You made the appointment with the seller and you’ve done your homework on what would be a realistic sales price. Then you meet, and the client has much higher price expectations. This is the time to go above and beyond to deliver a price counselling service the client will remember says the property experts.
Dealing with a client that has an unrealistic idea of what his/her property is worth and is adamant about listing the property for that price can be very frustrating for any agent, especially if you have done your research but it feels as if your opinion is completely disregarded.
However, going the easy route and listing a property at an unrealistic price is not in your seller’s best interest as the property is then more than likely to just sit on the market. “The longer a home sits on the market, the more likely people are to assume that there may be something wrong with the property, which ultimately lowers the asking price,” says Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa.
Also read: Lies, damn lies and statistics
According to the latest data from FNB by Q2 this year, some 96% of sellers had to drop their asking price (up from 91% in Q1) and from 78% in 2014. Samuel Seeff, chairman of the Seeff Property Group says it comes as no surprise that an increasing number of sellers must cut their asking price to conclude a sale. “In fact, unrealistic asking prices in many metros, especially Cape Town, is one of the key issues frequently raised by agents who often have to do a great deal of price counselling,” he says.
Seeff says in areas where realising asking prices are in place, you will often find that properties are selling faster and for closer to the asking prices, but where sellers are still holding on to the 2016/7 price highs, you find that the properties are just sitting on the market.
“It is not just the sales market which is still grappling with high price expectations, but we are finding it in the rentals market as well. Many landlords are still holding out for a high price, or they take short-term tenants for a short period without taking into account the cost of the vacancy periods that follow,” reports Natalie Muller, sales and rental manager for Seeff Atlantic Seaboard, City Bowl and Waterfront.
The ABC’s of price counselling
Do your homework – “Do your homework on pricing really well and go to your listing presentation well-prepared and give a professional explanation of how you got to your proposed marketing price for the property. Believe in your professional opinion backed by a CMA and be brutally honest with your sellers without being rude or arrogant. Remember this is probably their biggest investment you are dealing with. If needs be, take them to see what competition stock their property is facing in the current market,” advises Gerhard Kotzé, managing director of RealNet estate agency group.
Understand your client – Make very sure you understand what the motivation of your homeowner is for selling and what is their commitment, and then be dedicated to go above and beyond to provide the service and memorable experience that each seller and buyer deserves says Berry Everitt, CEO of Chas Everitt International Property Group.
Explain the risk of overpricing – “My advice to agents is to try and help their clients understand that some real estate professionals choose to market a home at a higher price simply to secure a mandate. If faced with a client who has already dealt with an agent who markets themselves in this way, you ought to explain to your client that if they sign with an agent based purely upon the highest price, they will end up with an overpriced property that won’t move, locked into a mandate with an agent who will almost certainly be knocking on their door in due course to get them to reduce the asking price. Ultimately, they’ll probably arrive at the same lower number as other agents initially presented, but now they will have lost valuable time and first-mover advantage. If anything, sellers should be asking agents how long it took them to complete their last transaction, as this would be a better yard stick on which to measure an agent’s competence than price,” explains Goslett.
Dealing with landlords – Muller says that agents need to work with landlords and counsel them as to the benefits of a good tenant who will look after your property and pay their rent on time and need to be accommodating with the rental rates and escalations to keep these tenants as defaults are on the rise.
Walk away – “If you have done all this and they still don’t want to take your advice and professional guidance, you should respectfully walk away rather than become part of the industry problem of promising sellers unrealistic prices for their properties,” concludes Kotzé.
Property isn’t a precise science
Some property experts warned agents to be careful about broadly applying reports on property trends. Jonathan Acutt, managing director of Acutt’s, says he is always careful to apply a one-size fits all approach to real estate trends “as experience have taught me that it is not like that at all. To paint our market with one large brush and call it a trend is quite dangerous for agents as no two suburbs are alike.”
Everitt says the real estate market is highly complex and can vary widely from area to area and from price sector to price sector. Most properties will sell for than what they went to market at says him and Acutt.
“The property market is driven by buyer confidence and the truth is that confidence is down. But this is also the time when property buyers seeking good deals come out of the woodwork, so it will be interesting to watch what happens?” says Acutt.
“Real estate is not a precise science. Having said that, though, pricing ‘correctly’ for your local market at the outset is always the key to selling quickly at only a small discount to your asking price, ant that is why sellers require the services of experienced and well-informed estate agents who are constantly in touch with the variations of their particular area and can help determine an asking price that closely matches specific local market realities,” concludes Everitt.
A little inspiration …
Keeping your eyes open for “whatever comes out of the woodwork” instead of moping about the things you have no control over anyway such as the recession, the fuel price, the corruption and crime reminds me of a great motivational story I recently read about a young estate agent in Cape Town.
Blessing Tankwa says about 5 years ago he was crashing on a friend’s couch in unit number 25 in an apartment complex called Maple Grove in Parklands, near Cape Town. “I was very broke, life seemingly had no direction, I was young, basically unemployed DJing at a local club for R150 a day 2 or 3 times a week and I had a kid on the way.” Then he became an estate agent and his life changed completely. In the last two years while with Keller Williams Coastal he sold four units in this very same complex and all four at record selling prices. He also sold number 25 where he used to “crash on a couch” to his mother-in-law.
“I say all the above to say this, life may not make sense right now but keep at trying to better yourself and grab every opportunity that you can as best as possible. Most of us may not be where we want to be today but we are far from where we used to be. Get up one more time, he ends.” Tankwa has since signed up as an estate agent with the Design Property Group.
Do you have an inspirational story to share? Send it to editor@propertyprofessional.co.za.
