Ninja in a Blazer – 2nd September 2022
September 2, 2022Ninja in a Blazer – 9th September 2022
September 8, 2022Pricing a property can be quite tough.
You’d think as an agent, we’d know exactly where to price properties. The truth of the matter is that we have an opinion on price, as do most sellers and most buyers.
Like a buyer, we sometimes have about 10 minutes to look at a property to decide on a pricing strategy or price guide for the sellers, and sometimes the sellers really want one number from us and will pick an agent based on the price they give them.
Sometimes we’ll miss the quality or lack of quality in a renovation, we might miss some building and pest issues (we’re not trained entirely in this, but pick up a lot of things along the way), and sometimes, we miss things like the property having no oven in the kitchen.
At the end of the day, I try to be as honest as I can be working on similar sales in the area. However, I know I’m not always right. When the market was going up, I was wrong in some cases 5%-15%, while the market is coming down a little, I might be wrong to a similar extent sometimes. Most times, I’m fairly accurate on price, I used to pride myself on being right, but, after 6 years in the business I know I’m not going to be right 100% of the time. Being right doesn’t always bring you pleasure if you’re not selling the property.
Last year it was impossible to price properties as they were moving so fast, this year it’s impossible to price as there’s so much uncertainty in the market. We’re seeing low pricing, high pricing, and no pricing.
Sometimes an agent will have the strategy to price a property lower to get more traffic, even though the owners want a lot higher price. This is called price-baiting.
Sometimes an agent will overprice an appraisal to get a listing, then have to price it accordingly and drop the price week on week until it’s sold.
Below you can see a campaign (from the bottom up, dates on the left).
The seller has changed their agent, and the price has come down at least $250,000. Had they priced the property correctly at the start, there is every likelihood they would have achieved a higher price. The issue is the agent potentially told them “I can get you 1.2mil for this” when the truth of the matter is no agent can honestly know what they can sell your property for.
I’ve heard some agents calling themselves the doctor and the patient, the seller’s sickness is wanting a price that’s too high so the doctor has got to give them medicine to help them sell.
But…
Wouldn’t it be better if the agent was straight from the start?
Would you want an honest opinion?
I would rather give my sellers an honest opinion as to where the buyers are going to be coming from budget-wise, so they can make an informed decision about whether they want to sell or not. In some cases the owners are pleasantly surprised, in other cases the owners are upset and will get another agent’s opinion and most people will sell for a price in the range of what I told them, and in some cases less.
I do like to have a level of optimism, but I also like a realistic approach to price guides – I try to put myself in the shoes of a buyer, why would I buy this, when I can buy that.
In a good market, the overpricing agents will sell a lot of properties, in a slower market a lot will be withdrawn and either not sell and go to other agents.
A good analogy is buying fuel from a service station. You get some shoppers who want to buy from a certain station, you get some buyers who want to find a bargain and will go wherever they want, then you get some buyers who buy for convenience and don’t care for the price.
Some house buyers want a certain suburb, some a looking for a bargain, and some want a position at any price. This is why sometimes an overpricing strategy will achieve a good price potentially 10% of the time, underpricing will bring a lot of buyers (bargain hunters), and pricing right will bring the buyers looking in the certain suburb who understand the prices.
I never tell buyers I know what a property will sell for, as most buyers have seen more properties than I have, so they’re probably the best judge of price, I will sometimes ask their opinion and ask if they’ll make an offer at that price. I would prefer buyers to do their research and attend open homes and make offers accordingly to what they think they’d buy it for. I’d rather have someone get a “no” than see it sold for less than they would have paid in 4 weeks’ time.
My advice to sellers is to choose an agent based on strategy rather than based on the price they tell you. Look at how many properties they’ve sold in a 12 month period and how many they’ve got for sale right now. Look at how many have open homes at the same time. At some stage during the campaign, you probably won’t be getting the agent you chose to do your open home.
My advice to buyers is to do your research and make your offers, the market isn’t going to stay in this lull forever. We always see it, those who hesitate, often miss out. Those that wait, and try to pick the bottom of the market often miss out.
