What to look for in a Real Estate to sell an IP

From: Robert Forward

As I am actually going through this process right now. I thought I'd put a different slant on things.

Some will say never sell an IP, you will always make money - eventually (the buy and hold strategy) others would rather trade properties.

My thoughts and actions are to sell at the top of the market after buying at the bottom of the market and walk away with the gains to do it all again.

So saying all that, what would you look for within a RE Agent to list your property with. And what due diligence would you do.

Would you take it to auction, or would you just list it in the Agents window front and do minimal advertising (less expenditure).

Would you be active and want the RE Agent to call you ever 2-3 days telling you the latest news.

Would you negotiate the RE Agents commission of the property down.

How do you chose a RE Agent to list with.

Why do you chose a particular RE Agent.

Do you sign the property up for Sole Agency or Multi Listing rights.

And then there are always those that sell privately. What made you go this way instead of handing it over to a RE Agent.

Everyone else please feel free to join in and ask questions. This is a side of property investing that we don't really talk about and it there is a big black hole of information.

Looking forward to some interesting replies.

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Reply: 1
From: Michael G


I found the book "Real Estate Mistakes" have some good thoughts in it.

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Reply: 2
From: Paul Zagoridis

Depends on the IP. Here are my thoughts...

Never sell at auction unless it's a hot and rising market or the IP has unique features (which disqualifies it as an IP for me).

No-one ever went broke taking a profit. So never selling is only ok if done with thought. A negatively geared IP which doubles over 25 years is not a good deal.

Make money when you buy. Realise that cash when you sell. Note your strategy/interest may change as time passes. You may want to sell all your green houses to buy a red hotel ;-)

Agents? Always use one if you live away from your IP. Factor the value of your time. You'll spend at least 4 weeks marketing, mostly Saturdays but follow up calls).

Only use an selling agent that you've bought from or is recommended by another in1vestor with similar strategy to yours. You cannot tell what they're like from an ad or even a chat.

Factor an advertising spend in keeping with the area. Do not spend unnecessary money on colour brochures in Sydney. Ditto mailbox drops. Especially if your IP is only attractive to investors (they know where to look for ads).

If your IP attracts owner occupiers or FHO's then consider targeting the campaign there. Discuss with your agent.

Never let your IP rot in an agent's window.

Consider writing an unusual ad to stand out in the classified crowd. The ad MUST get noticed by buyers, not attract new business to the agency. You're paying for it - you sign off on it.

Insist on weekly reports - including names and numbers. Tell the agent it's for insurance purposes if you must.

Always negotiate on commission. But don't be too cheap. Consider paying a sliding scale where the commission % goes UP with the price.

Never list with an agent who sends a junior associate to open the inspection. Your paying for the agents ability to close the deal, not take names and numbers.

Sole agencies are generally more attractive to listing agents. Only sign with specific measurable performance. The recent thread on breaking exclusive agencies had some good performance measures.

Multi-listing is evil except when it's good. If your IP is in a strong ML area like western suburbs of Sydney good. Eastern Subs don't ML.

Private sale? I just sold my residence that way. I'll post on the experience tomorrow. Not for most people. 4 week minimum, sales experience desirable; need thick skin and not afraid to call people for follow up. When you have "a live one" it's hard to do a gut check and haggle.

Why sell privately? What do most REA's do for their commission? Take names and (hopefully) make calls. When paying $5K-$10K commission I want more or I did it myself.


Oz Film Biz is at
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Reply: 2.1
From: The Wife

WHOA.....PaulZ....some EXCELLENT advice there!

~Life is a daring adventure, or nothing at all~
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Reply: 2.2
From: Owen .

Brilliant stuff Paul.

I've just started reading "Confessions of a Real Estate Agent" and it looks like it covers the stuff you have just described. Nice to hear from someone relating there own experiences. Thanks.
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Reply: 2.2.1
From: Gee Cee Cee

Hi Paul

Great Post

I have actually just finalized a spec home that I sold myself.

I don't like paying agents 5-10k to put up a sign, run a couple of adds and make a few calls.

In fact I would prefer to pass on half of the commission to the buyer.

