How should property be marketed and sold?

[Jon Chown]

As a continuation from another thread about Agents picking up their act (which I don’t disagree with), and given that there were several people who were dissatisfied with their experiences with Agents, I thought that it might make an interesting post to attempt to find out how Buyers (lets forget Sellers for the point of this exercise) would like to see property sold.

Here are a couple of options.
1.The list price is the price that the Seller wants and there is no negotiation.
2.The list price is the lowest price and the Seller will only accept offers over this price.
3.The list price is the highest price that the Seller would expect and all offers should be considered.
4.There is a price range given, ‘Offers between $x and $y’.
5.There is no price at all and Buyers must come up with their own value.

The point that must be considered in this exercise is that there must be only one option and legislation is put in place to dictate that this will be the one and only way that property can be bought and sold.

I believe that we are fast coming to the point that option 5. will be the norm. I will explain why after some other opinions are posted.

 

[evand]

I don't know which one to pick but one thing i do know is that whatever pricing structure that is legislated (or otherwise) in future will be beneficial to agents first and everyone else second. The ridiculous REI'S will see to that.

 

[MarkB]

A good question, but impossible to answer without consideration of the:

• particulars of the property (it's features both + and -), and how it compares to those around it (Does it have a rare feature? Or is it just one of thousands like it?)
• state of the market for that type of property at any given point in time
• motivations of the seller
• motivations of any potential buyer
• sales agent and how the work and the networks they use

 

[tcocaro]

Interesting post, as a buyer and seller (buyer of development sites) and seller of (end units) its hard to be one without thinking of the other BUT... heres my "buyer" comments.

Firstly, the post is interesting because in the market some agents go for one way or the other. In my view their decision is based on which is a better "marketing" approach or based on lazyness - let me explain. For instance whenever the product is a bit strange you usually find a "negotiation" type line or if they dont know the price due to lack of comparables or laziness on the part of the agent or vendor to fine them usual resort to a range or a bottom price...

This being said as a buyer i find when the price is not given to be an incredible annoyance and any other strategy as a waste of my time. Just give me the price and ill give you an offer.

Here is my views on each of the ones you listed;

1.The list price is the price that the Seller wants and there is no negotiation.

This is my preference however there is always negotiation e.g. asking $460 get an offer at $450, the buyer still knows you will tell the vendor regardless of the "no negotiation" stance.

2.The list price is the lowest price and the Seller will only accept offers over this price.

This is a waste of time in my view. If i see offers over $400k i simply offer $400k (or less if thats my opinion on market price)

3.The list price is the highest price that the Seller would expect and all offers should be considered.

Again a waste of time (sorry this is my seller cap on) but this cuts out many inquiries and sounds lazy i.e. couldnt be bothered thinking of a price so i just put a stupid high price and see how close to that stupid high price i can get.. again a waste of time.

4.There is a price range given, ‘Offers between $x and $y’.

Ill offer $x, again a waste of time.

5.There is no price at all and Buyers must come up with their own value.

A waste of time. My first question is what does the vendor want, I have yet to hear an agent say "I dont know" they give me the price and hence.. a waste of my time. Usually when this strategy is taken the "hidden" asking price is usually unrealistic hence the strategy i.e. gives agents their chace of selling me their spiel to why i should buy at above market price.. please spare me.

believe that we are fast coming to the point that option 5. will be the norm. I will explain why after some other opinions are posted.

Disagree wholeheartedly, I think the best approach is.

1. Research the market (comparables etc)
2. Set a realistic price (be confident in the price dont "dream")
3. Have a good marketing strategy around the product
4. Stick to your price and strategy (list the bloody price dont hide shy away from it if your research was done right then you have nothing to fear, if your product is right people will pay for it any other variation means you either dont know what its worth or scared the product isn't up to scratch)

-- much of the process should be driven by the vendor and supported by the agent.

Thats my 2 cents.

 

[allmine]

Good post Jon, Good answers on the other one to.
I would prefer your 3rd option myself. This is then opening it up for negotions in either dirrection. So that is, up when times are good for vendors, down in times like now. Good business is when each party is happy, this gets it off to a good start.
No 1., yep fair, and typicaly it says so next to the price.
No 2. Limits the vendors options, eliminates the ability for negotions.
No 4. A few agents seem to do this all the time, to confusing.
No 5. A starting point is a good thing, like the old saying, "if you need to know how much it costs, you obviously can't afford it", so no price on a cheap house makes no sense. No price on syd harbour water front home, well yes, scares most people off, no time waters.
Just out of interest, here in scotland there is an unwritten rule where it is asking price from the add, pluss 10 - 15 %. They can't explain to me why.

