SELLERS REFUSE GOOD OFFERS

16th December 2004

SELLERS REFUSE GOOD OFFERS
The reason? Too many agents have told too many lies.


In 2002, a Sydney agent described himself as "the most successful property auctioneer in Australia." He said his company "conducted in excess of 3,000 auctions per year". A mammoth achievement, but probably a lie.

A few weeks ago, the same agent admitted, "Everyone thinks that agents are liars, which basically we are - we do have to stretch the truth now and again." A refreshingly honest comment coming from an industry where liars seldom admit to being liars.

But why do so many agents lie?

It's simple - if they told the truth, they'd lose a lot of business. Just consider the following scenario which is happening all over the country today.

Before they chose an agent, most sellers call several agents and ask, "What is my home worth?"

Let's say the true value of the home is $500,000.

If any agent has the nerve to say $500,000 - and other agents say $550,000 or $600,000, which agent wins the job of selling the home? The biggest liar, of course.

The choice for the agents is simple - tell a lie and win the business or tell the truth and lose the business. Sometimes, the sellers select the truthful agents but still insist that the home be offered for sale at the price quoted by the agent who told the lie.

So, no matter whether an agent tells the truth or a lie, many homes are placed for sale based on a lie about the price.

When prices are rising, the value may soon rise up and reach the lie and the home is sold. The sellers are pleased and the agent is relieved.

Not so when the market is flat or falling. Agents still have to lie to win the business. Only this time, within a few weeks, the lies are exposed. Not only is the home likely to be worth less than the agent quoted, it is also likely to be worth less than its value when the quote was given.

The agent's lies are now catching the agents and the sellers.

Here's the real spoiler today.

A few weeks ago, the home may have been worth $500,000. To win the business, the agent told the sellers it was worth $550,000. Today, it is worth $490,000. But a buyer is prepared to offer $510,000. It's a really good price, but the sellers don't see it that way.

The sellers are now annoyed with the agent. Sure, they know prices are falling. And so, they agree to reduce their asking price to $520,000. But they steadfastly refuse to accept less - believing, of course, that they have made a huge concession already.

One agent in Melbourne currently has nine offers from nine different sets of buyers on nine different homes. He also has nine sellers who are refusing to accept any of these offers. The average difference between the price being offered by the buyers and the price wanted by the sellers is a mere $10,000. The lowest is just $3,000.

The agent believes the prices being offered are excellent - based on today's truthful values. "These sellers don't realise what's happening," he said. "It's always the same when the market turns down. The sellers reject good offers because they think they are bad offers. Later they have to sell at even lower prices."

This agent is probably telling the truth. The problem is that the sellers don't believe him.

For so long, so many agents have been telling lies to win business - out of a fear of losing the business - that sellers have come to distrust most agents.

So, today, with prices flat or falling, the sellers and the agents are both suffering. The sellers suffer because the price they are being offered seems low but it is likely to be even lower in the weeks and months ahead. And the agents are suffering because, by the time the sellers realise the agent was telling the truth, another agent will probably make the sale.

Sellers, you have stop the lies at the beginning.

Here's how you do it..

Before you sign-up to sell your home, get the agent to agree that if your home sells for less than the quoted price, you will not have to pay any commission.

The agent can give you a range in which your may sell. In the above example, the range could be "from $480,000 to $520,000".

If the home sells for less than $480,000 then you can decide whether or not you pay the agent.

All you have to do is get the agents to guarantee their quotes.

Say no to agents who quote you a false price and then you can say yes to buyers who give you a truthful price.

***************

This article was written by Neil Jenman, Author and Consumer Advocate.

<< Back to Latest News

Articles