Merged: Is the worst of the Global Financial Crisis behind us?
Grandpa Aerotart
The author is a well known housing doomsdayer who had been totally out of phase in his predictions over the last few years on the local market.
You'd also be aware of the tiny handful of 'doomsayers' who, with uncanny accuracy, predicted the current woes (and those of Japan in the early 90s) and who were described, then and now, by the mainstream as 'lunatics'?
Can you point to another economic cycle where extremes, like that house price graph, didn't correct sooner or later? And if later with far more economic fallout - as in 'bigger the boom bigger the bust'?
The government and the RBA ( begrudgingly ) will help protect Australian property prices from an American style cataclysm.
Would a 40% correction actually be that bad for the economy in an overall sense. Or would house prices permanently delinked from wages and out of the reach of future generations be worse?
I am going to suggest that the RBA, if they are/remain politically independent, will do whatever needs doing to protect/foster the greater economy and if real estate speculators suffer then they will view that as the lesser of several evils.
One way or another balance will be restored. It seems to me the only other way balance can be restored would be a wages blowout with attendant inflation - something that the Govt and RBA would be united against.
Faced with these options and taking a longer term view what would the RBA be more likely to find acceptable - a wages/inflation spiral that damages Australia's economy as a whole or a relatively small % of the population being taught a lesson on housing - as in 'it can't go up forever'?
Can you honestly look at that data - in itself - and tell us a correction is not in the near future?
As has been stated before the securitisation of debt and a belief house prices never go down is what caused the GFC. I think the RBA will react accordingly.
Take a long look at that graph and see that in EVERY housing boom, except the one in the 80s, there was a roughly 40% retracement to the immediate pre boom level. In the late 60s there was a significant wages blowout - the last time peoples real wages were better than inflation, they have been going backwards in real terms/purchasing power ever since - it was followed by the 70s boom (surprise, surprise) and then the 70s oil shock. Look what happened to house prices straight afterwards...look like a 40% correction to you?
The 1890s boom, the roaring 20s, post ww2 boom, 1970s boom - all had a massive correction - and with all that is going on in the world at present it won't happen this time?
You'd have to be mad to believe that.
Edit: Or look at it another way - draw a line through that graph that represents a 100 year annual average increase in house prices between 1880s and 1980s - then draw another between 1980s and now.
Last edited by Chimbu chuckles; 8th Aug 2009 at 07:36.
Don't know why some of the responses were deleted.
For the last year of have been reading the pprune property doomsdayers with interest. At the height of the predictions of a collapse, I was renegotiating a commercial lease as well as some residential re-leases. I was putting rents up in the order of 20+%. As a holder of international, commercial and residential property I was concerned my paper wealth would deteriorate and I wouldn't feel so good- foregoing European vacations, 1st Growth wine and other joys..
So I asked many of the above protagonists how could there be an upcoming property collapse if my rents are going up? Deafening silence- just more cut n' pasted stuff from the likes of Harry S Dent or Professor Stapelton.
So time has gone by and what have I noticed?
Well firstly, I sat with the brother in law in one of his BNE shopping centers having a macchiato. He has 90 something individual CBD commercial properties and suburban shopping centers. Not one rent default- yet here on pprune I can quote the above protagonists predicting an identical collapse to the Australian commercial property market as that in the US. Brother in law said he would be cautious- no acquistions- but the fact he hadn't sent any of his goons to change the locks on distressed business premises had him search for residential bargains. He bought a Noosa pad for 2.4 million down from 3.2 million as a weekender.
Which is where the real Australian property adjustment was last year- above a million. I wanted to take advantage of the downturn and buy another place- incidentally putting my money where my mouth is; you never note the property doomsdayers putting there houses up for sale. So I had a CBD terrace valued and it was down 20%. At the top end it is just cream on the cake for all but the show-off's. The 20% didn't affect my finance at all- I did note the Australian banks were very careful though. As a side point I had re-leased this top end property twice at the height of the GFC- there is a hell of a shortage of property because I upped the rent once and maintained it the second time around.
