90% of Sellers have unrealistic price expectation at Auction

Nine out of ten property sellers have an unrealistic price expectation at auction. That is fair enough because everyone has a right to want to get the best price but ace auctioneer Justin Nickerson points out that emotion can get in the way of a sale.

Transcript:

Kevin Turner: Well, the release that I read, I’ve got to say, didn’t really surprise me. It talks about nine out of ten vendors have unrealistic price expectations. Now, let me put this into perspective before I bring you to our guest to talk to about this. You know, there’s a saying in the industry that — and rightly so, too — that every seller deserves to get a premium price for their properties. So their expectation is fair enough. It’s meant to be fairly high, but is there too high? Is the expectation too high, and can it become difficult for them to do it?

Kevin Turner: I’m going to talk about this to Justin Nickerson, who is a spokesperson for Gavl, who brought this research out.

Kevin Turner: G’day Justin, how you doing?

Justin N.: Hey Kevin, how are you doing?

Kevin Turner: Good mate. Sorry about that intro, but it really wasn’t a surprise to me, you know, 92% of agents think that sellers have unrealistic sales price expectations. That’s their privilege though, Justin isn’t it?

Justin N.: Yeah, absolutely. Well they’re the one holding the cards, so if they want to decide that the market doesn’t match their expectations for their property, then they’re inclined to do that and hang on to it, but I think, always, that the sellers do have an expectation that their property’s worth a certain amount. I think the data that Gavl have got off the back of the survey just sort of reaffirms that, and in some cases the market might match that, and in other cases the market doesn’t quite get there.

Kevin Turner: Mm-hmm. You’ve only got to look at some of the online third-party sites that purport to tell you what your property’s worth. You can go to three of those, and get three different estimates. I mean there is no one price for any property. It’s really what someone’s prepared to pay for it.

Justin N.: Yeah, it’s the oldest cliché in real estate, isn’t it? But probably one of the truest, I think, because I think the hardest part about it, Kevin, is that emotion is the primary driver behind a property purchase, and how do you price emotion? It’s an unpriceable thing. What something is worth because of a view or because of a location is different to every single person that goes through it, so to stand there and say, “Well it’s got to be worth X,” or, “It has to be worth Y,” it just doesn’t quite match up with that unpriceable element.

Kevin Turner: Justin, the research also said that agents felt that the seller’s expectation sometimes exceeded the market by as much as $50,000.

Justin N.: Yeah, and I guess that’s all scalable on the properties too, Kevin. If you’re talking multiple-million dollar properties, $50,000, although it’s a lot of money to you and I, is not a lot in the scheme of things, of that sale, but if you’re talking an investment unit, perhaps, or a home on the fringes that maybe in the 300s, 50 grand is an awful lot of money. It can be as much as 15 or 20% of the sale price, so I think that is all a little bit keeping within the scale of what it is there, but the analysis that Gavl have done has certainly shown that it’s a pretty common theme across all types of properties.

Kevin Turner: Surely that’s the role of the agent though, isn’t it? To get the seller to see reality, to get them to … well almost accept the unacceptable. If we can accept the fact that most sellers have a higher expectation than what their property’s really worth, the role of the agent becomes critical in helping them to accept the unacceptable, pretty much.

Justin N.: Yeah, you’re 100% right, and I think the unenviable task that agents face is, on the other side of that they’ve got a buyer who doesn’t want to pay what it’s worth, either, so they’re probably trying to burn the candle at both ends by getting both the seller to understand that they’re expectations might be optimistic, and trying to talk to the buyer and say, “Look, your expectation of what you’re going to buy the property for is also optimistic, but in the opposite direction, and then trying to meet them in the middle, is how the deal gets done, I suppose.

Kevin Turner: Right Justin, we’ll leave it there, mate. I know you’re very, very busy. Weekends, of course. Big auction weekend this weekend, for you?

Justin N.: Yeah, yeah got quite a few, both on Saturday and Sunday, so hopefully a few good results ready for us across the weekend.

Kevin Turner: Thanks Justin. Justin Nickerson there, from Gavl … spokesperson for Gavl. Thanks for your time, mate. Good calling on the weekend, too.

Justin N.: An absolute pleasure, Kevin. All the best.