What use is a seller's market if sellers cannot take full advantage of the multiple buyers who are interested in a property? We've had quite the seller's market in most areas of South Africa for the last few years, and although many people think it might be coming to an end, it might also continue for quite some time.
How many sellers have had multiple offers to buy their house after the first show house? In the past few years I have seen it happen many times. But what does that mean for the seller? A higher selling price? Usually not!
Think about it: In a seller's market, the demand for property far out-weighs the supply. Buyers fall over each other to catch a property they like, before it is gone. Shouldn't sellers be able to use this situation to their advantage? Of course they should!
So why don't we see buyers trying to out bid each other for the property? Because the seller's real estate agent doesn't want to start a war. Every war has its casualties, and real estate agents fear that their future commissions will be left bleeding in the aftermath.
The problem lies with the fact that South African real estate agents represent both the buyer and the seller in a real estate transaction. Yes, the estate agent's code of conduct says that the agent should represent the client's best interests, with due regard to the interests of the other party, but what does that mean and how does that work?
Real estate agents sell houses. They get a mandate from a seller and then market the property for sale. But it takes two to tango. The real estate agents are very aware that they need both a seller and a buyer to earn a commission, so they try and please both. Every buyer who is not successful in their bid to buy a specific property is, after all, a buyer who has to buy a different property (and fund another commission).
Real estate agents see buyers as valuable assets that need to be nurtured and looked after. But what does that mean for the agent's actual client - the seller?
Sellers don't get the full advantage that might be gained from competition between buyers. Real estate agents don't want to get "their" buyers involved in a bidding war over a property, because they know that the buyers who do not get the property will dislike the agent for it. And if the buyers dislike the agent, they will most probably go to another agent to buy their new home.
Does this mean that sellers have to sell their properties without the help of real estate agents? Absolutely not!
I would encourage property owners to employ real estate agents. But sellers (and buyers) should insist that their real estate agent only represent one side of the transaction, so that the agent can do the job properly.
