Greed, a deadly sin: Ben’s Barometer October 2018
What do you call a group of Real Estate Agents at the bottom of a cliff? A good start!
Don’t worry, we are acutely aware that if the general population could avoid using agents they would. So, we ask, is there a viable alternative for a real estate agent?
A recent article published on Stuff posed the question: could a robot fill the role? We consider, if, just as with many other industries, this is in fact a viable alternative?
Why real estate is different?
Real Estate is known as ‘real property’ and very different from ‘personal property’. According to English common law, real property relates to land and improvements and is immovable. Personal property is anything that can be subject to ownership and is moveable e.g. a car.
If you were looking to purchase a car, you would be able to buy the same model from a range of suppliers. And, if you didn’t like the advertised price at one place you could simply find a new supplier or negotiate a better deal. Real property on the other hand is unique. It can vary in location, lifestyle factors, presentation, quality and potential. Each individual aspect can generate emotion in a purchaser who has their own unique set of circumstances that they are trying to satisfy.
As agents, we play to this emotion by understanding our buyers and offering intangible information that’s likely to appeal. It could be as simple as knowing about a local cross-fit gym or weekend organic fruit market. Or it could be providing guidance on ways to add value to a property to a buyer who is keen to grow their capital. It is these intangible aspects of property and information, which are hard to deliver via way of an automated system. And it’s this which generates emotion in buyers. When buyers are emotional, there is fear of loss. Buyers operating in a state of fear make irrational decisions which can result in above market results. It is this a lure of such a premium that appeals to human greed, which in turn justifies the use of an agent.
Accepting a fair price
In America, where Artificial Intelligence has made its debut in the Real Estate transaction, properties are often marketed with a fixed price. In that market, it is all about generating eyes on the listing, answering a range of predictable questions, providing information on the property and surrounding area, and completing a transaction where the expectation has been set. In addition, significant amounts of property in large cities such as New York is in apartment blocks which will transact at an approximate rate per m². Automation can indeed generate a fair outcome in both of these situations, resulting in a successful sale.
Here in New Zealand, properties in larger centres are generally marketed without a fixed price, opting for non-priced methods such as Tender or Auction in a good market, or using a price indication such as ‘Buyer enquiry over’ in a slower one. In my experience, buyers and sellers tend to start at opposite ends of the pricing spectrum. I am yet to meet a buyer who tells me they are looking to pay a premium, or a vendor who requests the lowest price possible. But it is possible, through a well-run, competitive campaign, or skilful negotiation, that an above market premium is achieved.
Navigating a tricky deal
In the past three years, Wellington has experienced a property market boom, with unpredictable and rapidly rising prices setting the benchmark for ongoing transactions. To purchase a property in a rapidly rising market, buyers need to offer unconditionally or they lose in favour to those who have. We have seen FOMO (fear of missing out) take hold of buyers all too often. In such cases, buyers neglect their due diligence, overlook costs of deferred maintenance and purchase properties they would never consider in a balanced market all to get a foot on the ladder. But it is when the market turns, and the frenzy dies, that deals become tricky. And it is then that a skilled and knowledgeable agent can navigate the various real estate landmines, keeping both parties engaged in the process, to a successful sale.
The only thing that is certain, is uncertainty
Don’t get us wrong, it’s inevitable that things will change. In the last five years alone, we have seen the death of print media, the rise and rise of the social platform, the introduction of virtual reality to sell property off plans and a move away from the sole practitioner in favour of real estate ‘teams’ such as ours. We know that the market in five to ten years is likely to look very different to the one we are practising in today.
We know that automation and technology will make many aspects of our job easier, more efficient or null and void. And Ray White’s vision of the future is the ‘tech enabled agent’. But does that mean there is no place for us in the real estate transaction? As yet we are unconvinced. Nevertheless, agents will no doubt remain the butt of the joke!
The spring market is well and truly underway with large volumes of listings coming to the market weekly. Despite the increased choice, we are still receiving good levels of interest from buyers with open home numbers holding up well and many properties receiving multiple offers.
WELLINGTON MARKET QUICK FACTS
Average sale price by Ward:
Whats on this October in Wellington:
Zirka Circus, Appleton Park, Chaytor St, Karori, Wellington
Zirka Circus, New Zealand’s premium circus, is proud to bring you its 5th tour “La Unica” and it’s more spectacular than ever. Zirka Circus has successfully been entertaining families in NZ for more than ten years and this all new show takes it to a whole new level of entertainment. Performing Arts, Theatre and Show Time all wrapped up in a World class performance embarking on its World Tour.
Click here to book your tickets
World of WearableArt 2018, TSB Arena, Queens Wharf, Wellington
Each year around 60,000 people from across New Zealand and around the world experience the magical world of WOW.
World of WearableArt Awards Show is New Zealand’s single largest theatrical production where incredible works of wearable art, created by designers from around the globe, are bought to life on stage.
Click here to book your tickets
Wilderkids School Holiday Programme 2018, Innermost Gardens Site, Lawson Place, Mt Victoria, Wellington
A school holiday programme for kids who really want an adventure. Wilderkids is a school holiday programme based in Wellington’s Town Belt which gets kids exploring the nature on our city’s fringes. Children aged five to 12 will have a fun-filled, outdoors day with the Sustainability Trust education team – learning hands-on about the birds, bees, trees, creepy crawlies and everything else that lives and breathes in our forests. The focus is on connecting with nature and highlighting what’s already in our backyards to explore, understanding why it’s important to care for it, and learning about some ways to be sustainable.
Click here to book your tickets
If you, or anyone you know, could benefit from a considered market assessment by Wellington’s only licensed agent and registered property valuer, please do not hesitate to call. We are always very happy to help.