Marketing and Sales of a Property
This report is being prepared in order to establish a marketing and sales plan for the freehold property described above. There is no guarantee that this marketing and sales plan will meet with success and it should be understood that all real estate ventures entail a degree of risk and the possibility of financial loss is always present (Smith, 2004). The information provided in this report is believed to be a fair and accurate representation in accordance with the Properties Misdescriptions Act of 1991.
This property will be listed for ₤20,000. The estate agent fee for the sale of the property will be 2% of the total sale price, due upon sale of the property. Sales and marketing costs will be the responsibility of the seller. The sale will require 500 leaflets to be distributed to appropriate prospective buyers at a cost of ₤50. The charge for preparation of these leaflets will be ₤100. A marketing firm will be hired with a budget of ₤350. The agent shall be paid ₤50 for time spent interacting with this agency. The marketing agency shall post the property for sale on the Internet with an appropriate website including a picture and description of the property. The property will also be listed in the newspaper and real estate magazines as appropriate. Should the marketing agency feel the budget does not allow proper marketing of the property; a representative shall inform the agent who will inform the seller within 24 hours. The additional funds necessary for proper marketing will be at the discretion of the seller and provided by them as needed. The agent will perform all duties with due diligence as described in the Properties Misdescriptions Act of 1991.
The information provided in this description is accurate in accordance with the Properties Misdescriptions Act of 1991.The property is a freehold which is located in the historic Hammersmith area of London. The building is semi-detached and was constructed in 1911. It is three stories high with a garden in the rear. The ground floor consists of a dining room which is 7.32 m x 4.88 m. This room also serves as the reception room. The kitchen is 7.2 m x 4.57 m. There is also a bathroom off of the main hallway. The first floor contains a master bedroom which is 6.48 m x 4.80 m. There are also two double bedrooms which measure 4.88 m x 4.04 m. Each of the bedrooms has its own bathroom. The second floor contains two bedrooms both of which measure 4.57 m x 3.96 m. These two bedrooms share a bathroom. Parking is available off of the street and the property is within Council Tax Band B.
The building requires cosmetic work. All of the lower windows are broken out and have been replaced with plywood. Several of the first floor windows are also out. The wood trim is in need of repair, but will not require replacement. The brick is in good shape and will only require pressure washing. The entire structure contains wood floors. The floors on the ground level are worn in high-traffic areas such as near the front door. These will need to be replaced. The floors of the remaining ground floor will require sanding and refinishing. The floors on the other two levels are in better shape and will only require cleaning. The foundation is solid and without cracks. The roof is in need of minor repairs but there are no significant leaks or water damage. The walls on the two upper floors are intact and will require paint only. The walls on the ground floor have a significant number of holes and other damage. Approximately 20% of these walls will need to be completely redone. The ceilings throughout the structure are intact and undamaged requiring only paint.
Despite the cost of the leaflets and the marketing agency relative to the price of the property, this expense appears well warranted. Looking at the outside of the property many potential buyers may assume the structure is not sound and beyond repair. At the price this structure is being offered for, investors who specialize in low-end properties may find the building appealing.
This property falls into the low range in its present condition. While it is structurally sound, it is in need of multiple repairs. All of the lower Windows are in need of replacement. However, the land is included with the property and it is a three-story structure. Also, the location of the property will appeal to many. For these reasons, once the property is repaired it will be in the middle range.
Recommended Method of Sale
Sale by Private Treaty
There are advantages and disadvantages to all methods of real estate sales. The sale by private treaty consists of the owner advertising the property for sale at a fixed price. Prospective buyers can offer the expected price or a lower one. The seller can then bargain with potential buyers over the price.
This method of selling a property has advantages. The private sale can be less expensive than an auction. This assumes that the property is not on the market for an extended period of time adding high advertising costs. Selling by private treaty is also less intimidating for many individuals than an auction. Many find the chaotic atmosphere of the auction unnerving. The private sale also has the advantage of being flexible in regards to the final sale date. Potential buyers will not be excluded if they are required to wait several days in order to obtain sufficient funds to close the deal. The individual selling the property has more room for negotiation with a private sale. Individualized terms and conditions for the sale can be set on an as needed basis. Buyers also tend to prefer fixed methods of purchasing property as they are not as stressful as the bidding at an auction.
