HOW IS A HOUSE SOLD ?

How is a house sold ? In life this usually becomes a very important question to many people. We all know how to sell say house hold property like old sofas, gadgets like cell phones, laptops etc. You can ask your friends where they sold theirs this is very easy because people do it on a daily basis. However, this is not the case with a house or those assets that are classified as immovable property ( e.g a piece of land, shop, flat, factory etc ) simply because no one sell their house every day. Yet in life the need to sell a house or any form of immovable property can suddenly become urgent. The pressing circumstances vary. Sometimes its because of a lucrative opportunity you must capitalize as soon as possible. Maybe its an acrimonious divorce were you need the money to start afresh. For others it’s a deceased estate and there are many beneficiaries anxious for their own piece of the cake. Yet to others its because of ambition detecting that one goes through advanced academic studies and payment of whatever tuition fees required. So to all these people the million dollar question becomes How  is a house sold ? or How is immovable property sold?

First step: Valuation or Determining the Price

Impact of price on visibility

The question How is a house sold ? is as good as the one How do I find the right buyer ? because selling a house is a pursuit for the right buyer. Period. Whatever we do therefore, is determined only by how it can enable us to get this right buyer quickly. This kind of thinking is very important so much such that its like the compass showing the direction to follow. So the first step becomes valuation or determining a price for the property. In order to get the right buyer that is someone willing and able to pay the price, we should determine a price that is fair . A fair price is the open market value meaning a price determined by the forces of supply and demand prevalent at that point in time. So we should note that property value is not set by the seller’s budget of things he want to purchase using sale proceeds. Some sellers also argue that they need to put a bit more over and above the open market value in order to create some kind of negotiating buffer. Nevertheless, reality shows that while on one hand over pricing chases away buyers and eventually causes the price to be dropped on the other the right price attracts multiple offers which in turn causes the price to rise because an atmosphere is created in which the asking price is considered like an open bid price to start from. Please see impact of price on visibility graphic.

Second step : Property marketing

Having determined the open market price the second step is hunting the much needed buyer by exposing the property for sale to as much prospective buyers as possible.  So all marketing methods are implemented, banner advertising, personal selling, content marketing, contextual advertising etc – its an all out war !   After such a marketing onslaught that’s when you can begin to talk about multiple offers and the price rising.

People judge you by your appearance.

FREE TIP! Dress code: A marketing fundamental you can master without going to school.

When you go to meet prospective buyers you must put on formal attire namely a neck tie and jacket not shorts and pata patas ( sandals ). You should always know this principle when people see you they judge you based on appearance before they even see your documentation showing that you are bona fide (genuine). Remember I said earlier getting the right buyer is what determine your conduct when selling so this dress code is for the buyers not you.

Third and final step : Paper work and Costs of selling

The third and final step comes after a qualified buyer has been eventually secured. This is when  an agreement of sale is created and signed by both parties namely seller and buyer. The agreement of sale is a contractual framework that provides for the obligations of the parties necessary for the finalization of the sale in a way agreed during negotiations. Generally, an agreement require a buyer to make payment of the sale price into an estate agent’s trust account on one hand while on the other the seller is required to surrender the original copy of titles deeds or original copies of proof of ownership if there are no title deeds. When all things go well this process culminates in the creation of new title deeds in favour of the new owner being the buyer and transfer of sale proceeds in favour of the seller. 

There are costs however, that are deducted from the selling price which the seller should know about.  These are agent’s commission and capital gains tax (CGT) . Though this article does give important steps in the property selling process performing them is a different thing altogether. Remember the marketing methods mentioned earlier that must be executed in order to get a better deal, or  the concept of open market valuation necessary for a fair price that must also be done professionally. It is therefore, best practise to engage a registered estate agent who handles these things for you from A to Z. So it is at this juncture were agent’s commission comes into consideration.  Capital gains tax is tax that becomes due when you sell immovable property and its a percentage that is deducted by ZIMRA ( Zimbabwe Revenue Authority ) from the gain or profit that you make.