It’s not often that Tower is engaged to manage the sale of a property where there were so many challenges, but that was certainly the case recently with a home in an inner eastern suburb of Melbourne.
The call came from the son of the owner. His mother was in Aged Care with a Daily Accommodation Payment (DAP) of around $8,000 per month. It was critical that the property be sold to meet this liability and use the proceeds to pay the Refundable Accommodation Deposit to stop the DAP.
However, the house had been extensively ‘trashed’ and the property contaminated with hypodermic needles by the prior occupant. Victoria, and more specifically Melbourne, was also in Stage 3 lockdown, making marketing of the property difficult. Time was very much of the essence.
We were engaged to manage the clean-up, undertake repairs and presentation work, and manage the sale of the property. We estimated that around $50,000 was needed to present the property for sale. This was money the owner did not have. We agreed to fund the cost of essential work, providing it added value to the property.
To put you in the picture, we had to engage a specialist Crime Scene and Trauma Cleaner to remove all contaminants and hazards from the property. The property could then be cleaned and cleared by a house clearing specialist. They set about selling, donating and disposing of all remaining goods and undertaking a commercial clean of the property.
This transformed the property and we were able to determine what should then be done to maximise the price without over-spending.
The house was livable but the décor, configuration and several non-compliant renovations and modifications meant that it would have limited appeal to owner-occupiers. It was on a large block in a good street.
We recommended a good local estate agent to market the property. After consultation with the agent, it was determined that the likely target market would be developers that could benefit by renting the property until ready to build anew. It also could appeal to renovators and owner occupiers who would help push up the price above land value only.
To make the home as marketable and appealing as possible for rental purposes or the possible owner occupier, we limited repairs and presentation work to what was essential. Aside from the commercial clean, this included replacement of carpets, some painting, electrical repairs, asbestos removal and gardening. These works came in on budget.
As mentioned, timing of the sale was during the Melbourne Stage 3 coronavirus lockdown where property inspections were limited to one-on-one with the agent, and no public auctions. The property market was also declining by about 1% per month, effectively costing the client around $25,000 in lost value for every month it took to sell and settle, plus the $8,000 monthly DAP.
Together with the agent we proposed to a two-stage strategy to market and sell the property. The focus of the strategy was to maximise the sale price, but also to save time and further costs while limiting the impact of the declining property market.
The first strategy was for an extensive off-market campaign from the agent’s data base of developers, renovators and owner occupiers that were looking to purchase a property in the area.
It became apparent that owner occupiers showed little interest in the property given the amount of work required, but interest was being shown by developers. One developer submitted an offer, initially somewhat short of the estimated value and the client’s expectations. The agent worked with the purchaser to increase their offer, but still short of expectation, so the agent advised them that we would advertise the property to the market (stage two of the strategy).
The strategy worked. The developer increased their offer again to an amount acceptable to the owner. What’s more, the offer was unconditional, settlement was in 60 days and they did not incur marketing costs ($10,000) or undertake further presentation works.
Phil Hoopmann, National Property Manager at Tower who managed the sale, said that the client’s relief in having us involved was palpable. “Selling a home is complicated enough under normal circumstances, let alone when faced with the myriad of issues that confronted this client. Coordinating a team of ‘cool heads’, from specialist cleaners to trades people and a trusted agent, along with funding of the work, relieved the client of the stress of the sale and saved them significant money in the process.”
Phil Hoopmann, National Property Manager
We provide a complete sales management service for vendors.
Visit us at towerpa.com.au or call Mathew Green on 0422 638 336.