The sale by private treaty method has the disadvantage of not allowing for the competition provided by an auction. Also, the seller has no way of knowing if the fixed price is too low and buyers would be willing to pay more for the property. Also, the private sale method can be costly if the property remains on the market for an extended period of time. This situation leads to ongoing costs for marketing and sales of the property.
Sale by Auction
There are advantages to selling a property by auction. One of these advantages is the certainty of the sale. Once the hammer is dropped at an auction, and the property pronounced sold, the sale is a matter of public record leaving little doubt as to the buyer’s commitment to purchase the property. The sale has been conducted and completed in public. There can be no question that the fiduciary duty of the seller has been completed. This is important when the seller is not the owner, but a party responsible for the sale of the property (Murdock, 2003). Another advantage of the auction is that it provides a fixed date for completion of the sale process. Unlike sale by private treaty, the auction process cannot go on indefinitely. Auctions are also advantageous due to their marketing. Auction firms distribute catalogs, brochures and other sales information to extensive mailing lists. An individual selling a property by auction can be sure it has been well marketed.
Auctions have disadvantages. One disadvantage is that auctions can be expensive. The cost is frequently higher than sale by private treaty. Auction firms frequently have high quality particulars which are widely distributed and expensive. There is also the disadvantage of an inflexible timetable. Some prospective purchasers may be lost due to their inability to meet this rigid timetable. A disadvantage of the auction is that there is no choice as to who the property is sold to. If the individual purchasing the property at auction is for some reason believed unsavory, there is no way to prevent them from closing the deal.
Sale by Tender
Sale by tender consists of the seller contacting possible purchasers and asking them to make written offers on the property. In this type of sale complete information on the property is given to the prospective buyers but no price is set. It is assumed that the housing market will determine the value of the property. People who are bidding on the property remain anonymous to all except the seller. The purchaser only becomes known publicly when the transaction has been completed. An informal tender involves the seller asking possible interested parties to submit their highest bids and can include a minimum acceptable price. There is usually a timescale set for a sale date. A formal tender is more binding to both parties. A deadline date for sale is set and both parties are held to any offers made. The tender actually becomes a legal contract requiring the purchaser to buy the property at the price indicated. In this way, a formal tender is similar to an auction in that the deal is set once the bid is made.
There are several advantages of sale by tender. Many people prefer the discrete nature of a sale by tender. Another advantage of this method is that the timeline is established. The sale cannot go on indefinitely. This method is especially advantageous if the seller is unaware of the market price for the property. By asking buyers to make offers independently of one another, with no set purchase price, a seller is able to determine the market rate for the property.
One of the disadvantages of a sale by tender is that there is no feeling of competition amongst buyers as at an auction. Another disadvantage is the number of possible purchasers is significantly more limited than in the other methods of sale. Only those individuals who are known to be interested in the property will be approached. Finally, the fixed timeline of this method can be a disadvantage if a buyer requires extra time to access resources.
It is recommended that this property be sold by private tender. This is generally the least expensive way to sell a property and may be advantageous given the decreased value of the property. Also, this method will allow the seller to be flexible with possible purchasers. This could be important since a wide range of people may be interested. There is no way to know if a possible buyer is someone who wishes to own property, yet is unable to buy a more expensive unit, or if a wealthy investor will see the property as a profit-making opportunity. These two potential buyers may require vastly different options for completing the sale.
The recent global recession significantly reduced property values in the United Kingdom. However, the last seven months have seen property values increase until November of 2009 (House price news, information, and discussion, 2009). As of November 13, 2009 there were signs that the housing market recovery had begun to slow and possibly even reverse. While the real estate market is still down and continues to be unstable, the situation provides opportunities for the sale of lower-priced properties. Individuals, who could not otherwise afford to purchase a property given the difficult economic times, may be able to purchase a property which is reduced in price. Also, difficult economic times encourage prudent investors to look for unique opportunities. While the market is not optimal for the sale of higher-end properties, it may be good for the sale of properties in need of repair.
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