Why price guidelines are imperative to realestate.


New laws have taken affect in QLD that state an agent will no longer give price guidelines to a listing, it seems to be a very dramatic and bold move to try and remove the issues of underquoting and dissatisfied potential buyers who feel they are not given transparency when it comes to buying a home. But is removing the entire price guideline process a good solution for a market? It's a very hard thing to say yes, and here is why:

1. Price guidelines provide a general education lesson to the market.

Most people when they look at buying or selling a home, have only a very broad idea of how much something is worth, they rely on an agent to explain the value and justify the price guidelines. The agent backs this up with comparative sales and creates a strong example of why a home is worth that price. If you agree, that's great, if not, you are entitled to your opinion, however what this does do is create a general consensus around the worth of a home. Vendors could get very upset when they are told by the agent they have 15 interested parties, but they only bid up to $450,000 when you have always wanted $600,000. This can be a big waste of time.

2. We pay agents a fee for their expertise, they should be able to demonstrate it.

Agents are in somewhat of a precarious position, they are experts, but they can't predict what will happen at auction. A buyer can come from nowhere and bid $200,000 over the reserve, leaving the parties thinking that the home would sell for $800,000 extremely upset when you start calling for bids over one million dollars. However, if an agent is open, honest and engaging with people they should be able to explain results. By removing price guidelines, we are making agents more of a display representative, rather than an informative figure in the sale process. Agents could feel very disengaged because of this. 

3. "Price guides help buyers make decisions and they also enable agents to attract qualified buyers willing to compete at an appropriate level.”

These words have been spoken by John McGrath, and it points to the transparency of what price guidelines establish. By having an agent mention a price guide, they can do two things, they can ensure that the right target audience is looking at the property, and they can drill down on these prospects a lot quicker. By asking the prospect if a property is in their price range, and getting a clear guideline, they are in a better position to qualify the lead and go back to the vendor with a more established list of prospects. This can also get deals across the line a lot easier. It can get very messy if a prospect goes the whole way through the sales process, looks interested and wants to spend $300,000 less. This will make the agent look incompetent.

4. They are fundamental to offers being submitted before auction and private sales.

When people want to buy a home they want to know they are in the ball park of buying it. Price guidelines give people that assurance that their offer will most likely be accepted or be in the ball park of being accepted. By removing guidelines, prospects are a lot more likely to be in the dark about how much the vendor wants and what a reasonable offer is, they won't want to overpay, so they may withhold their offer because they can't get total transparency. 

However, with that being said, one thing to be taken out of The Property Occupations Act 2014, that should look to be implemented nationwide is the deregulation of commission. Agents structure their commissions on what they believe is both fair and reasonable, and a vendor needs to agree to those terms. If an agent does go above and beyond, they should be limited by their hard work, and the profits they can generate because of it. The deregulation will allow agents to control their destiny a little more, and if they don't stay in line, the free market of competition will quickly bring them back. 

About the Author:

Todd Schulberg

Todd Schulberg handles all things marketing for Homely.com.au - Living and breathing property, Todd has a keen interest in the movements in the market and how agents can utilise new tools and technology in order to be more connected. Using all things social, Todd suggests different ways that agents can engage and think outside the square with their marketing approach. 

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Rocky Bartolotto

 

Rocky Bartolotto is the National Sales Director for Homely.com.au - Rocky's extensive experience in introducing new product offerings to the market and client management abilities makes him one of the most knowledgeable property specialists in the country. 

In addition to his time working in the online space, Bartolotto is also one of Sydney’s top auctioneers, with over 4000 auctions performed through his business Auction Services.

is the National Sales Director for Homely.com.au - Rocky's extensive experience in introducing new product offerings to the market and client management abilities makes him one of the most knowledgeable property specialists in the country. 

In addition to his time working in the online space, Bartolotto is also one of Sydney’s top auctioneers, with over 4000 auctions performed through his business Auction Services.

rocky round.png

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