Most property sellers have to drop their asking prices to achieve a sale, a property group said on Tuesday.

"And the average drop is around 12 percent, which means that most sellers are quite seriously out of step with what buyers are actually willing or able to pay," the Chas Everitt International property group said in a statement.

Berry Everitt, CEO said such sellers usually argued that prospective buyers were quite at liberty to make lower offers.

"The fact is that serious buyers will usually not make any offer at all on a home they consider to be overpriced, especially if there are many properties on the market for them to choose from."

Everitt said others would shy away from making a lower offer because they did not want to offend the seller, even if they really liked the property.

"And sellers need to face up to the fact that buyers usually know the market better than they do... sellers may look at a few homes before listing theirs for sale, but buyers have frequently looked at dozens of homes over a few weeks or months by the time they decide to make an offer."

Everitt said if a home was not attracting any interest after a couple of weeks on the market, the seller should consider lowering the price as soon as possible.

"Sellers who do this when the listing is relatively new and the home still fresh in potential buyers' minds stand a good chance of keeping the marketing momentum going."

Those who did not would inevitably end up with an unsold property that was "about as attractive to buyers as last week's bread". - Sapa

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This article comes as no surprise. The start of all this was ~1998 when SA found interest rates at about 25%. From 1999 interest rates dropped dramatically and the Rand started to “strengthen”. I say “strengthen” because it was actually the $, £ and recently introduced Euro that weakened as a results of the mini 96-98 Stock market crash (well, mini compared to the recent one).

With this recovery, easy credit and decrease of the interest rate a cabal of Estate Agencies realised that a quick buck could be made. Suddenly property prices skyrocketed and with no barriers to entering the “profession” every retrenched executive and bored housewife were suddenly estate “professionals”. Again in inverted commas as the term professional denotes regulatory and standards bodies in place. Yes the Estate Agency board exists but they don’t mean anything.

Now everyone was buying property with money they didn’t actually have and those estate “professionals” realised they have to up prices to increase their commissions. Again, commission is a term far to easily bandied around. It should be earned and in my experience I have yet to meet an estate agent that .actually did enough work to earn their “commission”. Due to the vast numbers they had to do as many sales as possible otherwise the next clown would move in. As it is the last few years has seen the number of the opportunists drop with now only a few sustainable numbers left in the industry (although I’m sure this would rapidly change if sales started going through the roof again). The advantage now is that they are so desperate for sales they are dropping their commissions. I recently paid agents only R10k commission for a R650k flat. They were so desperate for the sale and the seller wasn’t willing to budge their price. The agent even had the audacity to call me unethical. Hehehe, the cheek! Anyway, I digress, that is a topic worthy of debate all on its own.

Back to higher prices. Agents were now pricing e.g. seaview properties for prices in line with what you’d only expect at Camps Bay, Llandudno etc. However, people were stupid enough then to actually pay those prices expecting easy money from re-selling and/or leasing. All of this is a good way to actually make money if the properties aren’t bought with the vast credit so easily obtained at the time.

Yes, some people did make money, but one only has to look at the bank repo lists to see that there are many, many more that came short when the credit crunch hit.

The main underlying cause for this can be attributed to one factor – Greed. This is not the first time this happened nor is it the last. People just don’t seem to learn lessons. Isn’t that expression “hindsight is the only exact science” applicable?

I love human nature. Fortunately, this cycle will repeat itself and we will be able to buy properties for a fraction of their actual worth. – Corry