‘Ludicrous’ sales move turning off millions of homebuyers

Aussie homebuyers and sellers are being severely disadvantaged by questionable rules around property sales, that authorities in some markets are too willing to ignore.

OPINION

Throughout my 40 years in real estate, I have always advocated the use of price guides in property marketing campaigns.

Price guides answer the first question that every prospective buyer has on a property of interest to them. They also help buyers work out which homes are worth inspecting, and that’s why we see more buyers at opens when a guide is used.

Some new research from REA Group reaffirms the importance of price guides. REA data shows 72 per cent of buyers will disregard a property if it does not have a price guide. That is a huge portion of the buyer pool that agents and sellers risk losing if their campaign does not provide some indication of price expectations.

Buying a new home or investment can be an incredibly exciting endeavour, but any buyer who has been out there every Saturday for months will tell you it can also be very tiring.

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REA data shows 72 per cent of buyers will disregard a property if it does not have a price guide.

What they need most is to be able to quickly and efficiently understand the likely selling range of a prospective home so they can determine whether to pursue it or not.

This decision is often made when putting together a list of homes to inspect each week. Buyers will either ignore properties without a guide, or enquire with the agent (usually via email) to get this information. And here’s where we run into a second problem that is incredibly frustrating for buyers.

BUYERS WILLING TO WALK AWAY

The REA data also shows 36 per cent of buyers feel they do not receive an adequate response from agents to their enquiries. Most enquiries are requests for a price guide, inspection times and rates and fees. In my view, agents are failing their vendors by not including this information in their marketing collateral. At the very least, they should be responding to buyer enquiries as soon as they can, ensuring every single question is answered clearly and directly with as much detail as possible.

Buyers are willing to walk away from a property if they feel there is a lack of transparency in the process. Every lost buyer is lost competition for their home, and this is highly likely to affect the selling price.

Mums the word when it comes to price guides on homes going to auction in Queensland.

‘LUDICROUS SITUATION HURTING BUYERS AND SELLERS’

It is part of an agent’s job to build trust and rapport with every buyer interested in the homes they are marketing. I encourage all agents to represent campaigns with a price guide. We know from many decades of experience that price guides work and are a crucial ingredient in a successful sale

However in Queensland, agents are not allowed to advertise a price guide on properties going to auction. They can’t even discuss a price with buyers. This is a ludicrous situation that disadvantages both buyers and sellers alike and disappointing that the REIQ and the State Government are not listening to the latest intelligence.

The only way agents in Queensland can give any sort of price indication on auction campaigns is through the back end of property advertising portals, where they must enter a price range to ensure the property is shown to buyers searching that particular price range.

The biggest challenge with price guides occurs after the campaign, if the home sells above the original price expectations.

In these cases, many buyers are quick to assume they were misled from the start.

They fail to understand that agents set price guides based on recent sales of similar homes, and it’s buyer competition that determines the ultimate sale price. The strength of that buyer competition is rarely determined by market conditions alone. It also comes down to the competence and work ethic of the agent.

This is why your choice of agent is a critically important decision. A good agent will run an excellent marketing campaign – including a price guide – to attract as many buyers as possible. They’ll then nurture each of those buyer relationships, ensuring each buyer has the information and confidence they need to make an offer or bid on auction day. A great agent – and the use of a price guide – can make a significant difference to your sale.

* John McGrath is the founder, Managing Director and Chief Executive Officer of McGrath Estate Agents

Originally published as ‘Ludicrous’ sales move turning off millions of homebuyers