How To Set Expectations Around A Property Price
In a competitive property market like Sydney’s Eastern Suburbs, the talk often turns to property prices.
Lately, that’s been because of the high sale prices that have been recorded, sometimes far higher than the agent quoted at the open homes.
So how do real estate agents set price guides when selling property? And why are some sale prices kept secret?
When you walk through the door of one of our open homes, our team will offer you a price guide or “selling estimate” for the property. It’s something we do routinely, to create a fair and level playing field for buyers.
How do you set a property price guide?
We base our price guides on our knowledge of the Eastern Suburbs market and data from previous sales. We compare each property to others that have sold recently, with similar attributes and in a similar location.
But the data doesn’t reveal everything. Every property is unique and both the market conditions and buyers themselves change too.
Often, it’s only once a home has been shown that a particular feature stands out to prospective buyers and makes it worth more or less than others. When that happens, agents need to move in line with market interest. That’s why we’ll often revise our price expectations as the sales campaign continues and why you’ll see the price guide change too.
What about agents underquoting?
As real estate professionals, we have a code of conduct that says we must act honestly, fairly and professionally with all parties involved in a property transaction. We also have certain responsibilities and accountabilities – from not misrepresenting the property in advertising and disclosing any serious defects, to not underquoting.
In fact, intentionally underquoting selling estimates is illegal and there are strict laws about it. According to NSW Fair Trading, agents are required by law to:
- Give “reasonable estimates of selling prices” and not make statements or publish a price lower than these estimates
- Advise the seller how they came up with the estimate and what it is based on
- Revise the estimated selling price if they become aware that is no longer reasonable
Price is a sensitive subject
One of the key complaints buyers make about property prices is around the level of transparency – or lack thereof.
There are exceptions to transparency, particularly when it comes to revealing the final price a property sells for. For instance, because of the nature of off-market transactions, there’s often a purchaser or vendor who wants the final sale price to be suppressed. And we have to abide by their wishes. This sometimes happens with auction or private treaty sales too.
Prospective buyers are naturally disappointed and frustrated when the sale price of a comparable property isn’t listed in that weekend’s auction results.
It comes down to transparency
As an agent, when you’re meeting a prospective buyer for the first time, you’re trying to create credibility and rapport in a short timeframe. If you aren’t transparent, very soon you’ll gain a reputation.
We hope to forge a long term relationship with our buyers and vendors and The Agency model has allowed us to raise the bar when it comes to customer service which has contributed to our team making some of our biggest sales to date.
You could call it a new style of real estate agency: one built on transparency, honesty and being upfront in everything we do.