How a real estate agent convinces house sellers to face reality and accept a lower price

Thursday, 14 June 2018

It's a delicate process to convince a seller that purchasers set the price, says Martin Dunn.

House sellers must realise that it is the purchasers who set the price their properties will sell for - but convincing them of that fact can be a tough task, one real estate agency boss says.

Martin Dunn, head of apartment specialist agency City Sales, said Auckland's buyers and sellers seemed locked in a stalemate.

'The auction room is full with buyers, our open homes are popular both in the CBD and fringe, but the vendors have their fingers in their ears and their eyes tight shut. Nobody wants to be the first to move.'

The average sale price of City Sales apartments had fallen this year from $440,000 to $434,250.

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Investors are now about 90 per cent of the agency's market.

Dunn said it was a delicate process to convince a seller that they needed to accept that purchasers set the price.

'The vendors have their fingers in their ears and their eyes tight shut. Nobody wants to be the first to move,' says Dunn.

'Our vendors have entrusted us to get a maximum price at the time. I teach my brokers 'show don't tell' as most clients don't like being talked at by salespeople.

'Essentially this is about submitting offers and as objective advice as we have at our disposal. My brokers are not what I call 'toy wind-up' salespeople who simply stand and show property.

'We try to ascertain the motivation from a vendor to sell, without being impertinent and in a correcting market this can prove extremely helpful to the client.

'If a client is selling an apartment to buy a house - obviously on the same market - we will suggest the house might appreciate faster than the apartment recovers its value and that moving on might be very much the right thing to do, even if expectations are not being met.'

He said some vendors were elderly, unwell or in financial trouble.

'This is where advice is a delicate issue but just getting sold can be a huge stress relief. We explain that there are always two stories and both are true. One is that we cannot keep up with Auckland's growth demands and that the prognosis for residential property is enormously positive so values will recover.

'The other is that right now Trump is sitting down with [Kim Jong Un] and all hell might break loose.

'And our government is threatening aggressive capital gains tax, death duties, stamp duties, inheritance tax, slashing immigration … and if interest rates suddenly spike back to 11 per cent through external political drama, the shock waves will be ugly.'

City Sales average price per sq m has increased to $9400 and investors' average gross return had fallen to 6 per cent.

Dunn said it was likely that rents would rise as more expectations were placed on landlords.

Dunn said there had been a drop in the supply pipeline of apartments coming on to the market and some sold-out developments in Auckland would not go ahead. Much of this was driven by bank funding decisions, he said.