What is the actual price of a property for sale?
Category Blog
Is it the advertised price? Or 10% lower than advertised? Or even 20% lower? It could be any of these prices depending on various circumstances. If a property has a number of buyers interested in purchasing it then, just as people are attracted to a busy restaurant, the increased interest will result in a higher price. Conversely, no interest over a long period could result in a substantially reduced sale price. It is intriguing to see certain real estate services offering 'attractive savings' to home sellers when they discount their commission. Savings off what value?
Different selling (and commission) philosophies offer different processes and ultimately different prices. The good traditional estate agent (normal commission structure) will bring negotiating skills to the table. These will be used to encourage the seller down to market value or the buyers up to the seller’s expectation.
Optimum price is best achieved when a good, hands-on, preferably sole-mandated, estate agent builds and orchestrates, a platform of competition among interested buyers. The competitive (fear-of-losing-out) tension that arises among the potential buyers as a result could make a difference of 10% to 15% on the final sale price achieved. Ensuring a higher net price for the seller even after 5% commission is deducted.
Which leads me to the point that as a buyer I might achieve a better deal buying through a discount agency than the traditional agent (5% commission)... less pressure, less negotiation, lower net for the seller and less commission paid.
Frankly, it is dangerous for the seller to assume that a low-cost home selling portal – punting a low commission – will sell a home at the same price as a full-service, hands-on, real estate agent or agency.
Discount commission agencies could ultimately, through under selling, have a negative effect on the average price in a suburb. These discount ‘attractive savings’ real estate services benefit buyers, rather than sellers. Is this good for property prices?
Author: Ronald Ennik
