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IF you’re worried about the price you’re likely to achieve for your home in a sluggish market, the last thing you’ll want to be doing is invest more money in it before you sell.  So is it worth styling a property for sale?

Yes say the property stylists, is exactly what’s needed.As Richard Armstrong, director of Melbourne’s the Makeover Group, puts it: “There’s a popularity contest held every week in the suburbs. They’re called auctions.

“In any market, whether it’s booming or on its knees, if you have genuinely comparable properties sitting next door to each other, then the one that is done well is always going to sell for more and faster.”

Michele Ardon of Michele Ardon Interior Design, a property styling specialist in Sydney’s eastern suburbs, says in a small market vendors simply need to spend money on some degree of property styling.

“They are simply not going to get the return they want if it [their home’s presentation] is average,” she says. “If it doesn’t stand out from the crowd, what is there to attract the prospective buyer?”

In the US they call it “home staging” and the queen is Debra Gould (aka the Staging Diva) who writes endlessly on the subject and runs training programs for people looking to set themselves up as professional home stagers.

As Gould puts it: “A house is a product that has to be packaged and marketed to the right target audience at the right price.

“In a slow or buyer’s market, any house is just one of many for sale in a neighbourhood. Real estate agents may say the only way to sell is to drop the price, but this ignores the positive sales impact of improving the product.”

How to improve the product and how much to spend doing it depends on the particular property, but there are some basic rules.

Ardon says the minimum spend is about $6000 and up to “$30, $40, $50,000”, depending on the value of the home, balanced against the possible return.

Armstrong puts the figure you should fork out at “between 0.5 and 2 per cent of the property’s value”.

“I would say 25 per cent of homes in the Sydney metropolitan area are being styled,” says John McGrath, chief executive and founder of McGrath Real Estate.

“People are wanting a one-bedroom flat styled right through to a four-bedroom house.

“We think there are three key pillars to selling a property and they are pricing, marketing and presentation.”

A lot of properties only need a few thousand dollars spent to get them right, says McGrath.

“Most people spend between $3000 and $8000, and my gut feel is that it adds between 5 and 10 per cent sale value.”

He says it can be as simple as removing or adding furniture.

“An agent should be able to give you advice but we do use outside style consultants, too. At the very least re-styling your property will make it sell a lot quicker,” McGrath says.

“The amount you may need to spend – and the possible return you can hope to get – depends on the value of the home we’re talking about,” says Armstrong, who believes – for the purposes of property styling guidelines – you can divide the Australian market into three broad categories: houses up to $800,000; houses between $800,000 and $2 million; and the $2 million plus property.

To ensure a house, in any category, has the best chance of achieving the best price, the minimum that a vendor should do to their property is “make sure everything is finished”, says Armstrong. “That’s [property styling] at the barest, most basic level. It’s things like cracks in walls, broken windows, broken handles.”

The next things that need to be done with all properties is to de-clutter and decorate in colours that are “warm, neutral and light”, he says. “Make it inviting so that people walk in and imagine themselves living there.”

Sometimes a stylist may go as far as a complete strip out of a client’s possessions.

“If I’m going to be a client’s style police,” says Ardon, “then we need to clear the place out, make it look empty and put in some good quality pieces. Sometimes it’s just a case of de-cluttering and renting a little bit of furniture, putting a few things in that make the place stand out.”

Also crucial is the property’s presentation to the street.

“What people experience at the front of the property will always set their expectations of what they are going to get once they walk in the front door,” Armstrong says.

This can mean giving the front yard “good crisp lines”, tidying, pruning and-or replanting garden beds, not to mention modernising the property’s exterior colours.

Armstrong had a client repaint the outside of a worker’s cottage in Melbourne’s Fitzroy.

“I honestly believe it added 30K or 40K to the property,” he says. “The heritage colours that were popular 20 years ago – the soft yellow and the Brunswick green – getting rid of that sort of stuff and working to a more modern colour palette says to everyone doing a drive-by: ‘We’ve got modern colours on the outside because we’re modern on the inside too.’ ”

Once inside (at least for homes worth more than $1.5 million) Armstrong advocates spending money on a “lifestyle” revamp to give it the contemporary feel that will appeal to most possible buyers. “You have to make sure the door handles are updated, light fittings are updated and things like dishwashers, stoves and that sort of thing are updated as well,” he says, adding that this stage might also include investing in a stone benchtop in the kitchen or “significant amounts of landscaping”.

Armstrong maintains that for every $1000 spent the vendor can look to add an extra $3000 on the total price achieved.

Ardon is more upbeat about the rewards of giving a property a makeover. “At the bottom end, if you spend $5000, then you can expect to get $15,000 to $20,000 [more],” she says. “At the top end I think [the return] is in the one to five or one to six ratio.”

That said, she also believes the sluggish market means vendors must make sure their home is memorable.

“You use elements of surprise,” Ardon says. All the basic principles of making your home attractive apply, but in a particularly slow market (not to mention one that already may be more property styling savvy, such as Sydney’s upmarket eastern suburbs) you also need to add “something prospective buyers will remember when they walk out”, she adds.

