A Quote from our Agent
There has been a lot of talk this week on the news, social media sites, radio and online blogs regarding agents underquoting prices (http://www.abc.net.au/triplej/hack/stories/s4194784.htm). So we asked for an opinion from our agents. Phil Murray's response is below.
It is our job as agents to do the best we can (within the law) for our vendors, which includes achieving the highest price we can for their property.
For most properties the method of sale used would be either “Auction” or “Private Treaty”.
Auction is a good way of arriving at a price that the property is worth “on the day”, the auction day normally being 3 or 4 weeks after the first open house.
If the property is sold before (as is sometimes the case) or on the day of auction, the big positive is that the sale will be unconditional (ie. no way out of the contract without losing the deposit which is paid on the auction day).
On the negative side there may be some potential buyers who for whatever reason do not wish to purchase at auction. This can reduce competition at the auction resulting in achieving a lower price. Also additional marketing costs would be incurred (3/4 weeks of print advertising & auctioneer fee).
In addition to the selling fee (normally a percentage of the selling fee), marketing (which could include all or some of the following; professional photos, floor plan, brochures, internet packages, press advertising, tailored sign board etc.) & an auctioneer fee would normally be charged.
Private Treaty is when a property is advertised showing a price in the following ways;
“Fixed Price” (conventional method) where a price is shown & is normally above what is expected. Offers are normally made below this price & negotiated up to & sometimes above the “listed price”, depending on competition & market conditions. The problem with this method is that some potential buyers may not enquire as the “listed price” appears too high for them thus leaving less interest......less competition & possibly a lower sale price for the vendor;
“Price Range” where the lower price shown would be the minimum expected & the higher price would normally be above what is expected but still could be exceeded, depending on competition & market conditions. Potential buyers probably prefer this method because it appears to gives them a good idea on what the property should go for. The problem with this method in the current market is that the price often exceeds the high price on the range. When this happens many buyers resist going above the “top of the range” price, reducing competition & possibly a lower price for the vendor;
“Offers Above” where the price shown is at the bottom of the price range expected. It is a price that is not expected as it is on the bottom of the range calculated by the agent based on comparable sales, although could be accepted if after a few weeks on the market the highest offer is still on the bottom of the range. The way the current market has been behaving is resulting in sale prices over what the agents have calculated (using recent comparable sales), however is pleasing the vendors. Sometimes the selling price is up to 20% above the “offers above” price. This upsets some buyers but is achieved as a result of current market conditions.....not as a result of “under quoting”.
The current benefit of the “offers above” method is that an excellent result is achieved for the vendor in quite a short time saving print expense & auctioneer fee.
My take on the current market conditions is that it is definitely a sellers’ market caused by low interest rates, shortage of stock& more buyers than sellers (investors, local buyers & much higher % of Sydney buyers)......”supply & demand”.
This may change in the future leading to different methods of sale being used by agents to achieve the best results for their vendors.
As agents we must continue to calculate “estimated selling prices” using recent comparable sales & not start our list price or quote an expected price below the lower end of the “estimated selling price”.
During the last 6 to 12 months I have had comments from buyers (prior to securing a property) expressing disappointment at the state of the market causing much higher sale prices but nothing but happiness from both vendors & successful buyers once a sale is achieved.
I believe we are doing our job well !
by Ruby Sablowski on 13 March 2015
Filed under People