A long-standing management client approached us to sell his property. We did a CMA (Comparative Market Analysis) and came up with what we considered to be a fair appraisal and an achievable sale price range ($265,000 - $275,000)
After initially agreeing to list with us, he then advised that he had decided to list with another agency, and gave his reasons for doing so as follows:
- He was unhappy with the proposed listing price as other ‘similar’ units were sold at higher prices;
- He was offered a lower commission figure without even asking;
- The 90 day marketing period was excessive, and
- Auction was not an option with us.
If the vendor had discussed this with us, we could have explained
how we arrived at the listing price range – the higher sale prices of “similar units” provided by the other agency included car parks;
how the commission amount translated into one of the lowest % rates in town, based on the projected sale price:
That the agency period was up for negotiation; and we choose not to offer auctions for the apartments as we continue to get good results without our vendors incurring the additional up-front costs (without any guarantee of a result) that auctions entail.
The unit was indeed sold by the other agency, through the auction process for $240,000. This sale price was $30,000 below what we had thought was achievable ($265,000 - $275,000) and what we achieved for an almost identical unit in the same building one week later. And once the auction fees and the reduced sale price was factored in, the ‘lower’ commission amount took on a different, pricier hue...
The morals of the story are this:
The terms of a listing are generally a starting point. If you would like to discuss them – either why they are what they are or if they can be changed, let us know.
Our approach to setting price ranges is determined by two things. If we set it too high, the property won’t sell and the vendors won’t be happy. If it is too low, the vendor won’t be happy. We want vendors to be happy. So we do our best (and that’s pretty good because we have a lot of experience with this) to come up with realistic figures that will get a buyer to buy and a vendor to sell.