Agents should focus on price differentials rather than sales prices when dealing with clients in today’s transitional market, according to Iain McKenzie, CEO of The Guild of Property Professionals.
Speaking to the guild’s members about their local property markets and client strategies, McKenzie observed that agents could benefit from the switch in emphasis when looking to win an instruction.
“It is about the difference between the price you sell at and the price you buy at,” he said. “What I used to tell my sellers back in the 80s and 90s was that it doesn’t matter what your home is worth, as long as you buy your dream home with a £20,000 or £30,000 differential, because then I have done my job as an agent.
“As a consequence of that, every offer you get becomes a good offer, because it is a working offer, and if you accept £30,000 less for your property, but then buy a property for £30,000 less, it is the same thing.
“In addition to that, if you buy upmarket, you actually make more money, by possibly getting a better deal or because percentages are different,” he added.
According to McKenzie, there are still agents in today’s market who are overvaluing properties just to get the instruction rather than giving the right advice to the customer.
“A good agent will be able to navigate how to deliver best advice to the customer, moving away from the word valuation and rather using terminology such as market appraisal, because it is the market that dictates the home’s value,” he said.
McKenzie also told the guild’s members that while many sellers might feel as though prices are going backwards, that doesn’t necessarily reflect reality.
He explained: “If a neighbour sells their property for £800,000, and the vendor lists their property at £850,000 on the advice of the agent, if they then dropped to £825,000 or £815,000, they would feel like their house is going down in value.
“However, the reality is it isn’t, because if the neighbour’s home sold for a similar value this year, there is a lot of leeway in between in terms of marketing price, which is not the real price.
“Because of this, the market will feel like it is dropping more than it actually is. And again, a good agent will be able to explain that to a customer,” McKenzie added.
Pretty obvious really and he gets paid a six figure sum to tell everybody this!
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Rubbish. You have a legal duty to achieve the best market price. Agree to sell for £30k so you can try and buy on for £30k less. Who’s the loser, the person on the end of the chain! This is nothing more than a case of the worst salesperson tactic, who sells on price. The property should always be sold on value not what you can get away with. That value achieved is based on what the seller is prepared to let it go for at the end of the day based on a number of factors with a starting point of true property valuation. One of which is not what the agent can try and scam for an easy sale.
“What I used to tell my sellers back in the 80s and 90s was that it doesn’t matter what your home is worth, as long as you buy your dream home with a £20,000 or £30,000 differential, because then I have done my job as an agent”.
Shocking advice, you have intentionally scammed someone who will lose £20,000 or £30,000 to get ‘your’ sale.
And this is supposed to be advice from a professional body!
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I respectfully disagree with you Woodentop. It’s about the best deal for the vendor, not always the highest price (for the agents commission).
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I think you missed my point (I must try harder). It is always the best deal for the vendor but there is more than one vendor in a chain. It is for the vendor to decide what they are prepared to accept, not be influenced on merits of price by the agent, as the Professional Guild brags about taking a low offer to pass on up the chain. Someone at the end is going to have to take a fall as there is no way to recover their over inflated loss and the grief agents going up the chain are put under pressure to get their vendors to comply …… if not careful ….. fall in legal peril.
This is more acting for a buyer!
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This is a very impressive overreaction to what is a relatively harmless opinion expressed by Ian. The pretty obvious point that he is trying to explain how to soften the dissapointment of a price reduction. Further, this is positioned by the onwards move and the marginal cost of potentially upsizing. It places no imposition on the top of the chain to accept whatever offer is presented.
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Back in the early 1990’s when everything was truly horrible, the ONLY way to do a deal was to look at the flexibility of the chain to see if there was enough wiggle room in it. That was for real people selling real homes that they lived in.
Other than that it was selling repossessions and that just depended on the lender’s sale process to prove that they had done everything possible to minimise any loss.
The problem was that they were both constantly chasing the market down.
I’m sorry @Woodentop, whilst you have a correct moral argument, the UK property industry is based on a very lightly regulated free market economy model. If it is better for your client (and the rest of the chain) to take a £30,000 hit today rather than a £40,000 hit tomorrow then the right advice for you to give is definitely NOT “Hold firm!” The right advice is to take the deal on the table. And that’s true for the whole chain.
I get your point I truly do, but from my own experience it just didn’t work in the real world the last two times around (major ones I mean: late 80’s/ early 90’s and the Credit Crunch).
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Well I think this is an excellent piece from Iain McKenzie and The Guild
It’s all too easy to claim that these suggestions are “obvious really” but we shouldn’t forget that a large number of current estate agents have not operated in a market such as this, many will have done but need reminding and some may have just simply forgotten.
Thank you Iain!
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Good luck saying that on a valuation lol
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