Under a million and my portfolio is sizzling- rents and prices. Strange huh. FHO scheme they say. I reckon again its a shortage of good propery, positve migration and the love affair with housing and trendy living. I'd guess this will actually hold ( the good stuff ) as tentative investors enter the market where FHO left off.
Anyway. Money where my mouth is. I'm buying a place in Sydney next week. I foolishly held off. It will be a relief when its tucked away as I go through the same insecurity ever time I buy- will the sky fall in just as the above protagonists suggest ? I expect it to perform modestly over the next few years. Well situated, even if the general market declines, it should do well.
What are the positives for Australian property in my opinion? No prior qualifications to shoot you all down with. I'm just a pilot who was fortunate enough to have a good wage from the early part of my career, never had to buy an endorsement or work for a LCC.
- Shortage of supply with nothing suggesting a change to this.
- Low % rates. Remember, prices were peaking at a cash rate near 8%!
- If % rates do rise the world economy, of which Australia is enviably placed to take advantage of, must be doing well. So things like inflation and more skilled migration protect the housing market.
- The firepower the RBA has to prevent a US style downturn by reducing mortgage costs to further. This will give affluent property markets a solid base.
- 1 million expats live abroad with a suggested average annual income of 250,000USD a year. This won't change and will be a perpetual round- about of unusually high wealth creation not reflected in average wage but certainly reflecting in middle to high end property.
- Financial lending practices in Australia are very good. I watched my nephew in law struggle to get finance for FHO grant. The banks cautious.
- Rental yields have improved considerably. Not great, but coupled with negative gearing, property will always be a popular investment vehicle.
- Unemployment is stabilizing.
For the last year of have been reading the pprune property doomsdayers with interest. At the height of the predictions of a collapse, I was renegotiating a commercial lease as well as some residential re-leases. I was putting rents up in the order of 20+%. As a holder of international, commercial and residential property I was concerned my paper wealth would deteriorate and I wouldn't feel so good- foregoing European vacations, 1st Growth wine and other joys..
So I asked many of the above protagonists how could there be an upcoming property collapse if my rents are going up? Deafening silence- just more cut n' pasted stuff from the likes of Harry S Dent or Professor Stapelton.
So time has gone by and what have I noticed?
Well firstly, I sat with the brother in law in one of his BNE shopping centers having a macchiato. He has 90 something individual CBD commercial properties and suburban shopping centers. Not one rent default- yet here on pprune I can quote the above protagonists predicting an identical collapse to the Australian commercial property market as that in the US. Brother in law said he would be cautious- no acquistions- but the fact he hadn't sent any of his goons to change the locks on distressed business premises had him search for residential bargains. He bought a Noosa pad for 2.4 million down from 3.2 million as a weekender.
Which is where the real Australian property adjustment was last year- above a million. I wanted to take advantage of the downturn and buy another place- incidentally putting my money where my mouth is; you never note the property doomsdayers putting there houses up for sale. So I had a CBD terrace valued and it was down 20%. At the top end it is just cream on the cake for all but the show-off's. The 20% didn't affect my finance at all- I did note the Australian banks were very careful though. As a side point I had re-leased this top end property twice at the height of the GFC- there is a hell of a shortage of property because I upped the rent once and maintained it the second time around.
Under a million and my portfolio is sizzling- rents and prices. Strange huh. FHO scheme they say. I reckon again its a shortage of good propery, positve migration and the love affair with housing and trendy living. I'd guess this will actually hold ( the good stuff ) as tentative investors enter the market where FHO left off.
Anyway. Money where my mouth is. I'm buying a place in Sydney next week. I foolishly held off. It will be a relief when its tucked away as I go through the same insecurity ever time I buy- will the sky fall in just as the above protagonists suggest ? I expect it to perform modestly over the next few years. Well situated, even if the general market declines, it should do well.
What are the positives for Australian property in my opinion? No prior qualifications to shoot you all down with. I'm just a pilot who was fortunate enough to have a good wage from the early part of my career, never had to buy an endorsement or work for a LCC.
- Shortage of supply with nothing suggesting a change to this.
- Low % rates. Remember, prices were peaking at a cash rate near 8%!
