Plain speak - why is it so hard for the real estate industry?
I am staggered that for an industry that has ready access to timely, accurate and relevant data, we have comments made by some in the real estate industry which show a complete lack of insight and other who seem unable to speak clearly. To my mind what I have seen is obfuscation.
Let me explain.
The NZ Herald reported this week on the latest NZ Property Report from Realestate.co.nz. A valuable monthly report into the state of the property market as measured by the collective listings of all the licensed real estate agents in the country during September. The report is comprehensive and very timely – published on the 1st October covering 11,000 new property listings that came onto the market in the month.
The journalist writing the article spoke to a couple of representatives of real estate companies to provide context to the data. This is what some of them had to say:
Peter Thompson – Managing Director of the largest real estate company is Auckland said
“it was difficult to gauge average asking prices in the Auckland market because of the large number of auctions”.
The requirement of the Real Estate Agents Act is that for every property listed by a licensed agent, an assessment must be made and provided to the vendor as to the comparative market value (sometimes known as a CMA – Comparative Market Assessment) of the property. This is the output of the collective experience and skills of the agent and is a vital input that powers the search by price on all websites. So to say that it is difficult to gauge average asking price shows a lack of insight or a desire to ignore the facts. The fact is that it is difficult to gauge the final selling price – that is down to the unique market factors at the time of the sale, but the asking price is effectively the CMA and the search price on the websites.
Further to this comment, Peter Thompson went on to say
“About 90 per cent of the agency's sales were by auction, where listing prices were not quoted”
Very true listing prices are not quoted publicly for auction properties, but 90% of their sales are by auction – I don’t think so.
In July as cited by the advert below 564 properties were sold by Barfoot & Thompson as successful auctions with 88 auction listings not sold. In the month they reported total sales of 1,133 – so in fact in July less than half of their sales were by auction. In the past 3 months the average has been around 55% of their sales have been by auction – not 90%.
The journalists then sought out comment from Bayleys' national auction manager Daniel Coulson who said
"rapid movement in the Auckland market also made it difficult to price"
Again nobody is looking to be the perfect fortune teller as to final selling price, all that is expected is a CMA leading to a “listing price” which helps guide the website search.
His next comment dumbfounded me:
"A growing number of vendors are leaving it over to the market to ultimately set the value of a property."
Ultimately all property sales result from the market setting the value of a property, regardless of whether a property is marketed with a price or without a price, whether it is by auction, tender or deadline sale; the price will be that level at which a willing buyer sets an price that exceeds competing interested parties price offer and which satisfies the vendor.
I have always felt that the real estate industry has got carried away in describing property in marketing materials, it seems now that somewhat flowery language has crept into media commentary. Please let's talk facts borne of data. Let's analyse facts and help those looking to buy and sell to get a clear handle on the market and avoid obfuscation.
Note: I have written this article based entirely on the NZ Herald article, I have not spoken to the parties concerned to verify what they said or confirm in any way what they said in terms of accuracy. I trust that the NZ Herald as a responsible publisher have verified these facts before publishing.