Tuesday, December 12, 2006

Pricing…How do you price a home?

A new Real Estate Code has recently been released which sets out strict guidelines for advertising the price of homes for sale. This code states that not only should a price range always be available but that it is also a true indication of the vendor’s expectations at the time of the advertisement.
The Real Estate legislation in parliament has similar requirements and provides for any quoted price to be accurate, within 10%, and once again - a true indication of the vendor’s current expectations.
The background to these issues goes back for as long as I can remember and the problem has emerged over many years from the simple fact that owners of properties always have wanted a “dream” price whilst buyers always want a bargain. It is this differential between the expectation of a vendor and that of a buyer that the real estate agent has always had the job too close. It’s only when both expectations meet that a sale occurs and people get to move.
Legislative and Real Estate Codes are intervening directly in the market place and its ability to find its own level with these recent changes. It is no accident that the practitioners in the real estate industry will have difficulty in making the transition to the required “what the vendor wants is what the purchaser must be told.” What will now occur is that buyers will need to factor their own bargain buying into the reality of a vendor and the expectations that they have, rather than the real estate person taking on this responsibility.
It is true that grossly overpricing properties at the appraisal stage has helped create the divide between buyer and seller early in the transaction. It is also true that as agents, we sometimes exploit the greed of the buyer by quoting an unrealistically low price to get their attention and hook them emotionally on a property.
On balance transparency wins every time and the market will simply have to adapt. This will only occur when the industry achieves consistency in the way it expresses the price expectations of home owners.

Anthony Toop, Managing Director.


© Toop Real Estate Group

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