Knowing How The Real Estate Industry Works

Real estate is a term that refers to the purchase and sale of properties such as houses, apartments, sections, offices or rural blocks. It is a major industry which turns over millions of dollars a year and provides employment for many people, mainly agents who sell a property on behalf of the owner for a percentage of the sale price.
Selling a property is a major undertaking and there are several steps involved in the process. Firstly, the owner must determine the value of the property and set a target price. This can be quite a subjective matter, but recent local sales are a good indication of where the market lies. It is important to have a figure which is reasonable, as potential buyers can be lost if it is too high. Most vendors start with an asking price which is slightly higher than what they expect to get, as this gives them space to negotiate later.
Next, decide on your marketing strategy. The most common approach is to enlist an agent who will attempt to sell it on your behalf. They generally charge about 3% commission and this should include advertising. If you have enough confidence, you could attempt a private sale, but be aware that it will involve a lot more work and has a lower chance of success.
An agent usually charges about 3% commission, and an experienced and skillful person will justify this cost by getting the best price for the vendor. If you wish to avoid this cost, however, you can list your property independently, either on the internet, newspaper, or a publication specifically for private sales. Although a less expensive option, it is a lot more work and generally has a lower chance of success.
Another issue is whether or not to advertise the asking price. If you choose to sell by auction or tender, the buyers generally have to determine the value for themselves, although they may ask for an indication. Auctions can generate competition and push the price up, but can also be a huge disappointment if there aren't many bids.
If you do openly advertise the price, you can either state a specific figure or your lowest figure. It is rare, however, for a transaction to be simple and will usually involve some negotiation between the 2 parties. This can work to your advantage if there is more than one interested buyer, but if the market is slow you may have to compromise. Your agent should act as go between and hopefully find a mutually beneficial arrangement.
Understanding how the real estate market works is essential to dealing with it successfully. Whether buying or selling, do plenty of research before you enter the market and familiarise yourself with local sales figures. Having a plan will ensure your experience with the real estate industry is positive.