Nice sign, (not hand painted in the back shed) an add that gets noticed, target your market, price the property well, be friendly & interested.


Mind you all the local agents phoned as well telling me how much of a wonderful sale they could make for me.

I just love telling them it is already sold now that they are phoning back again.

Gee Cee
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From: Sergey Golovin

It is another good one from Gee Cee.

Serge G.
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Reply: 1.1
From: Andrew Pennisi

Following is an email I received from real estate consumer alert. It is written by Neil Jenman author of Real estate mistakes. Although it is a little long it does have some excellent points on auctions

Home-sellers tempted to auction their homes should
remember four words: AUCTIONS GET LOWER PRICES.

Never mind what agents tell you, never mind what
you read in the papers, auctions are a financial
minefield for consumers.

Last year, despite the real estate 'booms' in
many areas, thousands of home-sellers turned their
backs on auction and benefited.

But there are still thousands of sellers who
don't realize, until it's too late, what happens to them at auction.

They get a LOWER price, that's what happens.

If someone is trying to talk you into selling by auction, then before you sign anything, please read this.



It seems as if the price goes up at auctions. But that's only because it starts LOW. It's like starting the day with a massive hangover and saying that you are going to feel better as the day progresses.

That's not a good reason to get drunk every night.
Avoid drinking and you avoid the hangover. You start the day in good shape.

And that's how your sale should start - from
a good position, a position of strength, not
of weakness.

One of the BASIC principles of price negotiation is to ALWAYS START HIGH.

You will get a much higher price if you start higher and come down, than if you start lower and try to climb up.

When you start low, you can get stuck low. It's like climbing up a mountain or down the mountain.
When you are climbing up you run out of energy a lot faster than when you are climbing down.

If you want a high price, START high. Auctions start low.


The reserve price is the price at which the home can be sold. It's the lowest price a seller is prepared to accept.

And that becomes the central focus of the auction.
If you are trying to get the highest price,
do NOT make your lowest price the main focus
of the sale.

There are two parties in a sale price negotiation - a seller and a buyer. Each has their "final price" or their "limit". The sellers' final price is the reserve - that's the lowest the home will sell for.
The buyers' final price may never be known.

There is no procedure at an auction for determining the highest price a buyer will pay. Only the highest price of the losing buyers may be known because they stop bidding once they reach their limit. But
the buyer who is the highest bidder often buys at
less than his or her limit.

Most buyers at auction buy for less than their limit which means most sellers at auction under-sell their homes.

You can't possibly get the highest price for your home if the central focus is on the Sellers' Lowest Price. You can only get the highest price if the focus is on the Buyers' Highest Price.

As a seller, you are at a huge disadvantage
because your lowest price, the 'reserve', is
always disclosed BEFORE the home is sold. That's when you hear the agent yell, "It's ON the market."
Everyone knows your lowest price.

Not so with the buyers. IF their final price is ever disclosed, it will be AFTER the sale is over.

By then it is too late for the sellers.


Research shows that more than 90 percent of buyers
do NOT like auctions. It makes no sense to use
a system of selling disliked by most of the

You can only get the highest price if all
the buyers who may be interested in a home are given
the chance to buy the home. As auctions repel so
many buyers, the highest paying buyers often avoid


One of the BASIC rules of marketing is: make it
EASY for people to buy. Auctions do not make it
easy. They make it hard.

Many buyers see that a home is for auction,
and if the date doesn't suit them, they don't
even bother to enquire. The buyers that are lost
in this manner are often buyers who would have
paid thousands of dollars more than the auction's
final selling price.


Investors, property dealers and bargain hunters
all know that auctions are one of the best places
to find cheap deals in real estate. It is well-known
that deceased estates and mortgagee sales are
often sold for a 'song' at auction. Auction agents try
to justify this by saying, "Look at the banks and
the Government departments. They use auctions."

But that's because they want to make sure the home
is sold. The sale is more important than the
price. The banks and the Government departments
are not the "owners" in the way that consumers are
owners. Many banks and Government departments
do not realize they are under-selling homes
at auction. Those who do, are now beginning to
avoid auctions.

Property investors, developers and dealers often buy at auction. But they almost NEVER sell at auction. That's because auctions get lower prices.


