, and that he or she take a series of steps to market your property effectively, including advertising, producing a brochure and networking your property with other agents. It is especially important that the agent reports to you regularly on any sales activity. In other words, you have the right to demand a lot more service from an agency with which you have signed exclusivity.
A responsible agent will try to avoid taking a sole agency unless he sincerely feels that the asking price is correct (or can be adjusted after a short time on the market without many viewings) and that he or she is truly capable of selling the property within the time frame allocated.
A good agency, whether on an exclusive basis or not, can be extremely helpful in dealing with the promotion and sale of your property in an objective and analytical manner, helping you to reach the right decisions at the end of the day.
Many sellers prefer to spend the time and effort working with several agents and others will find that they prefer to try to sell their properties themselves, directly and without getting agents involved. Sellers should obviously choose the course of action with which they feel most comfortable.
Commission RatesThe standard agency fee in a resort area such as Marbella is 5% plus VAT and any top negotiator will really earn it at the end of the day. In the lowest priced properties of under, for example, €300,000 or €400,000 some agents might ask a slightly higher commission, to ensure the property is getting the same exposure with their sales team and other collaborating agents as their more expensive listings. Agents don't give keys out to clients, they always show properties personally and they will spend an enormous amount of time and energy in their efforts to find the right buyer.
Frequent comments by sellers:
"My property has been on the market for months and I'm hardly getting any viewings"
Some brochures of our exlusive propertiesThe only time this might be considered to be normal is if your property would only be of interest to a small cross-section of buyers. All other factors being equal, it is likely your property is over-priced in today's market, or that your property is not getting enough of the right market exposure. Our advice: speak to your agent for their feedback, or seek the advice of another well-established agency with a good reputation. An accurately priced and marketed property should be getting a regular stream of clients viewing it. Depending on the property, this should be from several viewings a week to at least two or more viewings a month.
An owner may say "but why should I lower my asking price if the other properties for sale in the same complex are priced similarly to mine and they aren't as good?" Good question. The fact is that if you are not getting viewings, they may not be getting viewings at their asking prices either. The other thing to consider is that if your property has a lower asking price than inferior properties for sale in your complex, then clients viewing those properties will certainly also be looking at yours.
"All the clients that agents bring to my property are time-wasters"
Are they really? If you are getting lots of viewings and no offers on your property, chances are your property is not as unique as you'd like to think it is. It likely needs to be reduced in price or perhaps consider making universally-desirable renovations to it in order to increase its appeal. And always remember, selling a property in many ways is a numbers game. The more people who view it, the better chance there is of one of them falling in love with the property and buying it.
"I really need to sell my property now"
If you need to sell your property within, say 2 to 3 months, you need to be prepared to price it at a heavy discount when compared to similar properties on the market. What kind of discount? Here is where you really do need to have a very knowledgeable agent working for you who can suggest a low enough price to attract the necessary viewings to get the property sold, while at the same time not pricing it too low. .
"How much negotiation room should I build into my asking price?"
With the help of your agent we recommend getting a thorough understanding of the prices of similar properties in the market. Then price the property accordingly taking into consideration not just asking prices, but prices at which properties have actually sold. A knowledgeable agent in your area should have this information or can find out for you. Then price the property accordingly and as aggressively as you feel comfortable doing.
Bear in mind that no buyer will want to pay the full asking price on a property, they will still want a discount, and even more so in today's crisis climate. However, many buyers are very knowledgeable today and will recognize a realistically-priced property if they see it, and will take this into account when negotiating. But the old rule of "asking your final price" and not negotiating is still, usually, tantamount to suicide for a seller.
Other tips for selling your home:
Your property should be presented in its best light
- First impressions count. When agents take clients to view your property, ensure that curtains and shutters are open to let lots of light flood the property.
- Check your agent's website to see how your property is presented to clients, both in terms of the photographs and the description and the accuracy of the information presented.
- Make sure your agent takes excellent photographs. While the photographs should be representative, they should also be as good as they possibly can. It is the single easiest thing to do to make your property stand out from the crowd. If you don't like your agent's photographs, ask him or her to retake them, or better yet, you might get a professional photographer to take them for you, and insure uniform quality photos to all your agents, if you are not listing exclusively. Your agent should be able to introduce you to one although you will have to pay the photographer's fees.
- If there are any small repairs or repainting that would enhance the overall appeal of the property, it's well worth getting this work done now to eliminate any small "objection factors". Although it goes without saying, a clean house is a desirable house, and many buyers are put off if the property is grubby or untidy, and use small factors to justify a seller and to themselves a lower offer. Make sure your home is spotless and you will instantly create a favourable impression.
- Get your main agent to put up their "For Sale" sign
This always results in enquiries. Many potential buyers drive around different residential areas to get a feel for what areas they like best, before going to an agent. Who knows, they might even be looking at yours from outside, saying "that would be a nice property for us!" but without the sign, they would never know it is for sale. Not allowing a sign to be placed is to block one of the many proven paths for reaching the market place. Our experience is that signs help significantly in selling properties.
- Facilitate viewings on as short a notice as possible
- Negotiating a sale
Let your agent form a team with you with respect to handling the negotiation in an eventual sale, checking points with your lawyer and tax advisor when necessary. This is your agent's job and one of the reasons you pay the agency's fee, and experienced agents are generally better at negotiating the commercial points of a deal than lawyers. Once this is accomplished, your lawyer should take the lead role (in coordination with your agent when necessary), draft the sales contract and supervise the eventual completion of the sale.
If you are frequently travelling, it can often make sense to leave a Power of Attorney enabling your lawyer to sign a private contract on your written instructions. You can negotiate the details of the sale with your agent by telephone and e-mail and your lawyer with the Power of Attorney can take the "first step" towards the sale by signing a private contract without delay.
- Points to consider when a negotiation is taking place:
Is the buyer expecting a counter-offer from you or has he or she given you a one-and-only, take-it-or-leave-it offer? Do they have other properties in mind if they don't buy yours? Is their offer a fair one? Are all details included in the offer - price, target contract date, deposit, completion date, precise understanding of what is included in the sale in the form of fixtures, fittings and furniture, etc.? All these items should be agreed upon at the outset before lawyers are instructed. To avoid unpleasant surprises, under no circumstances should the commercial points in a transaction be negotiated "piecemeal".
Don't allow yourself to be pressured by your agent or anyone else to accept an offer! A good agent will simply point out your options, give you a sincere opinion based on his experience of showing the property often, along with information about real sale prices of similar properties and support the conclusion that you reach. But once you make up your mind to proceed, and considering the "emotional factor" of many property buyers where they can change their minds abruptly, make sure you move quickly (but surely) to close the deal.
In summary, selling a property can be as easy or as complicated as any task involving one's personal affairs. Competent, honest, professional help from agents, lawyers and tax advisors can go a long way to help you manage your sale objectively and easily.
Other articles from Panorama.
Marbella Property Market Report
An up-to-date report on how the worldwide economic crisis is affecting the property market in Spain's most important resort city.
Property Buyers Guide
The buyer's problem in finding the right property, negotiating its purchase and closing the sale is much more difficult than in one's own country.
Q & A buying a property in Spain
by Christopher Clover, Managing Director of Panorama, Marbella’s longest established Real Estate Agency.