It may be a buyer’s market but that does not mean that sellers are fools and are going to accept any old offer that comes their way. Buyers who are armed with the right information could well find themselves in a better position to make a sensible offer which is, in turn, more likely to be accepted, simply because they have all the relevant facts.
Agents have been furnishing comparative market analysis (CMA) to sellers for some years. A CMA is a vital tool that agents use to demonstrate to the seller how they have arrived at a figure that they believe is a market related selling price. The report is based on a number of factors, including what properties have been sold in a given area and at what price. It also lists other properties for sale at similar prices which would directly compete with the seller’s own property, as well as those properties that have been on the market for an extended period. It is widely held that properties that stay on the market for an extraordinary amount of time are overpriced and are therefore considered to be priced out of a realistic market range.
What is strange is that while most sellers are supplied with a CMA as a matter of course, buyers are, for the best part, left to their own devices. They are often left in the dark as to what similar properties, have been sold in the area at what price. Another area of concern is that although buyers may hear from agents marketing in a particular area that certain properties are considered overpriced, they are given very little concrete evidence that this is indeed the case.
When estate agents impart the information verbally rather than placing the facts of the CMA on the table, it could be interpreted to be an act of manipulation rather than sharing of information with the buyer in an unbiased manner. Because there is already a perception that agents are sometimes economical with the truth, surely it isn’t advisable for agents to feed this notion by sifting the information before presenting it to a potential buyer.
Uninformed buyers are often at a disadvantage and are, more often than not, at the mercy of hearsay. After all, they have no idea what has been sold at what price in any given suburb. They may well believe that all property in SA is overpriced and are known to assume - incorrectly - that all sellers are open to lower offers. The media often portrays the South African property market as uniform, based on broad comments made by experts. The fact of the matter is that there are many economic micro climates in this country that differ from the overall trend. It’s pretty obvious that if the downward trend has not affected a particular area, buyers who are submitting much lower offers are wasting their time.
People of course make offers every day that are accepted and there are a number of reasons for this. Either the offer is in line with the seller’s expectations, or a lower offer is accepted because there is an inherent motivation to sell. When the latter occurs, the seller may well be open to lower offers, but this too is dependent on a number of factors, including how long the property has been on the market and the urgency of the sale. More often than not, however, the seller will not contemplate accepting what he considers a ludicrous offer, even in an extremely slow market.
Buyers who walk into a situation fully informed are in a far better position to bargain. They know what is selling in the area and for how much. They do not have to take an agent’s word for it as the evidence is in black and white, allowing the buyer to make an educated decision, based on the true facts of the situation.