Should agents show properties that they know are overpriced to a buyer? In a perfect world, estate agents would refuse to market properties that they knew were being touted at an exorbitant price. It is, after all, a complete and utter waste of time. Or is it?
One of the best ways to point out the benefits of buying a well-priced home is to show buyers what else is out there at what price. Buyers often compare market stock when buying a property. By showing buyers overpriced properties agents can often reaffirm that the more realistically priced home is truly the one to buy.
This reverse psychology often works, although the plan can backfire if the buyer starts believing that the agent is wasting their time. This is particularly true if the buyer falls in love with a higher priced property and submits a realistic offer, which is rejected by an unenthusiastic seller.
While showing the odd overpriced home may be a good idea, agents have to weigh up the pros and cons of the exercise. Time is money in anyone’s book and dragging a serious buyer around the properties of several misinformed or greedy sellers is more often than not a complete and utter waste of time and it also frustrates buyers who are serious about buying a home. The exercise also gives the seller false hope as he may feel that the fact that people are still coming to view the property indicates that there is interest and the chances of him lowering the asking price become far slimmer.
So what should an agent do with a seller who wants to sell his house for far more than it is worth? The answer is pretty simple – refuse to market the home. Agents spend a great deal of time and money attempting to sell property. As with any business, there has to be a fair chance for them to get a return on their investment. In a seller’s market there may still be a chance that a buyer will be found. However, in a buyer’s market it is extremely unlikely that a buyer will pay too much for any property when he has a wealth of well-priced properties to choose from.
Pricing real estate is not an exact science and although there always has to be reasonable room for negotiation, attempting to sell a home for hundreds of thousands of Rand more than it is worth is, quite frankly, ludicrous.
Overpricing also affects those who live in close proximity. People often assume that because a home is on the market for a certain price, that it is a given that the full asking price will be met. Sellers who overprice their homes often set a benchmark because other people in the neighbourhood incorrectly assume that if the one property is worth such a large amount, then surely their own property must be worth so much more. You have to wonder if this is why some streets feature ‘for sale’ signs outside the majority of the homes. Everything is for sale, but no one is buying.
While there may be some argument as to what property an agent should be showing a buyer, it does seem slightly unfair that agents once again have to shoulder all the blame. Agents, after all, cannot force a seller to sell for a certain price and are often at the mercy of a seller’s ‘let’s see what happens’ approach.
Buyers are not lab rats and should never be used as an experiment when a seller merely wants to ‘test’ the market with his overpriced home. Agents who choose to overlook these types of properties achieve a number of things. They garner a certain amount of trust from the buyer; they save their own time and money by not showing properties that they know they will never sell; and they make it very clear to the seller that they are not willing to take the risk of trying to market something for way more than it is worth.
Buyers are not stupid and no amount of sales talk is going to convince them that the overpriced home is worth more than one that is priced to sell. It can be said with a fair amount of certainty that buyers want agents to stop showing them overpriced homes and certainly don’t want to have to deal with unrealistic sellers. Perhaps the time has come for certain agents to stop muddying the waters by over-valuing homes to get listings and to be as serious about selling as the buyers are about buying.
It is perhaps a pity that agents from different agencies do not cooperate in order to work an overpriced property out of the market. Let’s face it if there are no takers out there; sellers are going to get real sooner rather than later.