Setting a price
Real estate agents advise sellers on setting a price for a property, taking several factors into account. These include the current state of the market and the valuation of the property (the government valuation and a private valuation can differ markedly). Many sellers decide in advance what they are prepared to accept for a property, but do not state this in advertisements. They may instead give a range or a bottom price and wait to see what offers come in.
Women real estate agents
Real estate companies used to be reluctant to employ female salespeople, but this began to change by the late 1970s and early 1980s. It was observed that women agents were more successful because they were often better listeners and had more awareness of mothers’ concerns about local schools, neighbourhood facilities, and security. In 2004, 49% of salespeople were women. Only 27% were branch managers and 21% were licensees, but percentages were increasing.
Under a general listing, the property is listed for sale with a number of real estate companies, and benefits by obtaining wide exposure to the market. However, most real estate agents discourage this type of listing. They argue that everyone’s listing becomes no one’s responsibility, and general listings have a relatively low success rate.
Often one company is given exclusive rights to sell the property for a specified period, usually three months. Real estate agents encourage this method, saying they put more effort into this type of listing and achieve a higher success rate than for general listings. A disadvantage is that a potential buyer may not hear about the property.
Real estate agents have traditionally relied heavily on newspaper advertising to market property. Advertising ‘open homes’, when prospective buyers can look around the property, is a common way of marketing a house.
In the 2000s most property buyers begin their search with real estate websites. The costs of electronic marketing can be much lower than for print media, and with fast internet connections buyers can view both still and moving pictures of houses for sale. Public databases containing information on rating valuations, school zonings and aerial maps are also online.
The widespread availability of online real estate information presents new challenges for real estate agents. They are now dealing with more knowledgeable and sophisticated sellers and buyers, who want to minimise transaction costs.
Offer and negotiation
Most homes in New Zealand are sold by the prospective buyer making an offer, and the buyer and the seller negotiating until they come to an agreement.
An auction is usually a three-stage process. First, the property is marketed before the auction. At the auction, bids are invited. The seller puts a confidential reserve price on the property which must be at least met at the auction. Most properties do not sell under the hammer, so a third stage follows, where the seller negotiates with potential purchasers.
Auctions are ideal for unusual properties, or in situations where it is hard to determine the market value – for instance if prices are rising rapidly, or if the market is in the doldrums and a new basic price needs to be set.
The tender method is similar to an auction but there is less pressure to get a sale quickly. Potential buyers are invited to submit written bids for a property. After the closing date the seller can decide to accept a bid or negotiate with the bidders.
Some owners market their property themselves to save paying an agent a commission. However, the process may be time-consuming and may not achieve the highest price or a quick sale.