It’s easy to think that selling your apartment is a simple task. After all, the heavy lifting was done when you bought it, right? Well, for both seasoned real estate investors and owners selling for the first time, consider the following handy tips to help make the whole sale process as smooth as possible.
Decide on timing
Ideally you want to be in a position where you WANT to sell, rather than you NEED to sell. Thus, deciding on your timing is crucial. When should you put the property on the market? Are there any better or worse times during the year to be aware of? Leave enough time to attend to any maintenance needed and for a thorough clean before viewings.
Have you owned the property for more than two years? If not, you will likely be slapped with a special stamp duty of between 10–20% of the value of the property and that’s a lot!
Your decision on timing may well be driven by the government policies of the day and how these affect potential buyers’ purchasing power. For example, currently policy guidelines to banks are to support first time buyers with mortgage loans of up to 80% of the value of the property if they’re priced between MOP $3,3 million and MOP $8 million. First time buyers are also exempted from paying stamp duty if they purchase a property for less than MOP $3 million. For anything more than MOP $8 million, a buyer will have to come up with 50% of the cash because banks are only able to lend, officially, up to 50% of the value of the property. So as a seller, one has to be mindful of the financial challenges that a buyer faces that can be impacted by policies of the day.
And when you’ve sold the property, what’s the plan? Are you hoping for a lease-back option and if so, for how long? Or will you vacate and move elsewhere–buy again, or rent? All this will have timing and financial repercussions.
Telling your Tenant
If your property is tenanted ensure that you are properly informed on the Macau tenancy laws. This is so that you are within your legal rights to give notice that you wish to sell the property and that they need to start getting prepared to either vacate or to have a new landlord.
Decide on Marketing
To let people know that your property is for sale, will you initially rely on word of mouth between colleagues and friends or should you engage the professional services of a real estate agent? If you go the real estate route (which most people do), then will you have one exclusive agent, or multiple agents? Ambiente Properties always maintains that it’s better for both the seller and his agent to have an exclusive agency agreement, for a period of usually between four to six months. This makes it easier for the seller to manage having just one contact point, plus the agent will go the extra mile with the marketing materials and overall focus on the sale. The exclusive agent will also be in a better position to canvas the assistance of all their partner agents in sourcing buyers. This is because they are assured of receiving a commission from the seller, with the partner agent receiving from the buyer.
Exclusive or non-exclusive, be sure to get the proper documentation in place with your agent. Macau’s Housing Department now dictates that owners need to complete (and include one’s date of birth!) and sign an Agency Agreement. This paperwork spells out what the agreement is between buyer and agent such as details of the property, sale price, amount of commission to be paid and the like.
Deciding on the Sale Price
Talk with your bank and ask them to give you a valuation on your property for IF you want to borrow money against it. Why? This will tend to speed up their response time as they think you’re after a loan! And then you can expect them to give you a figure that they consider is a fair market indication. Then ask your agent to obtain up to two further bank valuations to act as a comparison.
Make reference to the current listings or transactions. A more ‘true to market’ assessment on price can be gained for properties within large developments where there tends to be a higher volume of sales transactions. The more ‘unique’ the property, the less sales movement and the more difficulty valuation companies have to come up with a realistic value for the bank to lend against.
When fixing a price, bear in mind, from the buyer’s perspective, all the costs involved—the taxes, special stamp duties, legal costs, agency fees, perhaps renovation costs. Observing the mortgage lending policies of the day, you should try to pitch your sale price at an advantageous point for both you and the buyer.
Beware of ‘market fatigue’. This happens when a seller puts their property on the market at an inflated price well in excess of the bank valuation or the market price, or both! And then as the months tick by they get more impatient, anxious and even desperate to sell, so they start dropping the price. Especially in Macau, potential buyers watch the market closely, through social media channels and online real estate sites. If they see a property being advertised for many months and the price is gradually dropping, they start to think, “What’s wrong with the place?” or worse, “I’ll wait a bit longer until the price comes down some more!”
