You know it and I know it. This is without a doubt the busiest, strongest and most absurd market that we’ve experienced. Incredible auction clearance rates, banks keeping interest rates at record lows, and buyers flocking to the market ready to purchase.
It is a seller’s paradise.
Offers are flooding in left, right and centre, with potential buyers hedging their bets pushing for pre-auction purchases at bewildering prices for the fear of missing out (FOMO).
Agents are winners too. But, in a rising property market, while our incomes are increasing, we often see a decrease in ethics. What do I mean by this? Let’s break it down.
Firstly, the legal obligations that affect agents don’t necessarily provide a guideline for our ethical obligations. And it is possible to be legal and also unethical.
Ethics extends beyond legality, they pertain to the moral and professional responsibilities we often verbalise to our clients. While ethics promote the interest of their clients first, agents remain obligated to treat all parties fairly and honestly.
As markets shift gears, as we have seen throughout the pandemic, agent workloads and stress levels increase substantially and shortcuts in our practice become commonplace.
In a market swarming with buyers, it’s easy to treat them as dispensable. And with offers in abundance, it’s easy to take advantage of a decent price without hunting for the best possible price.
And we know this is happening. Industry wide there has been an increase in properties being sold prior to auction.
Pre-auction offers for properties by one or two potential buyers are being accepted by both agents and sellers mid-campaign.
According to REA Insights, the typical days on site for properties for sale stood at just 38 days in June, which is monumentality lower than the 71 days recorded in June 2020. For capital cities, the average is an astounding 24 days.
Auctions are the barometer of the market.
Even in the midst of current lockdown measures in Greater Sydney and Melbourne clearance rates haven’t budged.
For example, on the last weekend of July, Sydney recorded a 75 per cent clearance rate, which was a 15 per cent increase from the previous year.
Combined with median house prices climbing a staggering 24 per cent in 12 months, the question begs: is pushing an early pre-auction offer to the vendor ethical? Is that offer the best out there? Have you created the best and healthiest competition for that property? Are you leaving money on the table for your vendor?
In this dizzying market, the all-important foundation of the agent’s process and structure tends to diminish.
If there’s one thing I’m sure of after 17 years in the industry, agents need structure to survive.
The right structure gives clarity and shapes ethical and moral behaviours into processes that unwaveringly provide the best possible outcome, including turning over every stone for your vendor before allowing them to accept a price.
Vendor relationships aren’t one-hit transactions, and when done correctly, they spark repeat referrals and are vital to profitability and success.
Shortcuts are always revealed in time, leaving the vendor and buyer with a bad taste in their mouth and the trust in the agent diminishes.
I’ll leave you with one final question – are you getting the best possible outcome for your vendor?
