The emergence of the web seemed to transform the landscape for buying and selling everything, including real estate; and certainly the principles of the democratic web have had a dramatic and permanent effect on the real estate market.
Most noticeable among this has been the richer and more comprehensive information available on the web – thankfully long gone are the days that an agent posted a single photo and a brief description for the property – nowadays listings are often comprehensive summaries with 20+ photos, videos, neighbourhood profiles and every facet of information as well as a clear price indication; all valuable for prospective buyers.
However as with this change have come the challenge to the real estate industry of private sellers leveraging the reach and cost effective advertising of the web to seek to secure a transaction and thereby save the commission fees charged by agents. Certainly the stories abound of the perceived benefits of DIY real estate. Just last month Fair Go featured a piece on private sales and only in the past week a business writer from the NZ Herald highlighted great success.
Whilst there is no doubt that private sellers are actively promoting their properties seeking to find buyers the latest findings of the annual Nielsen Real Estate Market Report shows that private selling may well be loosing some of its lustre.
As part of the Nielsen survey which is undertaken through an online questionnaire respondents are asked about their intentions when it comes to selling a property. In this latest survey the respondents who said that they would definitely sell privately totaled just 11%, a further one third of people stated that they would probably list with a real estate agent, but would give a private sale a go first. The balance of 47% – close to half of all respondents stated that they would definitely list with a licensed real estate agent.
The 11% of those surveyed indicating that they would definitely sell privately can be compared to each of the past 3 years when the question has been asked in the survey. Each year the intention has declined from the starting point in 2007 at 17% a steady decline totaling 35% has been witnessed to the current level of 11%.
At the same time over the same time period the proportion of respondents who have stated that they intend to definitely list with a real estate agent has grown from 35% in 2007 to now represent close to half of all respondents at 47%. Over viewing the results of the survey for the past 4 years shows that back in 2007 the sellers in the market were evenly split 3 ways – one third clearly judging that an agent is the route to sell, a third made up of definitely sell privately combined with the “don’t knows” and a final third uncertain as to an agent or doing it themselves. Today 3 years later nearly half of the respondents are recognising that agents can be trusted in such uncertain times; with another third still unsure, but probably going to rely on an agent.
Clearly the pendulum has continued swinging back towards agents as the complexity, litigation exposure and the ever present challenges of today’s buyer’s market environment leave people questioning why they would want to take on the role of self employed agent as well as their current day job.
It is interesting to note how coincidental it is that in an earlier analysis of the property listings market undertaken earlier this year 11.4% of all listings on the market were identified as private listings and similarly an often quoted statistic is is the estimate of total private sales (no corroborative data available) at c. 10%.Note: The Nielsen Real Estate Market Report is based on a website-intercept survey on New Zealand real estate websites conducted during May and June 2010 with a sample size of 1,225 respondents and a margin of error of around 2.86%.