Selling a Property? Watch out for these issues!
FSBO is short-hand for “For Sale by Owner.” Many owners want to save money by selling a property themselves. A few difficulties to watch out for:
1. On Sale vs For Sale Mentality #
Here on Mallorca, properties can take years to sell. This contributes to “sure, my house is for sale for the right price…” attitude which starts a Seller down ‘the Difficulties Path.’ Mallorca is a multi-agency market with few exclusivities. With no multiple listing service, Mallorca does not have a central data base of properties where people can search for desired qualifications and get a list of every property listed with that criteria. This creates a vortex where you may have the perfect place, at a good price point, but the buyer or a good renter does not see it.
For more success, a seller needs to get serious. The property must be staged with proper photos that do not show a microwave on a bench in the foyer or a shower curtain in the bathroom. You need to list with a proper agent for the market, have signage from a reputable agency. This means no handmade Se Vende signs from the ferretería. Commit to one qualified agency in your area and make sure their sign looks professional when it is hung on your home. This is your first announcement to the public that your property is For Sale.
2. Depersonalizing your home #
Taking down all those family photos, removing special artwork by the children, cleaning the kitchen cabinets, de-cluttering shelves and closets is hard to do if you have no idea how long your house will be on the market. If you are serious about selling, a good real estate agent will hire a professional stager to come in and remove the personal items that stop the potential buyer from seeing themselves in the space.This is a must for creating an advertising campaign. Your house is a valuable asset. If you want top bucks, remove anything that catches the eyes. Remember, a buyer makes a decision based on feelings. How does a place feel when you walk in? You may feel right at home with all your things but most buyers will not.
3. Pricing #
Whether you have a holiday home, one that has been passed down for generations or one that is your first full-time residence, we all have attachments to our homes. Many owners from the UK are feeling financial pain from Brexit. The pound has lost value. Owner’s pensions are not buying as much as it once did. This means they have less to spend on repairs or on servicing a mortgage. In the longer run, this will put a pressure on housing prices in the Balearics.
Many Brits own their homes outright and need to get as much for a property as possible to either return to the UK or relocate to a less expensive location. All those important considerations aside, you need to price your property so that it sells. You need a price that includes your carrying costs but one that is reasonable for your area. A good agent will tell you property prices in your neighborhood. Do not look at the prices properties are offered for. You need the actual closing price. Many properties are being discounted now. Final price is hard to find officially since the public does not have access to a government data base. A professional agent will support you in pricing.
4. Qualifying Buyers #
Many Sellers do not want to offend a potential Buyer so they do not pre-qualify that person before showing the property. You may meet someone at the bar or at a dinner party. Over casual conversation, you hear they are looking to buy and you decided to sell. Great. Is this person qualified?
A professional agent will only work with motivated buyers. The agent’s job is dependent on a final sale. That agent will make sure the person has financial resources and is reputable. The agent secures trust that the potential buyer will be able to satisfy the terms of a sales contract. Trust is crucial. Time is wasted on all sides if a buyer is not serious or the buyer does not have the means to finalize the sale.
You may be willing to finance the sale yourself. That is a topic we will cover more thoroughly in another article. However, if you are willing to hold the note, you want to know the buyer will have a down payment, has the income to make the payments for the mortgage and utilities and not destroy your property. The last thing you want is to take a property back with damages. A good agent can better assess if a potential buyer is trustworthy to fulfill terms of a contract.
5. Trying to Save Commissions #
Traditionally, 5% of agent's commissions are paid by the Seller. If you agree to an exclusivity, the agent may agree to a lesser amount. Just remember that you get what you pay for. Agents working on commission rely on this payment as a livelihood. This means that a professional agent is your representative and spends more hours on staging your home including great photographs, qualifying potential buyers and acting as liaison between you and the buyer in all matters. The agent pays for advertising fees which can be quite high for the 5% commission. For an average sale here on Mallorca of €350,000, the commission is €17,500. From that, the agent pays at least a few thousand in advertising and splits the commission with her broker.
The agent’s diligence is necessary from the time you agree to sell until the final process of closing. This can take months or years with the final process of 60 days being intense. If you want to save €15,000 on the commission (advertising fees will be paid regardless of whether or not you hire a professional agent), then know you will have hundreds of hours selling your house. You decide what your time is worth. And if you are married, don’t assume your spouse can handle work that you do not want to do.
6. Marketing #
In addition to placement on the agency network, there are many different channels a professional agent will advertise your property. An advertising profile of your home takes time to create and money to place on a special channel. Realtors know what works for this market. From professional photography, property URLs and videos used in digital and print marketing, experience helps contain extraneous costs which can add up. Agents absorb those costs because they believe in the value they have placed on the home. Remember, they get paid after you have a successful sale.
7. Paperwork #
Legal requirements to sell a home take time and experience. Affordable Mallorca is launching a listing platform that can guide Sellers through the process with step by step instructions. After you are certain your escritura is clear with no issues, you will need to employ a reputable notary (not as easy to find as that sounds), have a good accountant or know how to process tax requirements. The reality is that not all agents have knowledge of legalities as laws change on the island and in Madrid more frequently than you might think. Hiring a good abogado or gestor will save you many sleepless nights. The cost for this is 1% of the sale price.
Affordable Mallorca Tip: Pay for support services. Whether you use FSBO or use a professional agent, hiring a reputable administrator will save you many hassles.
Affordable Mallorca supports both Owners and Agents in our document storage capacity. We offer to create a filing system for you on a cloud database where you can store
- the escritura
- architectural plans and energy certificate
- photos to show any investment or upgrade
- contracts or history of the property
- purchase and investment history
- tax payments
All of these documents illustrate the value of a property. A potential buyer might wonder about the condition of the roof or the condition of the heating system, pool equipment, appliances. If documents are available for potential buyers to assess value, that is checked off the list as a potential hurdle for a successful sale. The financial documents are accessible for whoever is given a digital key: bookkeepers, accountants, tax attorneys, notaries and potential buyers. This is a plus for anyone who is diligent in tracking their financial documents. Instead of hard copies, this allows for the seamless transfer of information to expedite services. You save time and money.
Agents are helpful in navigating the sales process for a property. An agent typically, but not always, knows more about the market than you do. A good agent knows market trends, neighborhoods, mortgage options which are helpful to you. If you decide to pursue FSBO, Affordable Mallorca will be posting articles in the coming months that support your selling process.
By Memphis Holland
23 April, 2019