- If % rates do rise the world economy, of which Australia is enviably placed to take advantage of, must be doing well. So things like inflation and more skilled migration protect the housing market.
- The firepower the RBA has to prevent a US style downturn by reducing mortgage costs to further. This will give affluent property markets a solid base.
- 1 million expats live abroad with a suggested average annual income of 250,000USD a year. This won't change and will be a perpetual round- about of unusually high wealth creation not reflected in average wage but certainly reflecting in middle to high end property.
- Financial lending practices in Australia are very good. I watched my nephew in law struggle to get finance for FHO grant. The banks cautious.
- Rental yields have improved considerably. Not great, but coupled with negative gearing, property will always be a popular investment vehicle.
- Unemployment is stabilizing.
Chimbu
There has been an adjustment in different areas of the market. You can't easily measure it that's why we use crap concepts such as median house prices.
You should sell your house in Australia! Do you have one?
There has been an adjustment in different areas of the market. You can't easily measure it that's why we use crap concepts such as median house prices.
You should sell your house in Australia! Do you have one?
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Another apples to oranges scenario. The American economy. An industrialized nation, globalization etc etc. Australia. A totally different economy, population growth and future demographics entirely different.
Grandpa Aerotart
Yes Gnads I have been a very enthusiastic real estate investor in the past - and anyone who bought a house years ago would be mad to sell. Good real estate has doubled in the last 6 years or so and if it dramatically corrects now will still be worth more than people who bought 6 years ago paid and, if they haven't been sucking out equity to buy silly things, owe. Probably one of the better reasons why the RBA won't be terribly concerned by a largish correction.
But I DO NOT see real estate being a good investment (short to medium term) going forward. I think there is a better than good chance that a BIG correction is coming and it will be a shock to many who have bought in the last years. It will then be an extended period of time before real estate is again deemed a great investment - as in once it corrects I think it will bump along for a while before the next bubble starts. That will give real wages a fighting chance of catching up and allow Gen x,y and z a chance to do what their parents have done.
What is something worth if no one can afford to buy it?
It already has - 'abroad' is where all the **** has been flying - so far.
But I DO NOT see real estate being a good investment (short to medium term) going forward. I think there is a better than good chance that a BIG correction is coming and it will be a shock to many who have bought in the last years. It will then be an extended period of time before real estate is again deemed a great investment - as in once it corrects I think it will bump along for a while before the next bubble starts. That will give real wages a fighting chance of catching up and allow Gen x,y and z a chance to do what their parents have done.
What is something worth if no one can afford to buy it?
1 million expats live abroad with a suggested average annual income of 250,000USD a year. This won't change
We will see. The doomsdayers have been over zealous. Although I still reckon the above a million dollars market has corrected.
On the last point re expatriates. Guess what? Those displaced by the GFC are returning "home"by accounts. Taking more property off the market and exasperating the shortage. They don't tend to return home empty handed either- they will sit it out with cash until the next upswing.
On the last point re expatriates. Guess what? Those displaced by the GFC are returning "home"by accounts. Taking more property off the market and exasperating the shortage. They don't tend to return home empty handed either- they will sit it out with cash until the next upswing.
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"Green" shoots have "Brown" roots
Guys, you've got to see what this guy says.
http://globaleconomicanalysis.********.c....
Like my liver, we're stuffed.
http://globaleconomicanalysis.********.c....
Like my liver, we're stuffed.
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Sorry about the crook link. Try this one:-
The final part of a short talk by an Australian economist - one of the very, very few who predicted the crisis. He doesn't see any green shoots, that's for sure.
YouTube - Getting to Grips with the Economy 2009: Session 3, part 7 of 12
YouTube - Getting to Grips with the Economy 2009: Session 3, part 7 of 12
Grandpa Aerotart
FG thanks for that excellent link - I recommend everyone watch all 12 parts.
The first speaker, Prof John Guiggan, was interesting and made many good points and certainly recognised the issues but I suspect leaned towards the consensus view that Australia has dodged the bullet somehow.
