Vendors beware!  Is your agent working for the purchaser?  Here are the signs.

Vendors beware! Is your agent working for the purchaser? Here are the signs.

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This week’s edition has been written by Richard Simeon, Director here at R&W Mosman & Neutral Bay.

It’s a tough world in nearly every business sector and real estate is no exception. Stock levels (houses) have dropped to an unprecedented mid 70’s leading into Spring and there are fewer buyers in the market.

In 2006 there was an average of around 300 houses on the market at any one time. In 2010 it was around 175. Added to this trend, are the average days on the market that have blown out to 108 (3.6 months) (source: Australian Property Monitors – APM) in Mosman.

Guess what? Agents and agencies are struggling to be viable, particularly those agencies that are single-mindedly ‘auction-focussed’, as the auction clearance rate for houses in Mosman since January this year, was 31% (source: APM).

Here are some of the current untruths and realities in the market:

• Many local agencies claim to have an auction clearance rate of an amazing 90% in Mosman. The truth according to APM, is 31% for houses. The disparity is, that these agencies exclude properties withdrawn from auction in their total number of auctioned properties and include property sales by private treaty (failed at auction) sometimes sold six months after the auction date, as auction sales. They also group houses and apartments together, because apartments have a much higher auction clearance rate.

• Auction is an excellent method of sale but only if you have a blue-chip property which will attract strong competition. Otherwise, consider private treaty with a price guide. For example – I auctioned 81 Rangers Avenue on June 23, issued 32 contracts, registered 15 bidders and achieved an excellent result. Conversely, a recent offer of $4.8m for a property was rejected by a vendor who then auctioned it through another high profile auction agency. They sold it for $4.05m!!

• Most agencies solely promote sale by auction in order to force vendors into a quick sale and then claim ‘that’s the market price’. Either you have the right buyer or you don’t, so sometimes dealing with bargain buyers at auction does not reflect the true value of your property. Do be patient.

• Don’t chase the market down! Too many times, agents are only 1 or 2 weeks into the campaign and are slashing prices to close the deal quickly. Buyers frequently tell us they would have paid more but because the agent kept reducing the price, they waited.

• We are advised that one major local agency currently specialises in sending negative PR property information to all their vendors on a weekly basis. This strategy is used in an effort to condition and prepare their vendors to accept a lower price when offers are made.

• Don’t’ let your agent under-quote your property. One of the major local agency’s sales philosophy is to under-quote their properties to buyers, claiming that they will attract more buyers to compete and therefore force the price up. In my opinion, you will attract buyers who cannot afford your property and lower the price that the best buyers would have paid. Basically, in this market, no buyer wants to feel that they paid a premium. My advice – quote the property at what it’s worth and have the credentials to justify that price guide or even higher.

BUY PRINT

For every poor result in this market, there are also excellent ones, or at least those that are fair. This week since returning from holidays, Mark and I have received $28m worth of offers on four properties, which is extremely positive. Our office is also deep into negotiation phase on numerous properties. Hopefully, these are positive signs for a stronger property market in Spring. Some of these properties have been on the market for over 12 months and finally, we have found the ideal buyers at the right price.

Fundamentally, agents should defend a property for what it is really worth and only deal with the best buyers, however long it takes to find them. Chasing the market down by blaming poor selling conditions is not a true reflection of what a property is worth. Many buyers are confused as to ‘real’ property values, so agents should act as ‘property advisor’ by supplying written 3rd party evidence to support their price guide. The ‘best’ buyer for a property correctly qualified and provided with thorough property reports, will be forced to acknowledge that the relevant property is the most suited for them and will pay a fair price.

Sale by Auction is ideal for some properties but remember, the actual auction clearance rate this year is only 31% for houses (Source: APM). Sale by Expressions of Interest (EOI) is most often more effective, for many reasons. We are also successfully using new electronic marketing tools together with database mining to sell properties quietly and confidentially, without launching onto the market.
The old adage – ‘there are agents you buy through and those you sell through’ will always be true, so vendors, beware!

Vendors and buyers alike, we really do enjoy placing the right buyers into their most ideal homes. On behalf our sales team at R&W we hope to assist you sometime in the future to make your property dreams come true.

Source: Domain Property Monitors

    MOSMAN – 2088

    • Number of houses on the market last week– 73
    • Number of houses on the market this week – 86
    • Number of houses on the market this time 2011 – 80
    • Number of apartments on the market last week – 98
    • Number of apartments on the market this week – 95
    • Number of apartments on the market this time 2011 – 92

    CREMORNE – 2090

    • Number of houses on the market last week– 11
    • Number of houses on the market this week – 11
    • Number of houses on the market this time 2011 – 16
    • Number of apartments on the market last week – 27
    • Number of apartments on the market this week – 24
    • Number of apartments on the market this time 2011 – 31

    NEUTRAL BAY – 2089

    • Number of houses on the market last week – 16
    • Number of houses on the market this week – 16
    • Number of houses on the market this time 2011 – 7
    • Number of apartments on the market last week – 60
    • Number of apartments on the market this week – 56
    • Number of apartments on the market this time 2011 – 65

For this week’s sales in Cremorne real estate, Cremorne Point real estate, Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Neutral Bay real estate, Cammeray real estate.

• Click Here
For this week’s open for inspections
• Click Here

Regards,
Richard Simeon
Director

2 Responses to “Vendors beware! Is your agent working for the purchaser? Here are the signs.”

  • Ann says:

    Thank You Richard

    Yes auctions in this area are rarely successful.

    I think other agents also do them to lock in the client.

  • Ming says:

    Well said Richard. Finally an agent prepared to tell the truth about what is going on in our market. Lets hope the others catch on soon. Ming.

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