Thinking of Selling Your Rural Property

For most New Zealanders, the home, or farm, orchard etc. is always likely to be the most important material asset in their lives, however few things in life are permanent. Times and events change and people move on in their lives. All property will eventually change ownership, sometimes after years, sometimes decades, sometimes generations. When it does, there is usually one thing in common. How well or effectively the home or farm is sold, will effect how well the owners are able to move on in life. In simple words - what quality of new home or farm can then be purchased, or perhaps, what quality of retirement can be achieved by the vendors.

Marketing Your Rural Property

If achieving a very good sale result for your property is of major importance to you – then it follows that the choice of both the Real Estate Company and sales consultant used must of equal importance. All Real Estate companies are not the same. All sales consultants - in particular rural sales consultants, are far from the same. Commonly however, the choice of a company and a salesperson is a casual affair, lacking the judgement and consideration that this vital decision deserves.

Every rural property in Hawkes Bay, from a large sheep station down to a simple lifestyle, has its own special features and character. Of vital importance to a good sale is the ability of the real estate sales person to recognise every marketable aspect of the property and to creatively represent these  to the widest possible pool of potential buyers. Many rural land agents of the traditional kind do a very adequate job in describing the agricultural features of the farm such as the stocking rate, fertiliser history, improvements, etc. While this type of advertising will probably attract the interest of local farmers, the prices achieved for properties sold in this manner are usually very average and predictable, usually measured in dollars per acre, dollars per stock unit or (in the case of orchards), dollars per planted hectare. If a premium price is sought, the sales consultant needs the ability and flair to create  much wider interest in the property marketed.

There are potential cash buyers for every level, size and type of rural property. Clever and innovative marketing will attract buyers not only from the countryside, but also from every part of New Zealand and overseas.  These are the buyers with the ability and potential to create the level of competition needed to achieve the best possible prices for any class of rural property. Your neighbor may well be the buyer who succeeds in purchasing your property – but without the visible competition of outside buyers there is little chance of him paying top dollar.

There is little difference in either principal or practice between achieving a top sale price for a property - or a top price for a pen of cattle at the local stock yard sale. One, two or three buyers around the pen of cattle usually results in low, or at best average prices. A crowded sale inevitably results in top prices, driven by the level of competition. To achieve the same level of competition for your property, your  real estate sales person needs to create a marketing program that will attract the interest of the widest and largest possible pool of buyers from throughout New Zealand and overseas. To achieve this the marketing program needs to exite the interest of buyers with a major  emphasis on the aesthetical, lifestyle and recreational aspects of the property and its surroundings.

The use of very high quality photography is one of a number of critical elements. Use of the internet is another. Good photography and creative internet advertising can be highly effective in widening the pool of buyers and so achieving a very good sale result. All real estate companies use internet advertising; however the quality of this advertising  varies widely and very oftern leaves much to be desired.  Before selecting a real-estate company and a sales consultant, it is important to have a careful look at the quality and effectiveness of the internet advertising used by that company and sales person when marketing other similar property.

If you are considering selling a rural property of farm, the first and perhaps best advice we can give you is this; don’t rush in. Ring a number of sales people from a number of different companies for an appraisal. Invite the agent to show you examples of the advertising programs - internet and news media, used to market similar property. You will want the agent to give you his appraisal of the current market value of your property. In doing so be very aware that it is not uncommon for some agents to over state the values with a view to impressing the vendor and so gaining the listing. Advertising a property at a price that is obviously inflated over the current market level, will only drive away prospective buyers who, with carefull handling by the sales agent, might very well otherwise have paid a top price. It is most important to obtain a realistic current market assessment and an honest, reputable and experienced rural real estate consultant will assist you in this respect. Never-the -less, an independent property valuation from a reputable registered rural valuer may also be a wise investment. Formal valuations from a registered valuer can often be a little conservative in nature but are a very sound  starting point.

Before placing your Hawke's Bay rural property on the market please contact us, without any obligation whatsoever, for a market appraisal and just as importantly, advice on how an effective marketing program could be implemented to achieve the very best price possible within the current real estate market. No unfounded promises. We would be pleased to show you the actual marketing programs and outstanding results we have achieved in selling a very wide range of substantial rural properties throughout Hawke's Bay.

Methods of Selling Rural Property

The price achieved in the sale of this property will usually depend to some degree on the marketing method used and to a large degree on the quality of that marketing program. Your basic options are:

1. Tender
2. Sale by Set Price
3. Sale by Negotiation
4. Auction

Tender

Good results may be achieved tendering agricultural and horticultural properties, or properties without any marked lifestyle character i.e., where the land value is easily determined and obvious. However it is a matter of concern that some real estate agents have adopted tender as their preferred marketing method for all property. The sad truth is that contrary to the information given to support this process, a public tender will frequently minimise the single most important factors in achieving a premium price. This is the direct shoulder to shoulder competition between buyers and the emotional aspects that drives a buyer in direct visual competition to pay just that little more than the other buyer. Some properties have indeed sold for good prices under the tender process, but such sales are more a reflection on a strong property market than an effective marketing program.  The tender process reduces the agent’s task to a relatively simple strait forward “exercise by numbers”, a convenient thing for the marketing company and agent in a very busy real estate market. In my opinion a tender process may well achieve a “fair valuation” price, but is unlikely to achieve a premium price.

Sale by Set Price

Fixing and advertising a price for a rural property may well achieve a satisfactory result; however there are some problems and risks associated with this conventional method of sale. Many buyers see a set price as a target to attack and, expecting the vendor to overstate his expectations, insist on negotiating at a lower level. A further problem is that some buyers who might on inspection love the property and in the event pay a higher price than they had anticipated, will be scared off by a high price tag.

To achieve a high price (of say $1.35 million) it is essential to attract the $900.000 to $1,100,000 buyers who might a) change their minds and b) will definitely provide visible competition to the ultimate buyer.

Sale by Negotiation

This can be a very effective method of sale. It requires significantly more work and skill than tender and greater negotiating skill than either tender or selling with a set price. However if two or more buyers can be put into competition an excellent result can be achieved. It avoids the issues and objections of price and most importantly, the potential – given skilled negotiation, the possibility of underselling the property.

Auction

An effective auction program has the potential to achieve a price premium for any rural property sufficiently desirable to achieve competition between buyers. There are no buyers who will willingly pay a premium over a sensible valuation, but many who will, on the day, when shoulder to shoulder in direct competition on auction day, when emotion and human nature is as likely to be as important as any good prior intention. An auction program allows the agent to undertake an effective concentrated marketing program within a set time limit, with the best chance to achieve the best possible result for the vendor. A further consideration is the very real possibility of locating a keen buyer who will not risk loosing the property at auction and will pay a premium price for the property before auction date.

In summary, these are the four most commonly used methods of sale used by real estate companies throughout New Zealand. While most agents are quite capable of taking your property through these processes with some degree of competence, what is most important is how well and effectively these marketing processes are designed and implemented.  It is vital to appreciate that sale price potential depends not so much on the merits of your property, but to a very large degree on the energy and the ability of your agent to create the innovative and imaginative marketing campaign necessary to lift it above the many other very attractive properties available throughout Hawke's Bay, and by so doing, grab and hold the attention of the many potential buyers throughout New Zealand and overseas! This is level of buyer competition needed in 2004 for a genuinely satisfactory sale.

We would be happy to discuss these, and any other aspects of rural property marketing directly with you.