Pricing is pivotal, says Realty1IPG chief

With house price growth having slipped to a 12 year low emotions among sellers are running high, according to Mike Bester, CEO of Realty 1IPG (International Property Group), who says there are three main emotions likely being experienced by most sellers in today’s suppressed market.

The first is defiance, evidenced by sellers confronted with unwelcome pricing advice from their agents, he says. “This is understandable when one remembers the price growth that characterised the market just a few years ago in 2004 and 2005. In some areas, annual growth posted a high of 25 percent, setting a precedent that sellers are now struggling to accept is unattainable. It’s all the more devastating for those with little or no equity in their properties – usually people who bought less than three years ago.”

Frustration usually follows defiance, he continues. “Having spent weeks, if not months, on the market with not an offer in sight, sellers tend to become frustrated at the lack of interest in their homes. Still unwilling to believe it’s because of their pricing, they blame the state of the market or their agent.”

Then comes resignation. “It’s at this point of the emotional selling roller coaster that owners drop their prices – or withdraw their properties from the market,” Bester says. “Those who have to sell are now desperate. Others who are not under financial pressure or have to relocate for any reason, tend to throw in the towel, with the idea of waiting until the market improves.”

What’s sad for Bester is that at this point of the process, these homes stand to be sold for less than their current market value.

“Desperation, over-exposure of a property, and a lot of stock competition make poor negotiating tools,” he says, adding that today’s buyers are inevitably on the look-out for bargains.

Bester, who was a senior manager at Absa for many years before taking over the reins at Realty 1 IPG, adds: "The market is far from dead. In fact, members from around the country are reporting an upturn in buying activity. But there’s no arguing with Absa’s findings that year-on-year house price growth is at a 12 year low.

“This means price has become the pivot around which the market is turning. If a property is priced correctly – and I would define this as among the lowest 10 in the area - it will attract lookers. My colleagues say it takes an average of 15 showings to get an offer. Without lookers, however, no offers will be forthcoming. It’s therefore critical for serious sellers to heed the advice of a professional listing agent and to make the distinction between the selling prices of properties currently on the market and the selling prices of properties that have sold. There’s likely to be a significant difference.”

Article by: www.realty1.co.za