Just because it’s been on the market for over 8 weeks doesn’t necessarily mean it’s a lemon!

Many properties come onto the market way overpriced. There are two main reasons why this happens, either the vendor has insisted on a high price or the sales agent has told them an inflated figure to convince the owner to list the property with their agency (it’s called buying the listing or buying the business).

Sales agents know they shouldn’t do this and that they are setting themselves up for quite a bit of work in regards to a price education process with the vendor, starting the week after the property goes on the market. They do it anyway because they know most (not all) vendors have an over inflated expectation of their own home’s value or are greedy and telling them a figure they want to hear increases their chances of getting the listing over a sales agent that will tell them the truth.

When a property comes on the market over priced it often takes the sales agent several weeks, sometimes many months, to adjust the vendors expectations down to fair market value. The problem is that by the time they do this, and reduce the price to fair market value, the market perception of that property is there is something wrong with it, “it’s a lemon”. This can result in the property sitting on the market for even longer and quite often the vendor will end up having to drop the price below market value in order to achieve a sale.

So next time you see a property that has been on the market for a couple of months or even longer don’t discount it as many people do as it could have just been overpriced to begin with. If it meets your needs and the building and pest inspection or strata report checks out then you might be able to buy it at, or below, market value.

Be sure to still do your research on what fair value actually is though. I have often researched the value of properties where the asking price or price guide has dropped by around 10% from where it started and once I complete the research I discover many are still overpriced by another 5 or 10%, and some by much more. If you want to purchase a report on properties that have been sitting on the market for over 2 months go to www.sqmresearch.com.au