Agents Overprice Properties!

This may come as a surprise to you, but this is what my friend Geoff Baldwin, WA managing director of Remax was reported as saying in The Weekend West on Saturday April 16, 2011.

Geoff said, “… many agents were proposing drastically inflated sale prices in free evaluations in a bid to win clients.” This practice is known in the industry as ‘buying the listing’, and what Geoff is saying is absolutely true.

Delibrately inflating the price of a property for the purpose of securing the business is not only dishonest and unethical, it means that the property usually sells for a lower price than it otherwise would have, and also causes unnecessary stress to the sellers, both emotionally and financially.

When it comes to estimating the likely selling price of a property it is possible to make a mistake; even qualified valuers make mistakes from time to time. After all there are many factors which contribute to the value of a particular property including the overall rate of inflation, level of unemployment and consumer confidence, just to name a few.

However, all things being equal, comparing recent sales in the area is usually the most accurate method. Often there can be a big difference between what a property is listed for and the price at which it actually sells, so it is important to compare on the basis of final selling price rather than listing price.

Nonetheless, taking all that into account the final arbiter is the market itself. That is, a buyer and a seller who are fully informed and of reasonable mind, with realistic expectations, operating in a free and open market.

Of course from time to time we do have freak markets such as the one in 2006, when property prices increased by 42% in a 12 month period. It was not unusual for buyers to be offering tens of thousands over the asking price in fear of missing out. In that sort of market it is virtually impossible for an agent (or valuer) to accurately appraise a property. Thankfully, we only see those out of control markets every 18 years or so.

So back to the question of agents over pricing properties – how to counter it?…….

One way is to make the agent guarantee in writing that if he or she does not achieve the price quoted, then the seller is relieved of the obligation to pay the selling fee. Unfortunately, you won’t find many, if any, agents who will give such a guarantee. But not to worry, I have one such guarantee on this website which anyone, including agents, are free to download right here.

If you or anyone you know is thinking of selling in the near future, you can do yourself or your friend a great service by using our “Home Sellers Protection Guarantee”. It is more important now in the current flat market than ever before to get the price right. It doesn’t matter how much marketing you do or how many home opens you have, if the price is too high the property will not sell.

As Geoff Baldwin says “Get real on home prices.”

We are feeling pretty generous this Easter, so I am giving away 10 FREE copies of Neil Jenman’s book “Don’t Sign Anything”, valued at $29.97.

Neil is the Real Estate Consumer Advocate real estate agents love to hate.

To receive your FREE copy (remember we are only giving away 10), please send us an email with your name and address or call us on 9444 4099 before 5pm on Thursday April 21, and we’ll have it delivered direct to you.

Have a great Easter Break!

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