Sunday, Jun 22, 2008
In a seller market EAs work for the seller, but in a buyer market EAs work for the buyer!
Times: A bad year for estate agents
“How about a price-reduction competition?” Last time round, with owners reluctant to trim prices in a falling market, a hush-hush incentive scheme to persuade sellers to drop their asking prices helped to keep sales turning over. Each office logged the price cuts on a confidential form, and the office and individual that achieved the highest percentage reduction on their total register pocketed bonus payments. “I like it,” the bean-counter nods, as H scowls across the room at me. “Only we need to keep it quiet. I don’t want owners knowing we’re actively slashing prices across the board.”
Posted by confused76 @ 08:59 AM (678 views) Add Comment
5 Comments
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1. paul said...
The prospect of estate gaents being honest about price falls?
THE HORROR. THE HORROR.
2. letthemfall said...
It all goes to show that EAs have to get prices down or they will not survive. All the guff we hear about owners who don't need to sell sitting tight and keeping prices high is just another dollop of VI rubbish. Prices will stick for periods, then jerk downwards as sellers are finally persuaded.
3. techieman said...
This is absolutely right. There is no incentive for EAs to participate in waiting for their clients to get higher prices at the cost of turnover. Even if conditions were good who wants to wait 3 months for 2% of an extra say £10k. The only reason this works fine on the way up is because other properties are already part way through the process. When the markets reverse and sellers are in denial, resulting in the drying up of transactions the only way the EA can survive is by encouragiong more "realistic" pricing.
At the beginning the EAs have a cushion, and soome might thing its a temporary pullback. When it dawns on them that its not such a pullback EAs must become just as aggresive on the downside. I'd watch out for reductions in headline sales commissions and wouldnt be suprised at cartel like operations.
Freakonomics is worth looking at.
4. mark said...
amazing how the news has changed over the past 6 months
5. icarus said...
Which happens more often - EA pursuades vendor (a) to drop his price or (b) to maintain his price but offer a cashback or some other sweetener deal so that the price that finds its way into the monthly indices is artificailly inflated?