The Weekend Post - Real Estate
A free market must be maintained
QUITE often I hear from aggrieved potential buyers, upset – indeed sometimes absolutely furious – about the issue of price guides and looking for someone to blame. The source of their spleen is when a home sells under the hammer, or by private treaty, for $520,000. Yet the advertised price guide was $375,000-$425,000.
Surely, that’s an outrage, is their argument.
Recently one of these aggrieved types contacted me wanting me to help him hunt down all those involved in what he perceived was a massive marketing crime.
Surely I would understand his pain and agree that all parties should never work in the industry again and should be sent, at their own expense, to Real Estate Boot Camp.
This would be somewhere at the end of a very long unmade track, somewhere very hot, very dusty, with – wait for it – with NO broadband signal!
In this gentleman’s situation, the property was on the market by private treaty with a guide, but not a stated price (and note the word “guide”) of $850,000-$900,000. But the property went and got itself sold for $1,025,000. What an outrage!
The biggest surprise, however, for the poor chap was my reaction. I just did not share his feeling of an unjust and unfair system.
Of course I had totally empathy for him about how frustrating and disappointing it is when you put your heart and soul into a purchase and then miss out.
But how he lost out is because of what is known as free market conditions. Now there are rules which vary across the country about how agents can and can’t state prices and guides, but a free market has to be maintained otherwise the whole system fails.
I tried to explain that a price guide or offers invited etc is exactly that – a guide and an invitation.
All residential property has a price variant, rather than an exact price or worth. A sales figure is made up of so many elements, many of which are unknown in the early stages of marketing. The sale price is the weird combination of what a seller is prepared to sell for meeting what a buyer is prepared to pay for it.
The aggrieved one did admit the agent said a lot of interest was being received and when he initially hinted at submitting an offer of around $900,000 the agent said higher offers were already on the table. The following day when he contacted the agent he was informed the property had been sold. He discovered the price at which it was sold later.
But while I can understand his disappointment, let us look at it from
Annoying it may be, but if a seller wants to quote a crazy low guide to attract buyers they are perfectly, or should be, perfectly entitled to. It is a risky strategy and in many cases does not work. But this time it did.
You as a buyer must pay what you think a home is worth to you and what you can afford; if you miss out, maybe it was too expensive for you, so you need to move on.
Whether an auction, private treaty or tender, it does not matter – which seller would want to sell for less than the most they can get?
Occasionally when a home has a stated asking price, an honorable seller will stick with that. But when a buyer is knocking your door down
“All residential property has a price variant, rather than an exact price or worth.”
the seller’s side for a moment. What would this very same potential buyer do if he was the vendor?
To have accepted this buyer’s offer would have ensured that the the agent did not achieve the best possible price for his clients and, as such, he would certainly have been failing in his duties. to pay more, being honorable can become quite expensive. So buyers embrace our free market and see the whole picture.
Poor Mr Aggrieved of Somewhere in Australia does not agree with me and said he would be switching over to something called Bitter Homes and Sheds.