Most often, the buyer has the prerogative to choose which law firm handles the property conveyancing. Before agreeing, as a seller, establish what legal fees you will be expected to pay.
If you have a mortgage on the property you’re selling, this will need to repaid in full to the lending bank before the sale can be completed. Contact your bank representative, inform them in writing that you’ve signed a “Sale & Purchase Agreement” and that you wish to apply to pay off any outstanding mortgage on the date of closure. Remember to check if there are to be any early repayment penalties! A tip: the seller is not obliged to settle the mortgage until the actual time of signing the property over to the new owner and receiving the full and final payment. If the mortgage is paid off early, for example on receipt of the initial deposit and then the sale falls through, the seller may be left cash-vulnerable having relied on the balance payment that isn’t paid in the end.
Once your sale has successfully concluded and the full payment is safely in your bank, what then are you going to do with it? This might sound like a silly question, but it’s a legitimate one. Know ahead what bank transfer costs or times are if transferring a large sum of money overseas and also what is involved in putting it on time deposit.
Dressed in Sunday’s Best
It goes without saying that for 99% of buyers, the more presentable a property is, the better price point the seller can achieve. However, there is that 1% who wants the place to be in the worst condition possible as a) it will sell cheaper and b) the buyer wants to do their own renovation.
As a seller, you’ll need to decide if you will be presenting the property furnished or unfurnished. I always advise that for selling, ‘Less is more’. Pare down as many loose furniture as possible and clear the place. This makes the property look more spacious.
Given too much of a blank canvas however, some buyers however will lack the imagination of how a property could look. Another option therefore would be to engage someone like your agent to help ‘stage’ the property. Very popular in the US, there are companies whose sole job is to provide furniture and accessories on a loan basis. This can really help encourage buyers and to squeeze a little extra into the sale price.
A fresh coat of white paint and a deep clean will go a long way. One tip I always give is to paint the air-conditioner covers as over time these become yellow and unsightly, even though they may function perfectly well. Replace light bulbs, clean the air-cond filters, have a vase filled with fresh flowers and a couple of live pot plants. If your agent is holding an Open House, remember that the smell of coffee or cinnamon is enticing as they conjure up a sense of warmth and homeliness. If not this, then at the very least be aware of the Dettol Trick. The smell of disinfectant by its very nature implies cleanliness so wipe down the kitchen and bathroom cabinets with some warm water and Dettol solution. Buyers will be met with a smell that says ‘clean and caring owner’.
Spruce up the car park if you’re selling one. Sweep and clean, and add a lick of fresh white paint to the floor markings and any nearby surrounding walls.
Here in Macau, buying and selling seems to be so much more ‘transactional’ than perhaps elsewhere. Some buyers don’t even bother to see the property they are buying because it’s just going to be an asset on the buyer’s balance sheet! But for the most part, these presentation tips are worth bearing in mind.
Sorting the ‘nitty gritty’
As you approach the date of sale completion, it’s a good idea to put together a property file. This will contain things like the last three or so months of bills and payment slips for utilities, building management fees, housing tax, land tax. You may have other documentation to do with the property that could be useful for the new owner, for example pre and post renovation plans, any interesting photos of the property, any user manuals or guarantee certificates for kitchen equipment.
A seller is ethically bound to advise his agent and the new buyer of any maintenance issues that need attention or mechanical faults with the electric appliances.
Collect all the sets of keys you have and sort them out, marking them with tags.
The buyer will have indicated what furniture he would like to retain in the property and anything else needs to be removed by the seller. Start getting quotations from moving companies. Items you don’t want to keep yourself could be disposed of via a home sale, passed to friends, given to charity or sold through local social channels like Bye Bye Zaia.
Make arrangements to cancel your Cable TV and internet before or on the completion date. And remember to inform the post office of your change of address so that any mail will be forwarded to your next address.
Good luck with your sale!
For any real estate-related inquiries, don’t hesitate to contact Suzanne Watkinson:
*All views expressed are the author’s alone