Perhaps a bright colour for the kitchen bench’s splashback or “wallpaper on a wall as you walk in the entrance”, Ardon says.

“They will have seen six or eight houses and they’ll remember the one with the red splashback.”

Gould, the Staging Diva, has likened the process to speed dating. You may see eight houses one weekend but “you’ll reject most and possibly choose one property to go back to for a second look”, she says.

“Home staging or house fluffing is all about creating the best first impression, paving the way for potential buyers to fall in love.”

Source : Guy Allenby, The Australian Newspaper 30 July 2011

A professional buyer’s agent should find out as much as possible about a property and it’s surrounds for their clients before their client exchanges contracts to purchase. An important part of the due diligence process is investigating whether there are any issues with the local council.

The purchaser’s solicitor or conveyancer will examine the Contract of Sale, and review the 149 Certificate that is issued by the local council. However from my experience many solicitors and conveyancers do not have the time or inclination to thoroughly check all of the issues with the local council, and therefore it is incumbent upon buyers’ agents to do those extra checks.

As buyers’ agents, we should independently call the local council and speak to the Duty Planner or Duty Surveyor to enquire whether there are any past or current Development Applications (DA’s) on the property to be purchased, and also for the surrounding properties. Information received may have a negative impact on the property of interest and may affect whether your client is still comfortable to proceed with the purchase.

Previously rejected DA’s may contradict what a selling agent has advised on what is possible with renovating or extending a property. Other issues that may be disclosed are: unauthorised building works, Construction and Occupation Certificates not issued, and also demolition orders.

Many council websites have a DA Tracker section, where you can see a history of Development Applications on any property within the area of that council.

Some recent examples of issues that I have uncovered from local council checks have been:

A federation house was in a Roseville street that the Kuringai Council had recently re-zoned to Residential 2(d3), allowing multi-storey developments. My enquiries through council disclosed that a large new six-storey development would be built behind this house. The client still proceeded with the purchase but the sale price allowed for this issue.
A house in Fairlight was affected by road widening. The client’s conveyancer ran a check through the RTA that stated that there were no road widening issues for this property. However my enquiries through Manly Council revealed that there was a Road Widening order on this property, that had been issued by the council independently of the RTA. The land resumed would have taken half of the lawn and garden space of the house. Our client decided not to proceed with this purchase.
A Maroubra unit, with open views to the city, was to lose those views due to a new development directly in front of this building. We checked the plans of the new development, and the client then decided not to proceed with the purchase.
In summary, it is very important that council checks are done on prospective properties as part of a buyers’ agent’s professional due diligence. Failure to do so could potentially expose you to litigation and liability with clients if adverse issues are uncovered following their purchase.

By Henry Wilkinson – Principal, Homesearch Solutions, for the NSW Real Estate Institute 2011

Awards for Excellence Homesearch Solutions

The REINSW Awards for Excellence gives recognition to the real estate industry’s top performers. The most prestigious awards of their kind in NSW.

For the second successive year, Henry Wilkinson of Homesearch Solutions has been nominated as a finalist for the 2011 NSW Real Estate Institute (REINSW) in the Buyers Agents Category. The award winner will be announced on Saturday, 15 October 2011 at the Sydney Convention & Exhibition Centre.

 

What is Private Treaty?

A Private Treaty sale is where a property is listed with a purchase price and is not subject to an auction. It is up to the purchaser to negotiate a mutually acceptable price with the selling agent or vendor (owner of the property).  When a price & the sale terms are agreed you are said to have “offer & acceptance” to buy the property. The purchaser is then usually given a short period of time in which to conduct “due diligence” (unless done prior to the offer), which includes checking of the Contract of Sale by a solicitor or conveyancer, conducting building and pest reports, and undertaking strata inspections (for apartment purchases). When the purchaser is satisfied it is time to sign a copy of the Contract of Sale and pay a deposit (usually 10%, but can be negotiated) for the property. The vendor also signs a copy of the Contract of Sale after which “exchange” occurs. This basically means forwarding the purchasers signed Contract of Sale to the vendor’s solicitor or conveyancer and the vendors signed Contract of Sale to the purchaser’s solicitor or conveyancer. Once this has occurred the property has been officially sold, and until this has occurred there is always a risk of gazumping taking place (where another purchaser offers a higher price for the property which is accepted by the selling agent or vendor).

There will usually be a cooling off period during which time the purchaser can effectively terminate the Contract of Sale. This is usually 5 days after contract exchange, but the purchaser must pay the vendor 0.25% of the agreed purchase price as a penalty. If the cooling off period is agreed to be waived at exchange then the solicitor/conveyancer must sign the 66W Certificate and attach it to the contract.

Settlement will usually occur 42 days (6 weeks) after exchange, but this is negotiable between the vendor and the purchaser.  At settlement all remaining monies are required (ie, purchase price less deposit & other adjustments).It is important to take into account other “hidden” costs of purchasing a property which may be required prior to settlement, at settlement, or shortly afterwards.