By Eddy S. (guest contributor)
I read with Person of Interest’s description of a conversation with a property agent in Is it Really a Buyer’s Market? and would like to share my thoughts.
Is the buyer wrong to offer a much lower price?
Was the buyer wrong to offer a price $300,000 lower than the asking price? It really depends on how he justifies it. Was Agent A justified in rebuking the buyer for offering this price just by looking at recent transaction data, which showed that $50,000 to $80,000 lower would be more acceptable? I will let the readers decide.
The article questions “was the buyer serious enough or in a hurry to make any purchase?” because another buyer offering $100,000 higher was already rejected. I believe that is a very easy way for an agent to say your offer is not genuine.
Any professional agent should present statistics on previous transactions based on an entire market cycle, including during bearish periods such as 2008, and use average transaction prices of similar units within the same district and other supporting data to show the potential buyer that his asking price was not realistic.
Agents – equip yourselves with the right knowledge and tools
Professional property agents need to equip themselves with the right knowledge and tools. If they do not have deep market knowledge and are just acting as simple intermediaries to pass information between buyers and sellers, and simplistically referring to recent transactions, I think they are not adding value and it may be better off for the buyer to present his case directly to the seller.
To save everyone’s time and money, agents can help to filter and manage the expectations of buyers and sellers so more transactions can be completed, cutting down on wastage and hopefully agent commissions as well. After doing their own research, if agent feels that the buyers or sellers are not serious, they can choose to walk away and save their time and advertising dollars (if the buyer or seller has unrealistic expectations, other agents will be wasting their time too).
Alternatively, the agent can suggest to the seller or buyer to pay for the advertising costs while the agent accepts a lower commission if the customers insist on their “unreasonable” offer or bid price.
I have no doubt that many sellers use property agents to test the market price of their unit but do not genuinely intend to sell, and many buyers bid ridiculous prices without the intention to purchase. So property agents, by equipping themselves with the right knowledge and skillsets, can help filter out these non-serious customers.
Buyers and sellers should do their homework too
Finally, buyers and sellers should be careful as most property agents and developers will only present what they want you to know, and hide what they don’t want you to know. So do your own homework or you will be duped by many of the investment scams out there!
Eddy S., an avid property and financial markets investor