I put my property for sale few months back, but i have not received many queries. Last week, one of the sellers asked me over the phone. He further added what should he do now?. He also gave me feedback that i don’t frequently write for sellers. Candidly i told him that as the entire risk of a property transaction rests with the buyer. Therefore, i have a soft corner for the buyers :). I promised him series of posts on the property for sale. This post is first in the series. I hope he is reading :). Similar to property buying even when seller put his property for sale it requires proper planning and execution. Prima facie any seller will ask what type of planning is required?. Trust me selling of property is as tough as buying. The property is an illiquid asset and may take up to one year to sell depending on market conditions. The current market is buyer’s market due to the meltdown of real estate sector, therefore, please go through this post before you put property for sale.
In India, there is a typical pattern to sell the property. Every seller has trusted broker/agent who frontend the property transaction. The traditional owners/investors are not vocal about the property for sale fact. Though the times are changing. There was a time if someone used to sell his assets like gold or property, society used to think that he is in financial distress. Maybe this thought process resists seller to announce openly about property for sale. Moreover, in past the owners used to sell either to or through trusted aides. In this digital age, an owner is overloaded with information provided he does proper research before putting property for sale. The information overload has both advantages and disadvantages. To sell a property, seller make mistakes that can potentially devalue the property. In some cases, it harms the prospect of property transaction. In this post, i will list down five such mistakes that can cost heavily to the seller.
Property for SALE – 5 Mistakes a Seller Should Avoid
1. List the property without homework: As i mentioned earlier that listing the property for sale without proper homework is suicidal. Each of the following factors is interlinked to each other. Let me share an example from my society. One of the owners is trying to sell the property for last two years, but now the property is tagged as unsellable. He consulted me, and i found that the owner listed “property for sale” without proper homework. This homework is 360 degree i.e. gauge the demand, price, time to the close deal, how to market, etc.
Demand and Price are directly proportional to each other. In short, if demand is high you can command premium and vice versa. The initial price quoted by him was 25% higher than the market rate. It gives impression among buyers that seller is not a serious seller. Some seller just keeps listing the property to check the property value. It is not right approach as they might find tough to sell in future. If you just want to verify the price then rather going overboard just discuss with your trusted agents/brokers or check online portals. Also, if you are serious seller then always quote RIGHT PRICE even if you are incurring a loss in the transaction.
Secondly, an owner carries a risk of the property being tagged as unsellable. Typically, i have observed that once you decide to sell than at any cost, the deal should be closed within 2-3 months time. If you take more time than you carry a risk of the Unsellable tag. In this bargain potential buyers start devaluing the property.
2. Desperation to Sell the Property: Trust me good negotiators can quickly find out whether seller is desperate to sell or not. After listing a property for sale, a seller should not show any signs of desperation. Some of the signs are frequent calling to agents/brokers/potential buyers. You should take it easy. If you have done your homework well, then you will not find difficult to sell.
3. Vacant or Rented: This is the biggest dilemma for a seller i.e. put property for sale after vacating the same or occupied (rented/self). Both approaches have its advantages/disadvantages. A vacant property looks spacious and gives the impression that seller is very much keen to sell. At the same time, a vacant property is a financial loss till it is sold. Moreover, a potential buyer will ask why it is vacant and from how long.
On the other hand, if the property is rented then the tenant may resist the sale of same. Tenant may keep the property in poor condition or make the excuse of non-availability. He may not cooperate with seller/potential buyer. The advantage is that regular rental income is generated. Therefore, delay in the sale does not pinch the seller.
In my opinion, the best option is to keep it rented/occupied, and you can always take a tenant on your side. You may give some financial waiver to him so that he can support the sale of the property. Selling the property without the support of tenant is tough.
4. Real Estate Mafia: Mafia is something that exists, but no one acknowledges the same. Even in gated community/association, there is a direct/indirect mafia of office bearer/s of Association. Once they know about property for sale, this mafia becomes active. There is one intermediary on behalf of office bearers who negotiate on behalf of the association. Based on the experience of my readers and personal experience, you need to pay 1% or fixed amount as a bribe to this Mafia. I highlighted the cancer of corruption in Resident Welfare Association in my post on the same topic. You are more vulnerable if you don’t stay in the same city. Most of the sellers keep the keys of flat in association office. To avoid this mafia, you should not inform about your plans in the society. In short, no one should know about property for sale.
5. Market your Property: At the end of the day if you are selling your property then you should be a good marketer. Only a tag of property for sale will not help to close the deal. I have observed in the case of few clients that they were not able to market their property. The best marketing strategy is to convince the female member accompanying the buyer. You should make a list of benefits/advantages of owning your property. Trust me once you convince the wife/mother of a buyer then you need not negotiate. In some cases, i helped my clients to fetch premium only because of a killer sales pitch. Assuming if you go to a superstore, and there is NO sales pitch, the probability of purchase is LOW. A good salesman with passion can convert the “No Deal” to “Deal”.