So how about just a price, give the buyer an idea, can put potential buys in a list of preference easily. Shows up in searches where you expect it to.

 

[DCI]

I suggest a possible solution lies whereby Government/agencies across board comform to a standardisation of market apraisal for newly listed properties. By this I mean agents would not be aloud to overprice the original appraisal of the property in order to win the listing, but instead standardise the market appraisal across all agencies so as each agency will have to do the best it can at selling the said property for the same original market appraised price. This would keep the price set at an amount the vendor would be hapyy to accept/agree with, with the added benefeits of eliminating substantial price vairiences between list price and actual sold price.
Of course for this to work it may need the intervention of an independant specialist market valuer whos roll it is to set the original price before REA list it. I think for this to work, offers made on the property may be acceptable above the market estimate but not below it. If the property does not sell within x amount of weeks, a price review may be considered which again would be across board for all agencies.
This would bring more equality across agencies as listed properties would be more evenly distributed between them, as overpricing to gain original listing would be stopped. Buyers then feel more confident knowing that the property they are looking at is not originally over valued.
Just an idea

 

[depreciator]

I reckon all properties should be marketed with a Tax Depreciation Schedule supplied and paid for by the vendor.
Scott

 

[s_t]

I reckon all properties should be marketed with a Tax Depreciation Schedule supplied and paid for by the vendor.
Scott

Be a nice money spinner for you wouldn't it

 

[depreciator]

Gosh, I hadn't thought of it that way.

 

[willair]

Sellers for the point of this exercise) would like to see property sold.

5.There is no price at all and Buyers must come up with their own value.

The point that must be considered in this exercise is that there must be only one option and legislation is put in place to dictate that this will be the one and only way that property can be bought and sold.

I believe that we are fast coming to the point that option 5. will be the norm. I will explain why after some other opinions are posted.

I think in the market we are now in it would come down to the strategy
you employ from the start the myth that property sells in twenty-four hours is long gone in the open property markets,the markets within the market will still stand up as they have before, the only problem i see for all RE AGENTS is this market if you have so many listings on your books and more listings coming in each day how do you value a property when the new listings that are not competitively priced, against the old listings that have sat in the RE windows for months at the same price,must be hard to tell someone that the value is 10% less than what they paided 2 years ago, ANY seasoned Agent like yourself would know that once you test the market with a high price its just totally false in the first place and may have serious consequences for the seller who waits for the price highs of 2 years ago, but then again the contract is only binding on 2 parties and the RE AGENT is not one of them
imho..willair..

 

[wylie]

I like the idea of an asking price, which can be negotiated down depending on the market conditions at the time, so No 3 for me.

I don't particularly like auctions, but have bought at them. As a buyer I look at auctions with a view to picking up a bargain. Sellers tend to look at them as a means of getting the highest price.

I don't like "by negotiation" either. For goodness sake, put a price on the house, make it a little higher than you want, and allow a win/win when you are negotiated down.

If a range is given, between $x and $y, I automatically think it will sell for $x or a little less if the vendor is desperate. One local agent used to ask for offers over a certain figure, and the figure always was way too low. This just wastes the time of the vendor and the potential buyer. A friend put in a $340K offer when it was advertised as "offers over $300K". Agent said vendor would not accept anything less than $360K. If he already knew that, why on earth start the offers over $300K .

I HATE tenders, because you can miss out by $1K or overpay by considerably more, particularly if you are buying a PPOR you have fallen in love with.

 

[The Y-man]

Option 3 for me.... Price and work down. Even if you pay too much, you feel like you got a good deal after talking the vendor down 20%


Cheers,

The Y-man

 

[LynnH]

I'll go with option 3 too - makes more sense to me than most of the other options.

I HATE tenders, because you can miss out by $1K or overpay by considerably more, particularly if you are buying a PPOR you have fallen in love with.

Agree wholeheartedly, wylie! And also that ridiculous sales system they have in Victoria - "Sale by Set Date" or similar names! Both these methods are, IMHO, completely lacking in transparency - would rather attend an auction than buy by this method, and I have to confess I'm not a huge fan of auctions (except in a buyers market, perhaps ).

Cheers
LynnH

 

[yorke]

Here are a couple of options.
1.The list price is the price that the Seller wants and there is no negotiation.
2.The list price is the lowest price and the Seller will only accept offers over this price.
3.The list price is the highest price that the Seller would expect and all offers should be considered.
4.There is a price range given, ‘Offers between $x and $y’.
5.There is no price at all and Buyers must come up with their own value.

