In a challenging market, there's a dynamic I've noticed becoming increasingly frequent. I think fear drives it - a fear of rejection, getting it wrong or losing a listing.
When a market seems desperate, the temptation for inexperienced agents is to butter up the seller and withhold the information that they think may lose them the opportunity to sell the property: the genuine price.
It may be that they don't have a good grasp on current market conditions, or that they don't want to be the bearer of bad news, but there's been a rise in homes for sale with ‘price on application' or 'set date sale' or even 'transparent negotiation'. Each of these is an attempt to market a property without revealing to the market (or the seller) the true worth of the property.
The selling methods are directed under the guise of 'discovering what the market might say' yet the results are often spectacularly unhelpful. The anatomy of selling with these methods often goes something like this: the agent lists the property and promotes it to the market without a price; potential buyers see the property and often look away for lack of information; the property becomes stale in the market; the agent suggests re-marketing at a price reflecting the current market; the property is now stale and barely a soul notices. Some time later, the property comes off the market.
Ok, not all sales go this way, but it's a scenario I'm seeing more frequently.
I understand the pitch. Generating awareness, attracting many interested parties, and creating a silent auction of sorts sounds plausible - even attractive. Except when it doesn't reflect the current market.
The underlying and ulterior motive is that if this strategy doesn't work, we'll go for the price that reflects the market and try and sell it that way. It's usually too late by then - the market has lost interest.
Several buyers have told me recently that they were interested in a particular property being marketed under 'set date sale' but with no indication of the price they were discouraged from going any further. Unsure whether the advice from the agent was connected to the reality of the current market, they looked elsewhere.
Buyers are savvy right now. Increasingly, they see these methods of sale and gloss over to the next property. There is no shortage of data for them to access so when an agent indicates a price that's 10% over what they would expect in the current market, it's a short conversation. They move on.
Let's be clear: there are market conditions when these methods of sale may be effective. In a heated market where many buyers are competing for a limited number of properties, these selling methods are a way to achieve the highest possible price. We are not in such a market.
I will also state that auction remains a viable strategy for marketing particular properties as it is a highly transparent process. The issue here is non-transparent strategies that seek to hide market realities.
Agents need to show courage and based on the weight of current market information, present the facts to their (potential) client.
As tantalising as it might seem, buyers want reality over fantasy. To look a seller in the eye and say "I know you would love to be hearing $895,000 as a selling price but, based on the last ten properties I have sold in this area and all other sales, your home will sell for around $820,000" is not easy news to break. That said, sellers are selling because they have a stronger motivation to move than stay right now, and an ineffective marketing campaign is of little benefit.
Our advice and challenge to clients right now: let the market know that you are genuinely priced and want to sell and buyers will sit up and take notice. Further, ask yourself the question: "How would I react to this pricing strategy if I was a buyer?". Chances are, you'd want to know the price and the address for starters!
We're working harder than ever to realise the highest possible price for our vendors, but it will always be in the context of prevailing market conditions. The truth is stronger than fiction - it's no different when it comes to selling your property.
For a successful result in this market, an agent has to be prepared suck it up, lay it on the line, and deliver the realistic advice you need to sell your property. There's no room for soft sentiment or running scared if you're about achieving results for your client.
It's the reason our dynamic team at ONE sold 25 properties last month and 23 properties the month before. Our pricing strategy aligns with market reality and our vendors appreciate our honesty and transparency to get them on the move. That’s our philosophy at ONE!