Here's a real-life example of a recent property I have tracked for sale in Auckland. It's a tale of sale price expectation that runs ahead of the market - something that's endemic in Auckland.
There is much to be gained as an active property shopper online in tracking the history of a listing to get a sense of the mindset and personal situation of the vendors.
To me, this history of listing activity online can really help you better understand the current market dynamics and be better informed as to the situation of particular house on the market.
A real-life example
To help you better understand, here's a real-life example of a recent property I have tracked for sale in Auckland.
I think it is best not to reveal the actual identity of the property as it is still on the market. That is part of the reason why this is relevant, as the property has been for sale for a period longer than the emerging standard these days in Auckland of three weeks.
Part of the reason why it has not sold, in my opinion, is because the vendors have too high an expectation of sale price. This I think is endemic in Auckland at this time as sellers' expectations are getting ahead of the market.
The property in question came onto the market back in early January. A leading boutique real estate firm with an auction date of mid-February listed it. The agents had high expectations of a selling price “well in excess of $2m” as was presented when the property was profiled in the NZ Herald property supplement.
The auction date came and went with clearly nobody prepared to meet the vendor's reserve.
The decision between the vendors and the agent post-auction was to change the method of sale from auction to ‘by negotiation’.
Clearly, though, the vendors ‘showed their hand’ and their eagerness to sell, as a few weeks later the listing was changed to show a price of $2,750,000.
Time passed by and the listing remained on the market unsold.
The next milestone occurred in mid April when the 90-day period of the original listing agreement expired. At this time the vendors decided to give another agent a go.
This is where things got really odd. The new listing agent from a large Auckland real estate company decided to list it with a price indication of $2,850,000. That was $100,000 more than an advertised price that generated no buyers. I have no idea what prompted this decision. I can only imagine the conversation with the vendors must have gone something like “I believe there is a strong interest in this property and clearly your previous agent failed to reach the right buyers, not only can we find those buyers but we can convince them that the property is worth $100,000 more than advertised last week!”
As a point of note, one consequence of listing with a new agent is the fact that the property appears online as a new listing with a new current listing date, in this case of mid April, rather than the true "placed on the market" date of mid-January. This may have partially assisted in pitching a new price for the property.
Weeks went by and the property remained unsold. Then, strangely, just a week or so ago the listing became an auction with a date of auction set for mid-May!
This property has clearly not found a willing buyer despite two agents, two auctions and clear price expectations.
The vendors clearly have signalled that they want $2.7 million minimum for the property and yet nobody is prepared to pay that sum. Potentially, this new auction (set for mid-May) might well see the vendors set a more realistic expectation with a reserve below $2.7million.
If not, I would judge the agent is wasting their time as this is clearly a case of the vendors' expectations being well removed from the reality of the market.
So what can be learnt from this analysis and tracking of a listing:
So, in my opinion, the failure to sell this property after more than 100 days does not lie with the agents or the marketing; simply, this is a case of the vendor’s expectation of price. There is always a buyer for a property – at a price. The question is always is, does that price the buyer is willing to pay and match the vendor’s expectations? In this case (so far) it does not.
I would concede that this property in the higher price range will not have quite the number of prospective buyers as would be found around the level of the median price of Auckland properties at $590,000; however, I believe this form of digital investigation is valuable to all property hunters to assess.
As a final comment there would be those reading this who might well say that agents should be more professional in managing vendor price expectation; they should challenge the vendor and if they believe that the expectations are unrealistic they should walk away to uphold their professional reputation and not waste their time with a property that is clearly not matched to market expectations.
However, it would be a brave agent who would confront this by declining a listing on the grounds of an unrealistic vendor price expectation. After all, they rely solely on commissions, and for many agents having a listing (irrespective of whether they sell it, or not) is a status point of value for their current profile and reputation.
Former Realestate.co.nz CEO Alistair Helm is the founder of real estate commentary and analysis site Properazzi.
