Beware When Apartments are Priced by Negotiation
When apartments are priced by negotiation, buyers should be more cautious. What does by negotiation mean? Why do some agents prefer negotiation instead of listing the apartment with a price? This podcast will explain why.
Good Day, Andrew Murray from the Apartment Specialists. Today I'm talking to you about what it means when an apartment is priced by negotiation. Does it mean should you price by negotiation?
There are two main reasons, in my opinion, why an apartment is priced by negotiation. The first one being, the agent doesn't actually know what it's worth i.e. they don't have the expertise or the confidence to quote the figure. Then number two is, the agent thinks that what the owner wants is excess of what it's worth. And if they put that price on a listing, it's going to deter away buyers. That's not really what you want. And it's a reason why if you look at a listing on Trade Me, one priced by negotiation, you will see that it always has less views.
Now it really came to a point when I was actually - my sister's looking for an apartment to buy. I had to see the listings and all that kind of thing. Obviously, I had to declare myself as a real estate agent with an enquiry. But if I see one with negotiation, I'm not even ticking it. Because automatically I'm thinking, I know it' s too much. So there are a lot of leads being missed there. The problem is - there are two reasons. The big one with the agent thing, it's the price, in that, as a vendor, you want an agent to have the confidence to tell you that your expectations are too high. Because otherwise, you're going to be wasting a lot of marketing and effort into an exercise that's pretty much pointless. At the end of day, you need the information, so you can make the best decision for yourself. If you know you aren't going to achieve something, why are you going to do it?
The second rule is, as long as the owner isn't too far away, and I mean like by hundreds of thousands of dollars, and it goes to apartments because they're worth less than houses, but a lot away from the actual value. Because you'll sell it. You just market it to it's potential, because too many agents get stuck in their heads what they think it's worth. And an owner has got nothing to do with what an agent thinks it's worth. It's actually what the buyer thinks it's worth. That is a perception. It's often an emotional decision. So even if the price is pretty high, you should always list it with a price, because you'll get the leads.
And the thing is, in the apartment market, because it's so specialised, it is very, very hard for a buyer to actually know this market. I remember when I started doing it, even after being a specialist apartment agent for six months, I still didn't know the values, so how is a buyer supposed to? As an agent, it's about having confidence with the price, put it on the ad. Give the relevant information needed, so they can make the right decisions. Then you're giving them the feedback from the market, so they can make the right decisions well informed.
To cut a long story short, price for negotiation is not generally a good thing. You'll never see in my listings, price for negotiation. That is obviously, my opinion. I hope that sort of gives you an insight regarding that, if you're a buyer or if you're an owner.
Anyway, I hope that helps, and looking forward to talking to you next time. Cheers!