Chris Warren is a Licensed Real Estate agent with over 20 years’ experience, providing real estate services to consumers on Brisbane’s inner southside. He was recently quoted in a submission to the Estate Agents Council of Victoria concerning real estate agent appraisals and the pricing of real estate, and wrote this article in response to a request for his opinion on the problems associated with the valuing and pricing of real estate.
Recently one of our sales staff asked us all to view a property she was hoping to list.
The owner was present and indicated to us he was getting a number of agents to look at the property and he would list with whoever gave him the best price.
For the rest of the day our sales person was chasing our opinions on what we thought would be the best price that could be achieved.
Absolute insanity, I thought once again!
What kind of business relationship could this owner and agent have based on such a pathetic unprofessional approach?!
After 20 years in real estate, I find pricing a property is still the most difficult problem an agent faces on a day to day basis.
Unless the agent has been referred to the owners or they have enjoyed a previous happy association the owner of a property will traditionally call in a number of agents to tell them “What’s it worth?”
And here is the dilemma. Does the agent tell them what they want to hear or what they need to hear?
The answer is obvious but the chances are if the agent gives a price the owner thinks is too low then the owners will most likely list with another agent who gives them a higher price.
So often the agent is forced into the position of giving a price he knows is too high just to be competitive. Either that or he loses the business.
The other alternative for the agent is to give no price at all. A very difficult concept for most owners to grasp.
This is the way real estate in Australia has possibly always been. Owners expect agents to have the price of their home at their fingertips and the agents know what the owners expect of them.
As we all know…nobody has any real idea of what a property is worth until it is exposed to the marketplace and a willing genuine buyer comes forth and is prepared to make an offer.
So what to do?
The only solution to my mind is for every owner to arrange their own independent valuation from a registered valuer. Then they have a price given to them in writing by a professional not involved in the sale of their property.
The owners may disagree with the valuation and that of course is their perogative.
And after all, valuers do get it wrong sometime too.
The fact remains they now have a price on their property given to them by an impartial party.
They should now be free to choose an agent based on his marketing proposal and how good a negotiator they think he might be. Surely this is a more professional way to market property than by an agent “buying the listing” for whatever reason?
Let’s not get too precious about this however. If a number of similar properties in the immediate area have sold within a certain price range in recent months then that is a perfect guideline to the market price and it may be pointless having a valuation.
Even in cases like this I think the agent should not give the owners a price. Encourage them to do their own research (their buyers certainly will) and give them us as much information as possible on recent sales. This is their property and they have the right to choose the price or price range they want.
If the agent does not think the price is achievable then he can walk away from the listing.
Summing up, the public need to be educated that an agent is not a valuer but a marketer and negotiator of their property.
Let the pricing be done by a professional valuer and let the market decide the final price.