Navigating the guide
Wednesday 08 May 2019
Guide price. It’s a very sensitive issue. Despite clear regulatory guidelines the headlines regularly scream conspiracy if potential buyers feel they are being unfairly manipulated by agents. Setting a price guide was challenging when the market was in overdrive and right now it’s equally difficult. The market is changing so how do you navigate the price guide conundrum? In a word: carefully.
The current market is incredibly hard to read which makes providing an estimated value to potential vendors, and subsequently a price guide for potential buyers, incredibly difficult.
Of course, the regulations around setting and advertising a price guide are very clear. The agreed estimated selling price must be included in the agency agreement signed by both the vendor and agent. From that point the sales agent can advertise either the exact price, or for an auction marketing campaign any price range must be within 10%.
But with the market moving how does an agent come to a determination around the value of a property that can be considered valid by a potential buyer?
In my view the key is to rely on two key things: transparency and communication.
I believe Morton is quite unique in that across our offices our agents have a wealth of long-term precinct expertise, with our senior agents each specialising in local residential sales for over a decade. That means they appraise every property with first-hand historic knowledge of the market in that area right down to the campaigns, interest and sales records for specific properties and buildings.
Our agents will provide an estimated value based on their research and market knowledge but always with the honest caveat that no price can be guaranteed. That caveat is not an excuse. It’s incredibly important and incredibly valid because the current market is incredibly difficult to read.
Buyers are as nervous as vendors are anxious.
It’s why our agents continue to recommend auction campaigns as the best strategy to gauge demand and allow the market to speak. It’s also why at the moment a price guide will be just that; a guide based on the best information available.
And a guide might change. Our agents communicate with vendors after every inspection, providing feedback on buyers’ response to the property and the price guide. Evaluation of that feedback is crucial to ensuring the guide price is realistic.
Equally I want to point out that there is no value in providing potential buyers a less than realistic guide. The idea that it entices buyers and is a way of entrapping them into a property is as naïve as it is foolish and wrong. It’s also illegal.
So my advice for vendors is to be conscious that value is hard to determine in the current market. Be prepared to listen to your agent and be prepared to constantly evaluate the true context of your value expectations.
Your agent will help guide you to make the right decisions to secure the best possible property result.