Fixed pricing still has a place in an agent’s sales arsenal, particularly in regional areas where auctions can be viewed as a sign of vendor desperation, according to a number of agents who responded to a claim that the best way to sell a property is to avoid a fixed asking price altogether.
“As regional real estate agents, we can walk into a home and tell you within two per cent what price will be achieved,” wrote Steve, in response to the claim made by RE/MAX WA regional owner, Geoff Baldwin, in an article published yesterday by Real Estate Business.
“The vendors see an auction as an indication of weakness and for the most part are unwilling to put the property to auction, because they have seen it over and over,” Steve continued.
Another Steve, who said he was from an agency in regional Queensland, said locals would generally “buy on price and take their time. They will not be pushed by 'auction frenzy'."
“The internet nowadays gives a very good buyer education for price and if used correctly by agents can be the strongest tool for seller education also,” he said.
Western Australia-based agent Brad commented that, as the state had no cooling off periods, this helped “our sales style.”
“Try an auction here or EOI [expressions of interest] and you are looking for serious issues,” he said. “Talk with buyers with honesty, admit an incorrect initial price if you were wrong and move on. At least they can see the owners have adjusted to meet the market.”
Mr Baldwin, who said fixed prices were often inflated by between five and 10 per cent to allow for negotiation, believed the best way to avoid overpricing was to stop using a fixed asking price altogether.
“There are several alternatives to fixed price that are proving to be extremely successful in the current market, conditions including auction and buyer feedback ranging which both avoid fixed prices, maximise enquiry, viewings and competition.
“Although properties may not sell under the hammer at auction, when assessed as a multi week campaign where offers are considered before and after auction day, the results are almost 100 percent better than fixed asking price.”
Perth-based David Hedges commented that he had never witnessed vendors adding five to 10 per cent to allow for negotiation.
“If this is common knowledge out there it's no wonder the buyers are coming in low,” he said.
“I support fixed pricing as I believe the idea is to give the buyers a target to aim at. Even if the price is too high, a low buyer response coupled with a high number of ‘hits’ on the websites and easy access to competing properties performances should be enough for a competent agent to get the seller to agree to a downward price adjustment before the property goes stale.”
Mr Baldwin acknowledged the sensitivity surrounding the issue, and told Real Estate Business overnight that his “comments were not meant to be a push for auctions, although I certainly feel they are one effective method to sell properties.”
“I also suggested the highly effective system of ‘Buyer Feedback Ranging’ whereby a wide range is presented to the market above and below the ‘expectation’ so as to bring people to gather, increase viewings, create competition and shorten the time on market,” he continued.
“Our teams have been successfully using this method for many years with great success however, like all successful systems, it needs to be trained and applied correctly.”
Mr Baldwin remained adamant however that at least half of the properties currently on the market in Australia “are listed at unachievable prices hence, the fixed asking prices of those properties are simply not achieving results.”
“Of course there are many highly skilled agents who either price correctly or walk away from unsaleable listings but the reality still remains that a large proportion of agents are accepting stock that is not only five per cent or 10 per cent overpriced, but in many instances up to 30 per cent as demonstrated by the variance between listed and sold price.”
“The bottom line is, if all overpriced stock was withdrawn from the market today, we would not have an oversupply, buyers would have less confusion, properties would sell more quickly and we would have a much healthier market.
“Of course there is no 'one size fits all' but I believe that the time has come for agents to look outside the conventional box and recognise the environment is changing and, in the process, leaving many in our industry behind.”