Some very good responses here and I would like to discuss a few points further.
It would appear that the majority of BUYERS like the ceiling price on the property so that they can calculate down from it. Far be it for me to buck this trend although I can see some issues with this system.
“Little houses on the hillside and they were all made out of ticky-tacky and they all looked just the same.” If only this were the case and all houses were just the same then applying a value to them would be relatively easy, but they are not and indeed some houses are like nothing else to compare with. This makes valuing difficult at best.
Emmachisit?"
"20 dollars"
"I'll give you $15"
"$18"
"OK - I'll have it"
Sounds so ideal – if only it were that way in practice. Let’s see
Emmachisit? End Owlongonmkt?
“$400,000”
“I’ll give you $300,000
“$360,000”
“OK – I’ll have it”
Why is real estate any different? If there is to be legislation and only one pricing option was allowed, then that's the one most would be comfortable with.
I don’t disagree that most people feel comfortable with it, but does this necessarily make it right? It is different because very few properties are the same and calculating value is difficult for both sides of the equation.
A fixed asking price gives the buyer an anchor. Business-minded buyers with a keen eye for values don't need one but most people (ie most of the market) do feel more comfortable with a starting point.
Yep – if only we could get the asking price right first time every time. An educated Buyer could look at a property and pretty well place it where it sits in the market and perhaps not miss out on some deals just because he was fixated on asking price and discounted the property because the price was too high.
If the secret of making money is 'giving buyers what they want (incl finding a way to profit from this)' then this is at odds with a negotiating maxim 'that the first person who nominates a figure is the loser'.
Agreed but why does it have to be the Seller? We all know that if ten people looked at the same property and placed what they were prepared to pay for it on a piece of paper we would probably get ten different values. Wouldn’t it be good to be able to take the highest offer – that is the one from the person who wanted it the most.
There's a bit of control-freakery involved - some agents (especially Jenmans) think that withholding information gives them a better sales opportunity since buyers MUST phone to get basic info and the agents can do their sales spiel (ie 'qualify' you and maybe sell another). This could also be seen as a hoop to discourage tyre-kickers, but at the same time agents time can be wasted on basic/boring questions that a good ad would answer (eg address, price and bedrooms).
Buyers complain about Agents for not trying to help them but when they try to qualify them so that they can help they are just annoying. There seems to be a abnormally here.
I
s a good property love at first sight, or is it one that gradually grows on you? If the former then the buyer will gladly jump through hoops. But if the buyer interest is initially marginal then any obstacle (even if just phoning an agent) is too much and a buyer has just been lost.
I believe that most purchases are love at first sight, but even if they are not and the Buyer is too lazy to do some work then tough bikkies, they miss out. There really is more than one buyer for each property and only one can buy it. I couldn’t count the number of Buyers who would have paid more and expected you to read their mind while they were being smart and not showing any interest in the property only to blame the Agent because they missed out.
My observation (similar to JamesGG & Daz) is that the more experienced/business minded buyers need no anchors. They know how much the property is worth to them based on what they can do with the property and/or comparative sales and yields*.
Bring on the intelligent ones.
EFFECT OF ASKING PRICE
The actual figures can be (though they shouldn't be) influential. Say a fair price for a property was $200k. Advertising may be as follows for the various methods:
1. might be set at $200k
2. might be $180k+ (or for a Melbourne auction $160k+ )
3. might be $210k
4. might be $180 - 220k (or for a Melbourne Auction $160 - 180k)
The only problem with this is convincing the Seller that their $200,000 property is not worth $300,000 and still getting the listing. If all you experts think that this is easy – think again. This is the crux of the whole listing with a price method.
As a final though, what's best for confident value-seeking investor buyers is different to Joe Average. And Joe Average provides the bulk of the market and may pay more than investors (at least for low-middle end property) it's important to have a sales method friendly to him. Because of its similarities with many other transactions, 3. above is it.
Sad but true, given that most OO’s will pay more for a property than most Investors, it’s not difficult to see why Investors are not often taken seriously.
LA Auzzie
In real estate, the customer is the BUYER; not the seller as many r/e's think.
While r/e's work for the Vendor, they are basically a salesperson, and the Vendor is the supplier of the product they sell.
Hi mate we have had this discussion before and while your thoughts sound good and fair, unfortunately the Department of Fair Trading don’t see it that way.
162 Real estate agent must not act for more than 1 party
(1) A real estate agent must not act for more than 1 party to a
transaction.
Division 2 Appointment
133 Appointment of real estate agent—general
(1) A real estate agent must not act as a real estate agent for a
person (client) to perform an activity (service) for the client
unless—
(a) the client first appoints the real estate agent in writing;
It may be beneficial for some to read the Property Agents and Motor Dealers Act here
http://http://www.legislation.qld.gov.au/LEGISLTN/CURRENT/P/PropAgMoDA00.pdf
I think r/e's should do a better job of first finding out exactly what the Vendor expects from the sale, and then concentrate their efforts on helping the BUYER to BUY.
And wouldn’t it be great if Sellers trusted Agents as much as Buyers do and answered all of our probing questions honestly. I once sold a property for a couple and it was not till after settlement that I discovered that they were separated and not even living in the same house (she just left some women’s things in the wardrobe and bathroom)
This doesn't mean having thousands of dollars of ads - totally useless for all concerned except the agents. The buyers are already out there looking on the internet and in the r/e's windows and trawling the streets.
Again we have had this discussion before and I should just leave it alone as I know you will never change your mind, but for the others here who might take this statement as gospel – THINK AGAIN – The fact is that you can’t sell a secret and the likely Buyer for your property may not be a local, or they might just miss it. Why is it we will pay $10 to sell a $100 fridge but they object to paying to advertise there largest asset?
If a Vendor wants to sell their home FAST, simply pay to get the joint valued by a licensed valuer, make an estimate of the property's value based on the valuer's report and a bit of detective work, and advertise it at the correct price.
This, I agree would be a good start. Unfortunately Sellers are just as lazy as Buyers and want Agents to tell them so that they can disagree. After all we only want to put a cheap price on it so that we can sell it quickly and get our undeserved commission
Hey Guys and Gals – Please take my comments with the humor that I tried to insert.
If selling Real Estate were that simple everyone would be doing it and the good people that I meet far outweigh the ugly ones and make my job enjoyable. Most of the time.
(plus postage, but that wasn't much either and it took 6 weeks to get to me. I watched the tracking - it went through Adelaide 3 times before they got it to me)
