Why use a Valuer as a Vendor Advocate?
Selling a property is a major financial transaction that can be both stressful and time consuming, at times taking greater than six months to achieve. Even with a selling agent appointed, results are not guaranteed, particularly where an appropriate selling strategy has not been selected for a property. There are a number of property transactions that do not proceed due to technicalities that could have been avoided with expert advice. Vendor Advocacy is a growing profession within the real estate industry that is increasingly assisting individuals and corporations to sell their assets and maximise returns. It is quite common for Vendor Advocates to be standard real estate agents who in many cases have limited undergraduate or postgraduate qualifications but Bertacco Ferrier Property Consultants are at the forefront of a new wave of Certified Practising Valuers (CPV’s) who are utilising their professional valuation skills to augment the Vendor Advocacy field.
The Australian Property Institute describes a CPV as a person who, by education, training and experience is qualified to perform a valuation of real property. Furthermore, CPV’s have a role at the heart of the property industry that is integral to the Australian economy and typically work quietly behind the scenes in an objective and independent manner to help reduce risk and provide greater certainty for their clients. Having years of on-the-job training and experience in the field, on top of rigorous undergraduate and postgraduate education, CPVs are expertly equipped to give you up-to-date and impartial professional advice in a wide variety of areas. It is because of this rigorous training that all legal courts within Australia rely on Valuers (or CPV’s) to provide expert opinion on matters regarding value.
Vendor Advocates are independent agents who act exclusively for the seller of a property. Utilising a Vendor Advocate ensures that real estate agents are kept accountable via a vetting and screening process that maximises the price achieved for the seller. The value-added services that are offered by professional Vendor Advocates include market appraisal, advice on agent appointment, advice on the most effective marketing campaign and the vetting and screening of offers submitted.
Vendor Advocates usually carry out a market appraisal of the property that includes local comparable sales and current listings to establish a market value range. The valuation of a property is the domain of a property Valuer and this aspect of Vendor Advocacy ensures the Vendor has the right advice leading into a marketing campaign – armed with a realistic but competitive reserve that is supported by market research.
In most cases, having the property “appraised” by a qualified Valuer will provide some level of comfort that the sale will proceed if a “subject to finance” clause is included within any written offer, due to the fact that a purchaser will have to engage a Valuer to assess the value of the property for mortgage purposes. We note that Bertacco Ferrier Property Consultants never use appraisals as a negotiation tool and will always strive for a higher price.
Advice on Selling Agents
Another major service that Vendors’ Advocates provide is advice and recommendations for selecting the best real estate agent in the locality. Choosing an agent is a critical aspect of the selling process in order to achieve a successful sale. Property Valuers have access to sales databases that show sales results for the various real estate agencies, which can help shortlist the best agents for your property.
Selecting a selling agent should not just be a choice based on the highest price quote or the lowest commission charged but by a careful analysis of the submissions that the shortlisted agents submit. A Valuer can more accurately assess the selling agent’s appraisal since agents can’t guarantee any asking price. A selling agent who suggests the highest price may be ill-informed or may be trying to “buy business” that will potentially waste time and money on advertising expenses. A Valuer will always seek supporting evidence and will have knowledge regarding the comparability of any evidence that an agent submits. The best time for an offer is within the first 30 to 60 days on the market for standard residential properties but may be longer for prestige homes and commercial properties. If the property has been priced right, an offer would be expected within the normal timeframe. Usually when a property is overpriced, there may be little or no interest and a price reduction is inevitable.
Valuers can often distinguish agents that offer similar services by viewing their track record and comparing statistics such as an agent’s original asking prices versus their final sale prices. In some cases the lowest-fee agent will show more price reductions and longer selling periods. The difference between an agent who charges 2% and 3% is 1%, which is insignificant if the eventual sale price on a property is reduced by more than 2% due to an agent selection error.
Advice on the Most Effective Marketing Campaign
The third service provided by a Vendors’ Advocate is to provide advice on the best method of sale, strategy and proposed marketing campaigns. When selecting the appropriate selling agent, a Vendors Advocate will request submissions that will show the relevant agent’s sale strategy. This includes whether they believe a sale via auction, tender, expressions of interest or private treaty is recommended. Again Valuers are equipped to know the best sale method with their extensive market knowledge and daily contact with sales data.
