One of the things I really love about being a buyer’s agent, compared with the role of an estate agent, is not having to endure endless telephone calls with sellers who insist on maintaining a sky-high asking price when all the evidence is that prices in Andalucía have fallen at least 30% since the peak of the market and in many areas the fall will have to be by a much bigger percentage before buyers start to reappear. They call to ask the same question they asked on the previous call: “why haven’t you sold my house?” and the answer is always the same: “because you are asking too much for today’s market”. They tell the agent to persuade someone to view, who will then fall in love with it and pay them their price and the agent tells them that it doesn’t work like that in a buyer’s market. The conversation goes round and round for half an hour and ends with nothing resolved. One overpriced house languishes unsold for another 18 months because the agent pushes it to the back burner and gets on with trying to sell something that is priced for the market. Then a couple of months later the same conversation happens all over again. But as I am working for the buyer I have the luxury of being able to tell a seller than I won’t even recommend their house for shortlisting, much less actually show it, if the price is off the scale.
The most common reason sellers give for pricing high is that buyers will always make a very low offer without taking on board the fact that a sky-high asking price often acts as a deterrent to view so no one sees the house anyway. And if the asking price puts the property out of the buyer’s budget it may be that the very person who would have bought the house never gets to see it but sellers just don’t seem to understand that. An asking price should act as an indicator of what the seller is willing to sell at and in my opinion should be no more that 10% above that level.
I have just arranged a purchase for a Russian client with a budget of €500,000 maximum. I knew there was a house in the right area that matched the criteria but I did not suggest it to my client because the asking price was not only well above his maximum but the house wasn’t worth it in today’s market. But ten days before he was scheduled to visit to view the few houses I had found within budget I got a call to tell me the seller had reduced the asking price to within 5% of my client’s budget. So I went to see it and of course, it turned out to be great and starting to look like a good deal. My client loved it, we got an agreement at 7% below the new asking price and the contract was signed fourteen days later. And as further proof that setting the guide price correctly sells houses someone who had seen the property six months ago turned up again when they heard about the reduction but they were a day too late, my client had already transferred the 10% deposit. In fact, my client was the first person to see the house at its new price and had it been at that price six months ago I have no doubt that my client would not have bought it, it would have already sold.
Sellers achieve nothing by hanging on to their daft prices. They run the risk of losing the perfect buyer and the market would be much less confusing to buyers if asking prices across the board were much closer to what the seller will accept. And if sellers are not prepared to accept at least 30% below what they might have achieved in 2006 they would be doing us all a big favour if they took their property off the market. We could then concentrate on those properties that are priced to sell.