(for information on buying an apartment, see this other post!)
Sorry for the delay, but the process took much longer than I expected (as with most things) – but the good news is, we sold the place in our building so I’m happy to report back with some tips and tricks for those of you thinking about selling. Note that the time lapsed had nothing to do with a difficult Stockholm market or anything – it was simply due to logistics with the holiday season.
The most important thing is to find a real estate agent that you personally feel comfortable with. Rapport with your agent is the most important thing you can invest in, and that should be highest on your priority list regardless of the commission they’re charging. Transactions will probably go relatively smoothly, but when they don’t, you want to know that the person you’ve trusted with the job of selling will go to bat for you. In addition, this agent will represent YOUR personal and legal interests as well as the legal interests’ of the buyer; there is no concept of a buy-side agent in Sweden.
- Choose an agent. I solicited offers between 3 different real estate agents. None of them were what I’d consider “cold call” connections. Two were referred to me and one had sold an apartment for a friend just a few months ago. The selection process is pretty easy. The agent will want to see what you’re listing, so they’ll come by your apartment or house and take a look around. It helps if you know some of the key details such as when the different rooms were last renovated or when the apartment building changed out their plumbing. Amenities that can make your place attractive today are fiber broadband connections, balconies and open fireplaces, so if you have any or all of those things make sure you mention it. The apartment we sold was in dire need of renovation, we don’t think it had been renovated since the apartment was built in the late 30s. If you have a similar place (or are buying an apartment needing a face lift) make sure you find out information about the supporting walls since most people will want to tear down the walls and convert the living space into an open floor plan.
Once the agent has seen your place and collected enough information, they will send you an offer. The offer will detail what sort of marketing they’ll do, how the open house viewings will work, how the bidding process works, and how their commission model works.
Most agents offer two alternatives: either a variable model that is based on their best guess of market price + a bonus if they manage to exceed that price, or a fixed price model based on final selling price. Run a model and see how it turns out and where the breakeven point is between the firms.One real estate company in particular, Erik Olsson, was very expensive – and since I was selling on behalf of the association, I was playing with the members’ money. Therefore, it was important for me to understand WHY they were so much more, i.e. what did they offer that the others did not. In this case, they offered a much longer open house (more on that later) but not much more. That gave me an interesting data bit to negotiate with though. Generally, most firms include photography, listing on their website and on Hemnet (the “Redfin” or “Zillow” of Sweden), publication of a brochure, and contracting services (i.e. the escrow process).
Again, going back to rapport, I felt that I had the best relationship with one agent in particular so I proposed that we wanted to go with her, but that we’d want to have longer viewings. We negotiated it up to 2 hours on Sunday and 1 hour on Monday. I also pushed on the variable part of the commission so she provided a 10 basis point discount on the fixed price and a 2% discount on the variable model. We opted for the variable model, signed the contract, decided on a listing price, and scheduled the photography and open house.
- Photography. This is surprisingly important! Since most people will look for apartments on Hemnet, you want to catch their eye and get them to come to the open house. That’s the trick – if they step through the door, the chances are so much higher that they will bid. The real estate agent will take care of the photography but it’s usually your responsibility to clean/style the apartment (unless they offer interior design as well).Our apartment was empty and needed renovation so fortunately, we didn’t need to do much other than take photos. They turned out pretty nice though – even the small stuffy kitchen looked HUGE with the right wide angle lens!
- Open House. Open houses in Sweden, at least for apartments in central Stockholm, typically run 30-45 minutes on Sundays, and another 30-45 minutes on Monday. The challenge is that all listings tend to be between 1pm and 4pm, so you really have to prioritize your viewings. How the hell will people have time to look around if it’s less than an hour? Well, that’s the kind of hysteria the market has created: people come into an apartment, take a quick walk around the place, and then move onto the next place. In addition, many agents will schedule two open houses in one day, so they want to make sure they keep it short and sweet before moving on to the next place.In our case, because we negotiated a full two hour block, our agent focused solely on us. She brought along another agent who helped take down names and phone numbers of those that showed up (for the bidding process) so she could focus on showing the apartment to potential buyers. WIN. Remember, the buyer isn’t just buying a place to live. They’re buying a dream of a better future – one that they can shape and form by renovating the place!
Our agent also showed the place privately to a few potential customers who didn’t have time to come to either viewing. Two of those customers actually ended up bidding, so that’s also an important thing to encourage. One thing to note here is that ideally, the agent’s office shouldn’t be too far from the apartment. That makes it so much easier for them to step out of their office and show the apartment to ad hoc viewers in hope of soliciting a bid later on. If they’re located further out, the calendar options are reduced significantly.
- Bidding Process. Once the Monday open house is complete, the bidding process begins. The agent will call and text all of the people that stopped by and ask if they want to bid. Bidders are free to bid whatever amount they want (including amounts that are lower than the listing price) and however many times they want. They’re free to drop out and come back, or they’re free to wait until the very end. Either way, it’s the agent’s job to manage this extremely messy process.
Because everything that can happen did happen, our bidding process took all week. The agent even showed the apartment to a couple on the very last day, and this couple came in with a late bid. We didn’t conclude until early Friday evening.
- Contracting and down payment. By the end of the bidding process, most buyers are completely exhausted. (Ever get into a bidding war on eBay?) And after they’re told that they “won”, they want to make sure no one manages to sneak in a bid at the very end (bid sniping) so they usually want to sign the paperwork as soon as possible. Most sellers are amenable to this because it also means that they’ve sold their place. Champagne all around!The signing can take place anywhere, but the real estate agent’s office is a good middle ground to meet. The beautiful thing about Sweden – when it comes to this kind of transaction – is that your rights, both as a seller and a buyer – are protected by law. In other words, the contracts are short and sweet and to the point (a few pages at most) since they can’t put terms in that conflict with the law. They usually list what you’re buying, the price, and the date for close of escrow. What a difference compared to the US sales process!The down payment is typically required within a few working days. The money goes into the real estate agent’s bank account, they take away their commission for the sale, and the rest goes to the seller. As far as I understand it, if
- Membership to association. If you’re buying an apartment in Sweden, the apartment most likely belongs to a bostadsrättförening – or an Homeowners’ Association. One unique characteristic is that the association has to formally approve the new buyer as a member. Yes, they can technically reject the buyer, but the law is written such that the bar is so high that people are rarely rejected. The buyer will only be rejected if they have a reputation and a public record as a troublemaker. If they ARE rejected, they can appeal to the Hyresnämnden or the Housing and Rent Court.
Therefore, for the vast majority of people, this process is just a formality. It’s also a great opportunity for the Apartment Board to welcome its newest members to the building.
- Closing. When do you give the buyer the keys? In most cases, when someone’s selling a place, they need to find a place to move to, so they may ask for 2-3 months before the close of escrow and final funds are transferred. The process works much faster in Sweden than in the US; since the buyer most likely has the funds or a pre-approval from the bank, the escrow period in Sweden is really just to give the other person time to make other living arrangements.
In short, the buyer and seller can come to an agreement on this, but as a seller, expect that your buyer will probably want 2-3 months. In our case, our apartment was immediately ready for the buyer but they requested 3 months.Once that time comes around, the everyone meets at the real estate agent’s office again and the buyer’s bank will wire the money to the sellers. Once the money is received, keys will be exchanged, and everyone goes on their happy way! Congratulations – you just sold your place!