Vendor price expectations are one of the main hurdles agents have to jump on a weekly basis, yet their management is fairly simple, according to one senior principal.
In the latest Real Estate Business Top 100 Agents ranking, several entrants identified high vendor expectations as the number one challenge they faced.
Peter Peard, CEO at Peard Real Estate in Perth, said some vendors were in a state of denial.
“If they’ve bought their property in the boom times before the global financial crisis (GFC), then that’s the price they expect to get back – but sometimes that isn’t the case,” he said.
For example, an article in Perth’s Sunday Times last weekend claimed a property in Fremantle had been discounted by more than 50 per cent.
According to SQM Research, the property was initially listed at around $2 million, but after 84 days on the market it had been reduced to just $990,000.
The selling agent for the Fremantle property said the property is currently under contract; however, the newspaper report had since “thrown a spanner in the works”.
Nevertheless, avoiding situations like this is fairly simple, according to Dane Atherton, managing director at Harcourts Coastal in Queensland, who spoke at the Ideas Exchange conference in Sydney last week.
“No-one wants to be the agent that bursts the bubble of the vendor and tells them they won’t get the price they’re expecting,” he said.
“So, before you even tell them their expectations are unrealistic, you need to show them why it is. Agents need to educate the vendor about the current market and similar listings to make them come to a realistic price almost on their own.”
According to the latest RP Data statistics, the average vendor discount for Perth was 6.4 per cent, the second lowest in the country following Darwin (1.1 per cent).
The capital with the highest rate of discounting was Hobart (9.7 per cent), then Melbourne (8.7 per cent), Canberra (8.2 per cent), Adelaide (7.7 per cent), Brisbane (7.6 per cent) and Sydney (6.7 per cent).
But according to Mr Peard, the market has picked up in Perth, especially in areas like Fremantle.
“The lower to middle range of properties have returned to pre-boom prices; however, some of the top end properties are still struggling to sell," he said.
“Stock is generally tight, but even then we wouldn’t take on a property that was a million dollars overpriced.”