Why testing the market is a waste of time and money

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In soft market conditions, I struggle to understand the motivation of some vendors who list their properties for sale but were unlikely to ever accept the reality of what buyers are prepared to offer. 

The thing is I don’t really get why they would bother because it takes a lot of effort and a lot of their money to essentially just test the market.

Why would anyone go through a campaign that lasts a number of weeks, costs a few thousand dollars, and requires keeping your property fastidiously clean to then say, well, we don’t have to sell?

Why would they go through that exercise, especially in the current market conditions which is likely to result in a price that is reflective of fewer buyers?

Testing the market folly 

Too many vendors say they are “testing the market” on price, but they don’t understand that as buyers they will doing the same on the other side of the transaction.

What I mean is that they may receive, say, $25,000 USD less than they would have last year, but if they’re upgrading, they will achieve a bigger discount on their property purchase because its price is discounted by a greater percentage of, say, $50,000 USD.

Of course, it’s the concept of selling and buying in the same market.

When vendors indicate they are testing the market they don’t seem to understand this strategy because they have a figure in their head that they “have” to achieve before selling.

Heads in the property clouds

Softer market conditions create a cohort of unrealistic sellers who have a price that reflects last year’s thinking.

They have yet to catch up with the reality of market conditions but, for some reason, they decide to go through the motions in the futile hope that a buyer will land in their laps who is willing to pay above market value.

It really is a fruitless, and expensive, exercise that wastes everyone’s time.

Some of the seller expectations that we’re seeing at the moment are what I like to call “generational”, which means the price they want to achieve is unlikely until the next generation of buyers has been born.

I know that’s a bit cheeky but some vendors have such an unrealistic price expectation that I often want to say to them, “The person you want to buy at that price hasn’t actually been born yet!”

One of the other main issues with vendors who indicate, quite late in the piece I might add, that they don’t “have” to sell is why are they bothering entering the market during softer conditions?

Surely, they should just hold off until things improve if the price is their main motivator?

Most of the conditions at the moment favor buyers so if you don’t need to sell, why are you attempting to do so?

Also, if a vendor wants to understand the market price of their property, they never have to go through the process of selling their property – or at least pretending to.

They can simply ask a number of agents to provide them with a Comparative Market Analysis and decide whether the numbers are attractive to them or not.

That would save them oodles of time and money – as well as the agents who have worked hard for free to create a solid sales campaign for a vendor who probably never was going to sell in the first place.

Source: Justin Nickerson

Contact the Gateway to South America team to learn about the best investment opportunities in the region. The company is a benchmark for foreign investors wishing to invest in Argentina, Brazil, Chile, Paraguay, Peru and Uruguay, providing expert advice on property acquisition.


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