The Marbella Property Seller's Guide
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.
The first and most important thing to establish is a "sales strategy" - a plan! The backbone of this sales strategy is establishing 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. What sales of comparable properties have been accomplished, and at what price? And what are other owners with similar properties asking? Is your property unique, which will allow you to ask a higher price as it cannot easily be reproduced, or are there many similar properties being offered?
The most experienced agents will of course be an extremely valuable source of market information, and will help you reach a conclusion as to a proper valuation and a correct asking price for your property. However, it is important that you insist that your agent share his or her market knowledge (and the market comparables) with you. At the end of the day you must be convinced that you are asking as much as you possibly can, without the property appearing overpriced in the market place.
If, after having investigated the market as recommended above, you are not satisfied with an asking price that the current market would suggest, you can always set a higher price and hope that its market value will eventually increase towards your expectations. But if you decide to take on this strategy, you must be prepared for a lot less interest from both agents and clients, resulting in fewer showings of the property and a sometimes frustrating waiting game. You always have the option to lower the asking price in order to generate viewings.
Beware of agents who tell you what you want to hear: too many agents purposely overvalue homes to get a listing and let their sellers down over a period of time. Consequently, there are too many overpriced properties on the market, sitting there with no viewings whilst the seller has assumed that the asking price was reasonable.
Providing market conditions are favourable, and there are an abundance of clients looking for property similar to yours, a successful sales strategy should result in at least two or more showings per month of the property. Finding a buyer is, in many respects, purely a numbers game: the more people who view the property, the more the likelihood that one of them will fall in love with it and put in an offer. Some buyers will negotiate with sellers to the very end of their string, and others will be less difficult. But it's easier to refuse a low offer if you are showing your property frequently.
Build in a margin for negotiation
An asking price is not necessarily going to be the sales price at the end of the day. It is considered suicide for a seller to ask his last price, due to the fact that most buyers want to be perceived as winning in a negotiation to purchase, regardless of the asking price. So, experience dictates that intelligent sellers should build a reasonable margin for negotiation into their asking price.
Get a good agent
Remember that 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 135,000 registered residents (about double that if we count the part-time residents) and a market spread out all over Europe and the rest of the World. This makes networking essential in any sales strategy to ensure proper market exposure. Good agents will network your property with other colleagues, both local and foreign, and will share their commission with their colleagues, sometimes up to 70% of it, resulting in better exposure and more viewings. When your agent networks your property correctly, he or she becomes more like the Sales Director of your property, giving out the lion's share of the commission to the agent who brings the eventual buyer.
Avoid quoting a "net" price
One thing to avoid, if you intend to use agents in offering 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 on the market at several different prices. 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. Confusion and mistrust sets in. 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 and your sales strategy shipwrecked.
If you list your property with your agents on a net basis, you are also telling your agents "I'm not interested in your commission", 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.
Also: beware of agents who encourage you to list with them on a net basis. They will only be looking after their own interests and not necessarily yours.
Exclusivity or not?
Should you give an exclusive sales agreement to an agent? If you are an absentee owner of a property, 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 caliber.
The motivation factor that you give to an agency by granting them the sole agency makes them much 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 they report to you regularly on sales activity. In other words, you have the right to demand a lot more service and effort from an agency with whom you have signed exclusivity.
A good agent, whether he or she works with you on an exclusive basis or not, can be extremely helpful in dealing with the sale in an objective and analytical manner, helping you to reach the right decisions at the end of the day.
Many sellers do 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.
Rates of Commission
Agents in a resort area such as Marbella will usually ask between 5 and 7% commission, which they will really earn if they are top negotiators. This amount is generally limited to 5% for properties in excess of €1,000,000. As indicated, a good agent will network your property, brochure it, advertise it, promote it on the Internet, show it frequently and communicate well with you. Agents don't give keys out to clients, as for instance in London, but instead they spend an enormous amount of time and energy in their efforts to find the right buyer for a seller.
At the end of the day, the commission can often be negotiated along with the other variable factors in an eventual sale (sales price, form of payment, number of agents eventually involved, the skill of your agent in negotiating on your behalf, and so on.)
Essential tips for selling your home
- Get your main agent to put up their "For Sale" sign. This always results in enquiries. Many potential clients 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 your property 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 on your property 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. If you leave your keys with a neighbour who plays golf three times a week, you are losing a vital chance to show the property at the client's convenience. Bear in mind that the first properties that agents tend to show are the ones they have the keys to. Properties that need appointments set up will generally be shown less.
- Ensure that curtains and shutters are open and that lots of light floods the property when it is shown.
- 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" from buyers. 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. Make sure the place is spotless and you will instantly create a favourable impression. Selling a property, in this sense, is like selling a second hand car: fix the dent and polish it up, and you will always facilitate the sale, and maybe at a better after-negotiation price!
- And once your house is as presentable as possible, get excellent photos: remember the old saying, "a picture is worth a thousand words". If you have your house with several agents, it pays good dividends to get professional photos and pass them around to your agents. If you have given a sole agency, make sure your agent gets top photos, whether taken by their in-house photographer or a professional. If you have a property worth a lot of money, in the millions, you should insist that your sole agent has professional photos taken and you should be prepared to have a brochure made in cooperation with the agent.
- If you intend to sell your property with some furniture, it is most important to make an inventory right at the beginning and give it to your agent. Many sales have been on the brink of falling through when a buyer thought, for instance, that the painting over the fireplace was included in the sales price and felt that the seller was "too mean" when he learned that it was not! Negative energy during a negotiation can be avoided by having a clear inventory in writing from the outset.
- If you are frequently travelling, it often makes sense to leave a power of attorney with your lawyer enabling him or her 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 the power of attorney allows the "first step" towards the sale, the signing of a private contract, to take place without delay.
- Make sure that you are fully aware of your tax obligations when you put your property on the market. Meet with your lawyer and tax advisor, and find out the options open to you to ensure there are no surprises when you eventually enter into negotiations to sell your property.
- Remember that selling a property in a resort area is not usually a rapid procedure, even in good market conditions. Properties can stay on the market from three months to well over a year depending on the market, the location, the condition and general desirability of the property, the effectiveness of your sales strategy and, of course, the asking price.
- 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. 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.
- 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 way of fixtures, fittings and furniture, etc.? These items should be agreed upon at the outset and before lawyers are instructed. To avoid unpleasant surprises, under no circumstances should these items be negotiated "piecemeal".
- Don't allow yourself to be pressured by your agent or anyone else in making up your mind to accept an offer! A good agent will simply point out your options and support any conclusion that you reach. But once you make up your mind to proceed, and considering the "emotional factor" of many buyers of second or retirement homes 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 by agents, lawyers and tax advisors can go a long way to help you manage your sale objectively and easily.
By Christopher Clover
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Panorama Properties S.L.
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