great post and so on the mark.
I have just written an article in the local paper here in CB called “why is my house not selling” – and pretty much goes along those lines.
The probelm is that owners dictate the price of the property and agents seldom if ever give advice as to a realistic selling price. (certainly up here) The amount of times I have heard – “well three agents say it is worth 300,000”. And how did they arrive at that figure – because the owner told them they wanted 280,000
Excuse me but that is not a valuation. Certainly not based on any factors that the market consdiers – like the sqM and the average cost per SQ m for both land and building in that area not to mention what potential buyers are actually looking for. These are things which the banks consider, but agents only consider (in general) what the client states they want.
So the net result is that owners have properties they think should be worth X when the reality is they are worth less. But the agent doesnt care because he gets a listing, it keeps his targets and someone may even look at it.
And before I get lambasted for being an agent I also eat my own dog food. My own house is valued at 310,000 (and I have the tasacion) and I have dropped the price from 279,000 to 239,000 which has worked wonders as now at least people are looking (and one silly offer been made) . Before I wasnt fussed about selling now I either sell it or rent it, but at least the price is attracting people.
And secondly we do give valuations that clients can either accept or not – if not I am happy to walk away because there are enough over priced properties around and I want to sell property not list them.
Listing only, does no favours to the seller or in fact ourselves, whereas giving a reflection of the market – and a market appraisal so sellers can see where their property fits into what the market is currently demanding, are important factors for setting the valuation. In some cases by dropping your price a little you may just break into a level where many people are looking.
Up here for example there are some villas for sale at 280,000 or so. There are people looking for villas/chalets upto 250,000. We are a mere 10-12% out on price so if the owner dropped their price 10% we have buyers – but most just wont budge. So they have to wait until the market catches up (and I believe the market is actually falling in real terms)
So perhaps sellers need to take a long hard look at their property and compare it against others in the area that are SELLING – not just on the market. If your price is within 10-15% of a buyers budget they will generally look at it because it is in the ball park of a deal being made. But when a property is over valued by 30% then even 1% commission wont make a difference to whether buyers come or not.
Oh and one final point, if the deal is made or broken on 1% – 3% I am sure that most agents worth their salt will drop their commission to facilitate a deal- I know we do – a sale at half of what you expected is better than no sale at 100% of what you expected – or it least in my books it is.