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Question for Realtors and Brokers

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  • Oct 21st, 2012 10:05 pm
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Newbie
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Sep 13, 2012
72 posts
16 upvotes
Ottawa

Question for Realtors and Brokers

First of all, I don't want this thread turning into an beat down on realtors/brokers. My hope here is to provide a non-hostile environment where they can be frank without fear of being set upon. If it turns ugly I'll likely just ask a mod to close/delete the thread.

That said, I was hoping to get a sense, anecdotal as it will be, of what things are like on the ground in terms of selling/buying at this point. Is there any awareness among your clients (buyers or sellers) that sales are slowing? If not, how are you managing the expectations of sellers? Are you finding buyers are being more aggressive in terms of low-balling bids? What's the feeling among your colleagues relative to what we've seen the past few months? Any insight is much appreciated!
6 replies
Deal Expert
User avatar
Nov 2, 2003
17118 posts
3872 upvotes
GTA
tzetz1 wrote: This guy is a realtor and has a nice blog too (he also predicts 70% crash with nice graph he later removed)

http://richmondbcrealestates.com/

Captured "history" of his original posts available here - http://whispersfromtheedgeoftherainforest.blogspot.ca/
that would be too good to be true. 70%...
i wish that were the case actually cuz i will buy right away after the drop.
Deal Fanatic
Jul 3, 2011
6517 posts
3798 upvotes
Thornhill
That’s a really good question, thanks for asking.

Each representative/broker might have a different type of buyer and seller they tend to serve. My clientele consists mostly of people who’ve owned more than 1 property and are looking to sell and buy along with seasoned investors. The remainder consists of first time sellers and buyers where the sellers have owned for years. The distinctions are important because they seem to reflect a certain level of maturity when it comes to the market.

Since last fall I’ve been discouraging my investor clients to not buy and seller/buyers looking to move up in price to not do so unless they absolutely must. They all demonstrate patience and wait. Those that have to sell are mostly required to because of opportunity and they fit into the same category as those who are selling to downsize. These latter two do make reasoned and informed decisions based on the analyses of house/area/market, their personal requirements and best window of opportunity and strategy I suggest, won’t take unnecessary risk but won’t underplay their hands either. The must sell for other reasons has nothing to do with their finances and list as soon as possible at current market.

I currently have some overseas investors who are anxious to buy a few properties but because I was referred by other clients trusted in my statement that the opportunity to save is very real – they didn’t initially care what the prices were and wanted to jump right in. The philosophy is to buy and manage for a significantly long term because it is to their benefit to invest outside of their country so my mandate is when a price decline hits X%.

First time buyers have proven the toughest to reason with. They, despite what some are saying about Realtor influence come convinced that unless they buy now they’ll never get into the market. I’ve even been asked if I was trying to politely tell them I didn’t want to help. Their expectations are always beyond their means and take it very hard. Those who decided to wait see the plus side to that now and one realized they were under pressure by their friends.

Lastly there is the first time speculator seller who bought pre-construction without assistance and now find that upon taking possession their expectations of massive returns just aren’t there according to my analysis. They opted to list with someone else who agreed to their list price. The property remains unsold, is about to expire and is competing with 20+ like units in the same complex most of which have been on the market for 6 months already and many below their list price. Their statement to me was “never again will I do this.”
Newbie
User avatar
Sep 13, 2012
72 posts
16 upvotes
Ottawa
Thank you, licenced - this is a fantastic post. Well reasoned, ethical, and provides just the sort of insight I was hoping for. I particularly like the distinctions you draw between different types of buyers.

My experience, when I first bought, was much like what you describe in first time buyers - hell bent on buying, largely due to pressure from family/friends. I made out ok, but just barely...largely because when I sold I actually listened to my realtor and jumped through every hoop he set me with little complaint (staging, painting, repairs, reasonable price setting etc). Sold within a couple weeks when houses on my block were sitting forever.

I wonder whether you, or any other realtor/broker on here, has had to deal with unrealistic price expectations from the seller side. It strikes me going forward into a bear market for RE that that is going to be the real tough nut to crack.
Deal Fanatic
Jul 3, 2011
6517 posts
3798 upvotes
Thornhill
Thank you Jekprokins for your kind comments.

I don’t ever have to deal with an unrealistic listing price because all potential sellers are told up front that the already pushing the boundaries top end of my maximum suggested list price is the price which I will fully support therefore I will not accept a listing that goes beyond that. That in fact was the case of the condo mentioned.

Yes, there are always sellers who have an unreasonable price in mind for various reasons just as there are buyers with unreasonable expectations. The least realistic sellers are those who’ve already purchased a property and need to sell their home for a certain amount in order to make the commitment on the new purchase; then there are those who are just downright unreasonable and those who weigh the pros and cons.

The first do the most harm to themselves because need has nothing to do with market value and no amount of seller need will induce an informed buyer to overpay. In fact, the desperation most often rears its head because of poor representation or even seller admittance if a private sale, which works against them. These sales are a buyer’s dream.

The second think they know better than anyone what price their home should achieve and no amount of reasoning or rationale will change their mind. Their listings are on the market for 6 months plus and are a buyer’s nightmare when they eventually do sell.

The third is actually all sellers including the “need to” seller. Every seller including Realtors all think our property is worth more than it actually is. I’d say only 60% (removing the first two types) are the most realistic sub-class of seller – from my perspective anyway because when you show them a detailed analysis that ends with a maximum suggested list price and a strategy to get same then suggest they get at least two other quotes, they’ll invariably choose based on a well reasoned decision and will hold the Realtor’s feet to the fire. More importantly they and Realtor become a team (as you did with your Realtor).

When sellers are well informed, fully engaged and in sync with their broker their expectations are met or exceeded, this is undeniable. There are sellers of all stripes and Realtors who choose to cater to every stripe. It will always be that way.

A bear market is a tough nut to crack. Not all Realtors are up to the task to sell when it must be done especially at the best price possible or to advise their sellers to wait it out if they can.

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