11 May Got Residual Stock?
There was an interesting article from Domain a few weeks ago about trophy homes and why some sell in a matter of weeks, while others languish, in some cases, for years.
The prestige market relies on a particularly niche market. A specific intersection of those with the funds, those with the lifestyle requirements, and that one particular property that meets all their needs has to occur to shift some of the high-end stock.
The article quotes Ken Jacobs of Christie’s International who notes “The more unique the property, the more targeted and nuanced the search for a buyer becomes … rather than a traditional mass market approach.”
This got me thinking, as a business we fund residual stock for developers, but I’d never stopped to wonder WHY there was residual stock? What are the reasons some things sell, and others don’t?
The longer a property sits on the market, the lower the sale price tends to be.
What can we, as a property industry, try to do differently to mitigate some of these factors?
So here you have it, thoughts on selling old stock, and ensuring you don’t have old stock to sell.
If your property isn’t hitting the price target you have set or is remaining on market for an inordinate amount of time, is there something else you could do with it? Could you subdivide? Could you market it as a weekender? If it’s a weekender could you highlight its proximity to major road networks and amenities, advocating for a not-unreasonable daily commute and market it as a forever home?
Your beautifully renovated Arts and Crafts home isn’t wowing anyone but you. What other features does the home have? Is there an incredible self-sufficient organic orchard and vegetable patch? Is there a huge 16 car garage for the trophies? Could the old stable at the back be renovated and turned into a premier reception venue? What are the bits of the property that have the potential to wow? Make these features pop.
Is there a top school nearby? Or incredible restaurants and entertainment precinct? These are important to buyers. You are selling a home and a lifestyle, not just bricks and mortar. Use these selling points to your advantage.
The right agent:
Do some research and meet a few agents. Find one who is as excited about your property as you are and who can speak to its features, benefits and quirks. There is nothing more off-putting than arriving at an open home and being met by the most dour agent who looks like he’d rather be clipping his toenails than showing your buyer through their new home.
The initial listing price you set can have the biggest impact on whether a property sells or doesn’t. People purchasing property have generally done their research. They know what properties are worth in the area. Prospective purchasers know that m2 of x, plus bedrooms numbering y, should equal a purchase price of z.
So, know your market.
A too high sale price will mean there is no one beating down your door, a too low sale price leaves people wondering “what’s wrong with this property” and “what aren’t they telling me?”.
Talk to your valuer, local agents, refer to online real estate platforms and compare apples with apples.
Make it look beautiful:
Even the most run-down, forlorn looking property will still have a good sales angle – highlight it! If you’ve been on market for a while consider hiring furniture, a stylist and photographer to make the property really shine.
Sell the benefits:
Your purchasers have likely found you via the internet, so work with that! Sell the benefits of their new home. Good quality photos, location information, local hot spots. Lay it all out from the start.
Call it what it is:
If it’s a renovator’s delight, say it. If it’s a renovate or detonate, say it. If it’s a move straight in and get on with your life, say it. Make it easy for people to know what they are walking into and what they can expect.
What can you do if you’ve been on the market for a while?
Be realistic and open to negotiate: Can you accept a lower offer on your last remaining units to get them off your books? Can you accept a contract with a longer settlement time? Can you offer any perks to get a deal across the line?
Check in with the market:
Have there been changes to the local market that you now need to accommodate? Is there an election coming up? Has the RBA increased the cash rate (I know, I know)? Etc.
Could the property do with a quick refresh? This could be as simple as organising a gardener to come and prune, fertilize and mow. Nothing overly expensive, a quick turn-around, and instant appeal.
Organise a pre-inspection report:
Particularly for older properties, a pre-inspection report can be provided to the agent for distribution to prospective buyers. It can outline any damage to the property requiring repairs and head-off any pre-conceived ideas a buyer might have formed based off their internet search. It’s important to talk this option through with your agent, while these can be super helpful, you don’t want to scare people off with a whole lot of work required.
If the agent suggests that a twilight viewing might be helpful to *ahem* highlight the positive aspects of the property, roll with it. If an early morning viewing works for the professional couple who might be interested, roll with it. The aim of the game is to sell, and it isn’t always at your leisure or convenience.
It goes without saying that both buying and selling can be stressful times. Be methodical, take your time and show the property in its most flattering light. The right buyer will come along at the right time.
If your strategy isn’t working, pivot. Try something new and see if that helps.
If you find yourself stuck with residual stock from a development, give us a call, we can help with that.