#1 definitely, ends all that pi**ing around with offers and counter offers. There is the final price and if I think its prices right I buy it if not then I walk away, no time wasted.
I was looking at a place in SA and it was advertised as offers above $200K so I faxed him an offer of $200K which the vendor rejected so I went up to 210, 220 & 230 before I had enough and told the agent to call me back with a price the vendor would accept. Turned out he would accept $255K which I was not prepared to pay even if he didn't mess me around. Would have saved a lot of time if the agent asked for $255K not neg. or at least offers above $255K and needless to say that I will not deal with that agent again.

 

[JamesGG]

Hiya,

Just a little thought that occurred to me while reading this thread;

Anyone else think it's funny that nobody wants the 5th option...?

Like, more than a few people here have basically said that the vendor can name a price, and then they'll offer what they think it's worth. But, why does the vendor need to name a price, before the buyer can offer their opinion? Is it because we are so ingrained with this 'buy at a discount' philosophy that we expect to see a property with a price tag and won't be happy unless we can pick it up for less...?

Personally, I like the fifth option. Pure supply and demand, let the market dictate what the price should be rather than the lower end of a pricing system.

Cheers

James.

 

[MarkB]

Personally, I like the fifth option. Pure supply and demand, let the market dictate what the price should be rather than the lower end of a pricing system.

The 5th option is closest to an auction (allowing for an "implicit" reserve).

Is it because we are so ingrained with this 'buy at a discount' philosophy that we expect to see a property with a price tag and won't be happy unless we can pick it up for less...?

Possibly because this is a forum dominated by buyers of real estate, not sellers.

Anyone else think it's funny that nobody wants the 5th option...?

What I find funniest is all these people who think they know the answer (how to market a property), when actually they don't even yet know the question (refer to my earlier post).

Under particular circumstances, any one of the 5 (and there could be many other alternatives) could be appropriate. But without knowing what those circumstances are, how do you know?

Or do you all just go shopping for clothes with blindfolds on and with no regard to size, style, etc?

 

[s_t]

It isn't just having a named price. It is also being able to negotiate and compete with the seller and other buyers. #5 in traditional form leaves you in the dark regarding competition and any further negotiation etc. Do you like #5 if a buyer?

I think the seller may as well nominate a desired price, then the buyer can nominate their desired price in an offer. Negotiate from there. Without any nominated price, it may be lots of effort to even determine roughly what the place is worth (is it in reach or not type stuff). I guess that is #3.

Hiya,

Just a little thought that occurred to me while reading this thread;

Anyone else think it's funny that nobody wants the 5th option...?

Like, more than a few people here have basically said that the vendor can name a price, and then they'll offer what they think it's worth. But, why does the vendor need to name a price, before the buyer can offer their opinion? Is it because we are so ingrained with this 'buy at a discount' philosophy that we expect to see a property with a price tag and won't be happy unless we can pick it up for less...?

Personally, I like the fifth option. Pure supply and demand, let the market dictate what the price should be rather than the lower end of a pricing system.

Cheers

James.

 

[ianvestor]

In a negotiation, it is usually the person who shows their hand first that loses out in the end (i.e. As a buyer, I'd want the seller to first tell me their price. As a seller, I'd want the buyer to first tell me their offer).

Imagine if properties weren't advertised by vendors at all, but were completely switched around to "Wanted" ads. So instead of sellers listing their houses for sale on the web for example and buyers jumping on there for a browse, you'd have all the buyers listing their WANTED ads on the web, and sellers jumping on there for a browse.

If that were the case, it would be the vendors who would get annoyed if a buyer didn't list their price (i.e. show their cards first).

 

[JamesGG]

Hiya,

Sorry, perhaps I was not as articulate as I was hoping to be.

Using an example, what I meant was, why are we (in general) happy to make an offer of $300k when a place is advertised for $330k, but not happy to go out on a limb and offer $300k if there is no price attached to it...?

Do we (again, in general) need that feeling of a discount to ensure that we are happy with our ability to secure a good deal...?

What if that same property was advertised at $350k...? Or, $300k already...? Would we still make the same $300k offer, or, would we change our offer based on that asking price...?

Honestly...?

Surely, if we have done our research (and we can all see the emphasis on due diligence on this forum) then we don't need an agent or vendor to tell us what the place is worth. We already know.

Cheers

James.

 

[ianvestor]

I reckon you're on the money James.

Using rugs as an analogy (Just because I admire this 'Craig' guy), Rugs-a-million wouldn't be anywhere near as successful if they didn't have a 'sale' every week.

Who would have thought you could get a $3000 rug for only $49? It probably cost Craig less than half that price.

Similarly, REAs sometimes like to announce on their ads "Price dropped by $20,000!".