If two or more people want to buy the same home,
the worst thing you can do, from a negotiation
point, is to allow each person to SEE what the
other is offering! Instead of offering their
highest price, each buyer will only offer a
SMALL amount above what the other buyer offered.

Auctions are touted as being competitive -
but the competition is in PUBLIC not private -
which makes it COMPARATIVE more than competitive.
Everyone compares what everyone else is offering.

It's like playing cards and knowing what the others
are holding. By making the negotiation so public,
the buyers have a tremendous advantage over the
seller. Instead of having to offer their highest
price to win the auction, buyers only have to outbid
the buyer below them.


To persuade sellers to auction their homes, agents
will talk about high prices. And then to get
buyers to come to the auction, the same agents
will talk about low prices. Most times both the
seller AND the buyer are deceived. The sellers end up
selling for less than they were told they could
get, and the buyers often end up paying more than they
were told they could pay.

The most infamous deceit is Dummy Bidding where
agents use bogus bids to keep the auction

Some agents deny that Dummy Bidding exists.
But consider this: How do you have an
auction with only ONE bidder?

Most people think Dummy Bidding increases the
price. But Dummy Bidding deceives sellers as
much as buyers. It is used to get the price up to
the point where it can be sold - the reserve

Usually, once the home reaches its reserve, the
agent stops using bogus bids. The home is then
sold for its lowest price.


To attract buyers, agents will market the home by
advertising it to "start from" a low price. This
is supposed to attract buyers. And indeed it does.
But it attracts buyers who want to buy at the LOW
price NOT at the price the seller wants.

Many of these buyers can't afford to pay much more than
the price advertised. And so, on the day of the
auction, there will be a crowd of buyers all
wanting to buy at a low price.

The agent will then say to the sellers,
"This is what the market is telling us."
But the agent has been looking in the WRONG market -
a market BELOW THE VALUE of the home.

This is why auctions get lower prices.


When a home does not sell at auction - and
thousands don't - it is labelled a "failure".
Buyers think something is wrong with it; and many
will offer LOWER prices. Like a wounded animal
with vultures circling, failed auctions are easy
prey for bargain hunters.

These are just some of the reasons why we believe AUCTIONS GET LOWER PRICES. We hope it's enough to make you think carefully when someone wants you to sign-up for an auction.

More information is available in the book Real Estate Mistakes and on our web site www.jenman.com.au

Consumer Alert is the opinion of Neil Jenman and The Jenman Group. We accept responsibility for these comments.

You are welcome to distribute this Consumer Alert, with or without acknowledgment.

If you have any comments, please contact us at [email protected]

Thank you.
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Reply: 1.1.1
From: Dave :)


What a great piece of information.

Much appreciated Andrew. Even though many of us are aware and agree with many of the points raised in this consumer alert, it's a 'must-read' for all property investors.

Granted, it pushes the 'Jenman' message, but there are truth's here we should all take seriously.


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From: Owen .

I'm halfway through "Confessions of a Real Estate Agent" and one of the issues put forward is the reported statistics on auction clearance rates.

He says something like if you hear "there was a 75% clearance rate last week" what does this include? Is it all properties sold via under the hammer or does it include those sold prior to auction, post auction after negotiation or what? The result we see in the papers usually indicate this but it is still included in the success stories of auctions.

The author indicates that sales under the hammer on the day are as low as 22%. Why wouldn't you just use private treaty if this is the case?
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From: Andrew Pennisi

Owen You are so right with this. I am a real estate agent who operates in essendon vic (an auction area !!! ) and even in the best of markets the clearance rate barley hits 50%
But most agents will fiddle the figures to make it look like 90+ % And the newspapers will go along with this so they get the advertising $$$$$$ It's a scam..
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From: Andrew Pennisi

Yes Jude. Thanks for the advice. I can assure you I read this site for the benefits I may get as an investor not an agent. I have been reading this site for a long time and have never commented for that reason. 99% of readers are unlikely to ever come in contact with Andrew the agent. If someone should make a comment on agents or ask my advice as one I will give an insider’s opinion that’s about It.. Unlike most agents who are happy to hand out their advice I own a number of IPs.
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