Valuers know the leading selling agents in the area through daily market place interactions and are ideally placed to select an experienced selling agent who knows the relevant market and can attract the right buyers. Selling property requires a lot of skill and dedication and accordingly selling agents are not equal – some are better than others. Approximately 10% of the agents do 90% of sales transactions by value with each having their own marketing techniques. Some property types require choosing an agent with wide coverage that may also be international, depending on the property class and subsector.
Part of a marketing campaign requires the Vendors’ Advocate to make difficult decisions such as whether applying for planning permits would improve the property or even considering minor or major renovations in order to achieve pre-determined financial goals. Sometimes it may not be worth carrying out any additional works based on the buyer profile in the area, the type of property being offered and other factors such as when the property was initially acquired. In some rare cases, the price for a property purchased at the market’s peak in 2007 is still lower than it was at that time, despite recent rises therefore any renovation works may further weaken the financial position of the Vendor.
Vetting and Screening of all Buyers’ Offers via the Appointed Agent
The final service offered by a Vendors’ Advocate is the vetting and screening of all buyers’ offers presented to the seller through the appointed selling agent. The contracts will be vetted to make sure it is correctly completed and binding and that there are no special conditions added that oppose the Vendor. The highest offer on paper may not be the best outcome. Long settlements with a higher price need to have the present value calculated to remove the time effect on money.
The Vendor Advocate is a second set of eyes in respect of the documentation process as the smallest oversight can render of contract of sale voidable by the purchaser. We have witnessed many contracts ‘fall over’ through our valuation experience and understand the vetting process is invaluable for making sure the sale can move through to settlement.
In summary Clivedon Group aims to provide the best Vendors’ Advocacy services underpinned by the extensive valuation experience amassed by our company personnel. We would like to highlight the three main reasons why a Vendors’ Advocate is essential for anyone considering selling their property.
Reason 1: Vendor Advocacy saves Time and Money
Unlike most professional services, there are no fees charged by most Vendor Advocates in Victoria therefore the service comes at no additional cost to the client – the fee is taken out of the agent’s normal commission. Often clients confuse Vendor Advocacy with Buyer Advocacy where there is a fixed fee charged to clients.
As mentioned earlier, transactions can take an extended amount of time – often more than half a year for the complete process till settlement. This will in most cases involve conducting open for inspections, gauging the level of success of a selected selling method or agent and researching current trends in the market particularly for specialised property types. A Vendor Advocate can save the Vendor both time and energy through the implementation of an appropriate marketing strategy. In addition a Vendor Advocate will provide comprehensive advice on the most effective advertising and assist in the selection of the right selling agent based on the relevant criteria.
Reason 2: Expert Advice
Vendor Advocates are independent agents who act exclusively for the seller of a property and are qualified to provide expert advice to Vendors. A Vendor Advocate carries out all the due diligence on behalf of the Vendor and interviews potential agents, establishes sales price parameters and marketing strategy.
A Vendor Advocate will carry out market research in the relevant areas, utilise comparable sales in order to help set the sale price parameters and select the best agent for the set marketing strategy, which maximises success. Vendor Advocates bring experience and offer ongoing advice throughout the sales process. This includes property presentation advice, recommendations for a reserve price and vetting buyers’ offers.
Reason 3: Optimal sale price
Using a Vendor Advocate can help to achieve an optimal sale price as the sale process is carefully monitored and the best-selling strategies are implemented. The real estate market is time sensitive and having all the right pricing points and the aforementioned selling strategies can enhance the bottom line. A Vendor Advocate will inform a Vendor in a timely manner where they stand with their selling situation so they can move on quickly to another potential buyer particularly where multiple offers have been submitted and are being selected based on set sale parameters.
About the Author
Des Dinama began his valuations career in 2006 and has been actively engaged in commercial, retail, industrial and residential valuations. He has also participated in research on behalf of Master Builders Association of Victoria for his masters thesis. Des has an intricate knowledge of development feasibilities and is regularly instructed by Lenders.