REIA hall of fame inductee and multiple REIQ small agency of the year award winner, Peter Sissons, believes agents and vendors would benefit from an honest conversation about price at the outset
For decades it seems real estate agents have been taught to ‘take the listing at any price’ and then move sellers into the ‘conditioning process.’
Unfortunately, in many cases this leads to the listing agent working very hard with an overpriced property for many weeks, only to find the seller decides to move onto another agent at the end of the exclusive period.
The new agent gets the benefit of the eventual reduced list price, securing the sale.
For many years now I have been an advocate of listing properties based on accurate market values from the outset. Yes, the process is harder at the beginning, and it does require more effort educating the seller as to the correct value.
However, I have found that providing a seller with an accurate opinion of current market value - thus allowing them to make an educated decision as to whether they will sell or not - has in our case led to an average conversion rate of listings to settled sales in excess of 90 per cent per annum.
Suggesting to a seller that if they are concerned about the sales value being proposed, they should feel free to engage a valuer to provide a professional opinion, is a great way for an agent to show confidence and build credibility.
In my 30 years in the business I believe the biggest waste of time for any sales agent is the weeks spent presenting an overpriced property to the market, and then having to come up with excuses to the sellers as to why they are not receiving offers. This also increases the level of rejection that sales people are subjected to, and flows on to their motivational levels.
In a strong buyers’ market as we are currently experiencing sellers are aware that their properties are not going to fetch the prices they might have done last year. I have found they are normally relieved to get an honest opinion, which allows them to make their personal financial decisions with more confidence.
With most states now recording their lowest auction clearance rates for many years, it seems obvious that buyers are not prepared to compete to win a property.
I have spoken to several of my fellow principals who are still advocating the auction process as a way to flush out interested parties who may, post auction, enter into private treaty negotiations with the seller. The issue I have with this process is that by allowing a seller’s property to be taken to auction, and in many cases having it passed in without a bid, does little to provide the prospective buyer with confidence in their proposed purchase.
If anything, it shows any prospective buyers that there is nobody prepared to submit an offer, and thus acts only to reduce the value that they may have in their minds.
Don’t get me wrong, in a sellers’ market where there is a reduced level of stock and strong buyer inquiry I support auctions. But in a buyers’ market, with supply now outweighing demand in many markets, we should use marketing techniques to match the current market conditions.
It’s also important to note that the reduced number of buyers currently looking for realistically priced properties are doing most of their searches via search engines on websites. If a home is priced into a range that’s $50,000 to $100,000 more than it’s worth, the qualified buyers may not even see it on their internet search.
Surely then, it is in the sellers’ and our interests to get things right from the start.
By Peter Sissons, Managing director, Sissons Estate Agents