BY MARK ARMSTRONG
23 NOVEMBER, 2018
Three months ago, we began an exclusive survey of people who sold a property and wrote a review on our website. So far, we’ve surveyed more than 30,000 people.
We asked one thing. Was your sale price above, in line with, or below your expectations?
This simple question is very revealing.
It cuts to the heart of what’s most important for vendors. It’s also a reflection of the work of good agents, to set realistic expectations then work hard for the best outcome possible.
Price Expectation is a new, important perspective on property and agents. Here’s what we found and what it means for you if you’re coming up to selling.
Overall, 63% of vendors achieved a price in line with their expectations. For 6% of vendors, the sale price fell below expectations. The remaining 31% - almost 1 in 3 - said the sale price was above their expectations.
State-by-state the picture was broadly in line with the relative performance of property in those markets.
Australia’s happiest suburbs - those with the highest number of sellers achieving above expectation prices are Altona Meadows (Vic) - 59%, Sunbury (Vic) - 51% and Charnwood (NSW) - 50%.
4 out of 5 of Australia’s happiest suburbs are in VIC. 2 of these - Sunbury & Greenvale are in Melbourne’s North West.
Australia’s unhappiest suburbs - those with the highest number of sellers reporting below expectation prices are Canning Vale (WA) - 15%, Bundeena (NSW) - 14% and Castle Hill (NSW) - 14%.
4 of the Top 10 suburbs reporting the highest level of BELOW expectation sales are in NSW, followed by VIC (2) and QLD and WA (2.)
Our survey also revealed that the lower the sale price, the higher the likelihood that the price achieved was above the vendor’s expectations. By contrast, the higher the sale price, the higher the chance that the price achieved was below their expectations.
In other words, vendors at the upper end of the market were less satisfied with their sale price than vendors at the lower end of the market.
We believe there are two reasons for this:
In any market, and especially in a softening market, it’s vital to find an agent who understands the local area, knows what buyers at your price point are prepared to pay, and knows where to set your price expectations.
As an example, let’s say that a vendor is choosing between two agents. Agent A says, “We’ll definitely get $1 million for your property, and my team will work as hard as we can to push the actual sale price higher than that.”
Agent B says, “I think I can get up to $1.2 million for you; I’ll be doing everything I can to achieve that.”
In any market – and particularly in a falling market – Agent B is often the one who will get the listing, because they have set the vendor’s expectations at a higher level. But if the vendor goes with Agent B, will they be better off in the long run? Let’s see.
Agent A works like crazy and sells the property for $1.1 million, even in a softening market. Agent B, however, has to spend considerable time and effort conditioning the vendor to come down from the initial expectation of $1.2 million, and sells the property for the same price as the first agent.
In theory, the actual price achieved might be the same, but the difference lies in where the agent has initially set the vendor’s expectations. This in turn influences the vendor’s view on whether they achieved a sale price above, equal to, or below their expectations. That’s what’s really important about selecting the right agent, especially in a softening market.
There’s a danger that going with Agent B is like catching falling daggers. Their strategy is to keep reducing the price to find the market, and they don’t know where they will land. It’s likely that Agent B will end up selling the property for less than $1.1 million.
At the same time, it’s quite possible that Agent A will achieve a price above $1.1 million. This is because Agent A is moving the market up to where he or she wants it to be.
Agent A is the one you want to go with. When you’re a vendor negotiating with a buyer, you want to be increasing the price point, not reducing it.
Since a good agent is the one who is likely to drive up the price point of your property, he or she is likely to rate more highly with vendors – addressing their biggest concern. By choosing this kind of agent, most sellers can walk away feeling content that they have achieved the best possible sale price.
Ratemyagent.com.au is your key to finding the right selling agent, no matter what the market conditions. Every review from a vendor is linked to the relevant transaction, so you know it comes from a homeowner just like you.
If you’re ready for reviews of agents in your neighbourhood, you can search RateMyAgent here:
If you want to know when we have more Price Expectation data you’ll hear it first on our show, Property Banter, you can subscribe here.
Contact us at firstname.lastname@example.org
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