I can keep more sharing more points, but i think i have covered all the crucial points. A seller can avoid above mentioned mistakes. All these are part of basic homework before you put a board of Property for Sale. Trust me a well-prepared seller can close the deal fast, and property selling is easy for him. You cannot rely 100% on the third party, and efforts are required from your end also. A seller can also check my post 5 Risks of a Seller in Property Transaction.
Copyright © Nitin Bhatia. All Rights Reserved.
Hi Ntin,
I have a property on beach road in Vizag ( also known as Visakhapatnam) which I bought for 65 Lakh ( excl stamp duty VAT) from builder in 2008. Thereafter, I spent approx. 20 lakh on the interiors over 3-4 years. Due to a turn of events, we had to shift to Mumbai in 2013. The flat was done up with the idea of staying permanently but this does not seem to be a reality now.
I tried to sell the flat in 2014-15 but was not happy with the price. I have potential buyers who offer between 1.2 to 1.25 Cr for the property now, also rent offers are for approx. 30000 rs per month ( Not easy to get in Vizag) . I have never rented the property for various illogical reasons which I am ok with.
Now I have a 1.4 cr home loan on a resale flat I purchased in Mumbai which I am paying EMI for.
While the Vizag flat is located in a prime area, the rates for ‘old’ flats ( more than say 7 years) are much lower from newer ones.
Would you suggest I sell the property or rent it out? What in your opinion is the growth potential of the location in Vizag.
In my opinion, last year was good time to sell when there was anticipation of Vizag being state capital of AP. After Amaravathi is declared new capital of AP, the main focus of govt will be on development of new capital. I don’t foresee much development in vizag. Therefore, in my opinion you can sell vizag property and either buy a new property in mumbai or prepay home loan. No city in India can beat Mumbai in terms of property appreciation provided location is good.
Hi Nitin,
Nice info overall
I have a very specific query.
the buyer pays me a certain amount (less than Rs. 1 lac) by cheque and blocks the deal
the property is against a bank loan and hence mortgaged which was told to buyer while blocking the deal. as such there is no issue as the same is with a PSU bank.
it seems the buyer got certain ideas/suggestions from someone later while finalizing his home loan.
later he started talking about property being mortgaged and change in payment terms.
till then no agreement was signed.
he was given certain time to come out with his details
but he didnt reply and sent a message regarding return of token amount in reply to a reminder message after completion of time.
what is his legal stand.
we have already lost 2 months believing his word
is the token amount refundable
It depends whether there is any written understanding or not. If there is no such understanding then it should be decided mutually.
Nitin sir, thank you for posting about sellers !!
I am about to sell a property which I had bought from Development authority, which is under construction. I am selling the property at nominal premium as I have relocated to another city and its been difficult to bear EMI in new city.
My question is that can I sell the property before its been registered in my name – I have taken the home loan from SBI on allotment letter basis.
The buyer is ready to enter into an agreement for purchase but insisting that firstly the registry will be made in my name then I will transfer the same in his name.
Please suggest.
Thanks,
Nikhil
It depends on the allotment rules and regulations set by the development authority. In some cases, transfer is prohibited till the property is registered therefore you need to check your agreement with the development authority.
Thank you Nitin sir.
The Authority does not allow change in name in allotment letter. I want to bypass the process of registry in my name to avoid incurring any expenses as my selling price is on nominal margin. Is their any way out ?
Unfortunately NO, you have to register property in your name to sell.
Sir, truly you have been such a Good help.
Should I enter into an agreement with the buyer before registration to sell the same (?) and take token money allowing him to pay the balance of home loan as on date; plus the balance amount paid by me over and above the loan amount; plus the agreed premium.
I suppose it can be mentioned in the agreement that subsequent to the registration of flat in my name; the titles will be transferred on him. What caution should I bear while doing the whole thing.
It is normal practice. You can sign sale agreement and accept token money. The terms and conditions of sale agreement should be clear and with definite timeline. For more details, please check my posts on real estate.
Hi Nitin Sir . I am looking to sell by resale flat and need a sample for DOTR and Sale Agreemnt. I have few questions. Should there be two agreements for the two amounts (One for guidance value ) and the DOTR Value(furnished stuff in home value) or should the sale agreement show the total value including the DOTR and the Govt Guidance value in the Sale Agreement.Thanks
Sale agreement should contain total consideration value all inclusive.
Hello Sir, I bought a land plot couple of years ago & I registered it to my name but officially the ownership of the land plot is someone other than me. How is it possible & how to get rid of this problem. Now I am also unable to sell this land due to this mismatch.
Sorry i could not understand what is meant by official ownership. If it is registered in your name then you are the owner.