Investors have been reminded about the risks of listening to agent appraisals when buying and selling property, and warned it could be costing them tens of thousands of dollars.
CPREA (Certified Practising Real Estate Agents) chairman Geoff Baldwin said asking several agents to provide appraisals then establishing an asking price based on their opinions is costing sellers in time and money.
“Many prospective sellers invite three or four agents to provide appraisals of their property so as to ascertain a likely selling price and often fall into the trap of adopting one of the highest prices quoted. However, this can actually cost money rather than fain more,” he said.
Mr Baldwin said whilst the “biggest driver in the buying process is emotion”, buyers will fail to get emotionally attached to a property if they never view it because it appears to be above their budget.
“The records show that buyers invariably spend five to 10 per cent more than their initial budget and this is because they are often disappointed with what they are seeing or because they see a house above their budget, fall in love with it and simply pay what they need to pay to buy it," he said.
“Choosing a price based on agents’ opinions and then adding another $10,000 or $20,000 for ‘negotiation’ will only ensure that the wrong pool of buyers are viewing the property and that the correct pool are simply not putting it on their shopping list.”
In addition, Mr Baldwin said that agents’ opinions are “often wrong” because they fail to accurately account for buyers’ emotions.
Instead of adopting a fixed price based on agents’ appraisals, Mr Baldwin recommended sellers employ a more “strategic approach”.
“Adopting a fixed price above the expectation will also ensure that at the start of the listing, when interest is at its highest, the wrong buyer pool are viewing the property, if anyone at all," he said.
“Auction, buyer feedback ranging, set date sales etcetera are all invitations for buyers to view the property without the barrier of a fixed price that often scares them away.
“Once a buyer has seen the property, if they are attracted to it they will pay whatever they need to, within reason, to make it their own.”
Mr Baldwin said investors should “steer away from a conventional fixed price” and instead appoint an agent who can construct a marketing and pricing strategy that will get the best price “through eliminating barriers and maximising competition”.