Thousands of property transactions are conducted daily. The drivers of this turnover are constant – buyers and sellers are; up-sizing, downsizing, aspiration, marriage, death, divorce, job relocation, aspiration, and financial circumstances including distress and elevation (inheritance and windfalls).
Most of these transactions are not conducted with a Buyers Agent, many are done directly with the Sales Agent who represents the vendor. What is not apparent is something that cannot often be quantified or just won’t be discussed after the event of purchasing…this is the question “Did I get the property for the best price possible?”
If you listen to the Sales Agent, friends, and family you would often get a confirmation bias of “You bought so well etc”… But did you?
I use a process of determining the Fair Value of a property – it is a range and then a specific figure. It is not just algorithmic or using the usual property data reports – time, effort and research go into these figures. They are remarkably accurate. Algorithms and AI may produce predictive or historic values, but they cannot discern the quality of a property against another.
Why shouldn’t you trust the Algo’s? – like people no two properties are alike there are always nuances or mitigating factors. The algorithmic values attached to the property are man’s attempt to standardise a process and understand property value and trends. These calculations allow agents and bankers alike to understand values better and with more accuracy than a specialist having to deal with each property and place their opinion as to purchase or mortgage value.
These considerations should be taken into account when comparing property and determining a value. Historical Algorithms and land title pricing are in fact reflections of past events in time, based on history and often they are lagging or not accurate. The same occurs when prices are rising in certain property pockets. Going into discussions with inaccurate or uninformed value assumptions will put you at a disadvantage. Even more so if you don’t have a strategy that matches this.
Understanding the Fair Value pricing concept and understanding the value of a property in the market at a given time is a mix of Art, Science and experience. The X factor in the sale value of a property will be when there is an emotional buyer involved paying well over the fair value mark for a property. The selling agents’ job is to create, encourage and nurture this competitive environment.
By listening purely to the selling agent with no independent means of assessment you are automatically confirming the bias and influence of the selling agent on the price. They are seeking to get the best price possible. They represent the vendor – so how does their value estimation create a fair transaction baseline? Ideally, the agent will price, quote or appeal to a price range where they can attract the maximum number of buyers to the property while achieving the maximum price possible… if they fail in this regard they may ‘cook’ the property where the overpriced property does not sell at all and ultimately gets a place on the ‘maybe later pile’ with all the new buyers. It has been seen and they can find better value elsewhere.
Alternatively, if the Fair Value is determined accurately beforehand a true conversation around real value can be had. Offers can then be positioned effectively around this mark. In any negotiation, it is easier to go up with the price than it is to come down once a negotiation has started.
In a falling market, this assessment process is essential to getting a true indication of what should be paid for the property. Going it alone sometimes means not getting the whole picture when it comes to understanding value or executing your offer effectively.
With regards to competition, the Auction process is designed to get competing interests together to bid against each other to realise the maximum price possible on that date in the market. The other benefit of the auction in the process is unconditional, the property is “as I, where is” … with all of its problems and no recourse. It is a great way for a vendor to determine a definite exit date and sell a home without any comebacks. Having an auction professional representing can dramatically increase the odds of success in your favour even in a heated auction.
Need more information?– call Gary Damp on 0425 232 115 or schedule an appointment and let’s discuss your positioning.
