Perception agents ask too much for houses is wrong

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Exciting new research using the combined data from the Real Estate Institute of New Zealand (REINZ) and realestate.co.nz has shown that the gap between the listing price and actual sales price is relatively low – indicating real estate agents’ expectations of property prices is relatively accurate across New Zealand.

realestate.co.nz and REINZ have analysed the gap between properties with a fixed/asking price and the eventual selling price across the country over the last six months of 2017 (from 1 July-31 December). The findings show that nationally, the median difference between the asking and selling price is only 2.67% apart demonstrating that agents across the country are actually quite accurate when it comes to pricing properties. 

Brendon Skipper, Chief Executive at realestate.co.nz says it requires a significant level of skill to get this right.

“Buying and selling houses is like balancing a set of scales - it’s important to understand both sides of the transaction. As a rule, sellers naturally want to achieve the best price possible for their property and buyers want to buy at the best price possible, so it’s about finding the sweet spot between those two points of view so that buyers aren’t put off by an over inflated asking price, and sellers don’t sell too cheaply. 

Bindi Norwell, Chief Executive at REINZ says: “Agents use what is called a Comparative Market Analysis (CMA) in order to accurately price properties. It looks at what similar properties in the area have sold for, but also takes into account any unique features your property could have, for example a pool or an architecturally designed property. Using a CMA combined with local knowledge and experience is what helps to develop this accurate pricing. 

“There are many factors involved that impact the final sale price, such as the level of interest in the particular location and style of property, the type of marketing a vendor invests in and the sales strategy selected. However, this research shows that agents across the country are, in the majority of cases, very accurate when it comes to pricing property and helping both parties to find that happy medium which is so important when it comes to buying and selling a property.”

Regional picture

Regions that priced properties the most accurately were:

•    Canterbury – with a median difference between asking and selling price of 2.00%
•    Marlborough – with a median difference between asking and selling price of 2.20%
•    Tasman – with a median difference between asking and selling price of 2.30%
•    Waikato – with a median difference between asking and selling price of 2.52%%
•    Taranaki – with a median difference between asking and selling price of 2.56%
Looking at the data, the West Coast’s figure appears more volatile due to the small number of properties that were listed and sold over the 6 month period measured by the research. Given the low number of sales in the region (148) means that data is more susceptible to statistical variances.

“While there are variances in the regions, when looking at the trend over the last six months of 2017, Canterbury has been the most stable in terms of asking versus selling price,” concludes Skipper.

“Clearly demand and supply has a major part to play in terms of people’s willingness to pay the asking price for a property which is why we see variations in the data when drilling down into the regions,” concludes Norwell.

Notes:

Values displayed are for New Zealand residential dwellings with a known asking price and sales price. Where an asking price is not displayed, such as auction listings, the agent has supplied an indicative price that reflects the search price ranges on the realestate.co.nz site. Asking prices are provided by realestate.co.nz and reported by truncated mean according to month of listing publication. Sale prices are provided by REINZ and reported by median according to month of sales date.