The second speaker, Prof John Keen, was the only person who put up the actual data to draw parallels between the world situation and that in Australia, both currently and historically. In my view he made his case very well and clearly is not wedded to the consensus view - and the fact that he was 1 of only 12 economists world wide that predicted the GFC gives him enormous credibility. His understanding of the correct role of credit is hard to disagree with.
Dr Guy Debelle was a complete waste of oxygen. If he is typical of RBA management (and he must be or he wouldn't be senior management) then Australia is in deep **** - not only does he not have the answers but he has no idea what the right questions are. The man struck me as a Gen Xer completely captured by the economic theory he was taught at uni and with no sense of history - or reality. Note he didn't attempt to argue the data - he merely sought to discredit Prof Keen. Note also his body language in the final Q&A section and indeed his final answer.
It is increasingly obvious that the vast majority of economists have been taught only two economic theories, that of Milton Friedman or a bastardised version of Keynes. You would be hard pressed arguing that those two individuals theories, as espoused in the universities of the west, are not flawed to a lesser or greater extent.
The most important thing history teaches us, and I have always been a great fan of history, its that the consensus view is nearly always wrong.
For that reason alone I tend to eschew the consensus view and go with the data.
I fail to understand how someone can look at the data and say "I'm cautiously optimistic" unless they have an agenda. Perhaps the other thing we should learn from history is that 'experts' rarely have a goal that is aligned with our own - they almost invariably have an agenda and its rarely the same as yours - numbers have no agenda - they just are.
The first speaker, Prof John Guiggan, was interesting and made many good points and certainly recognised the issues but I suspect leaned towards the consensus view that Australia has dodged the bullet somehow.
The second speaker, Prof John Keen, was the only person who put up the actual data to draw parallels between the world situation and that in Australia, both currently and historically. In my view he made his case very well and clearly is not wedded to the consensus view - and the fact that he was 1 of only 12 economists world wide that predicted the GFC gives him enormous credibility. His understanding of the correct role of credit is hard to disagree with.
Dr Guy Debelle was a complete waste of oxygen. If he is typical of RBA management (and he must be or he wouldn't be senior management) then Australia is in deep **** - not only does he not have the answers but he has no idea what the right questions are. The man struck me as a Gen Xer completely captured by the economic theory he was taught at uni and with no sense of history - or reality. Note he didn't attempt to argue the data - he merely sought to discredit Prof Keen. Note also his body language in the final Q&A section and indeed his final answer.
It is increasingly obvious that the vast majority of economists have been taught only two economic theories, that of Milton Friedman or a bastardised version of Keynes. You would be hard pressed arguing that those two individuals theories, as espoused in the universities of the west, are not flawed to a lesser or greater extent.
The most important thing history teaches us, and I have always been a great fan of history, its that the consensus view is nearly always wrong.
For that reason alone I tend to eschew the consensus view and go with the data.
I fail to understand how someone can look at the data and say "I'm cautiously optimistic" unless they have an agenda. Perhaps the other thing we should learn from history is that 'experts' rarely have a goal that is aligned with our own - they almost invariably have an agenda and its rarely the same as yours - numbers have no agenda - they just are.
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They do not exist?
A long time ago, Sir MArk Oliphant, a scientist and governor of South Australia said "economists, as a disciplined scientific body of people, simply do not exist."
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Can the idiot in post 102 who is describing property prices like they are on some sort of unsustainable parabolic curve please switch his charts to log scale, or at least try to understand the effect compounding has on a linear scale.
On a different note, i think wages are set to crash i spoke to my grandpa and he is telling me back when he started working his weekly wage was less than my hourly wage, wtf. We are in the midst of an unsustainable wages bubble and sooner or later its gonna burst look out.
developing........
On a different note, i think wages are set to crash i spoke to my grandpa and he is telling me back when he started working his weekly wage was less than my hourly wage, wtf. We are in the midst of an unsustainable wages bubble and sooner or later its gonna burst look out.
developing........
One of the often quoted, economic doomsayers- Harry S Dent. Who is loved by professional pilots for his simple data usage I believe. Has just reported that two countries will stand out for economic growth due positive demographics- Australia & India.
A net overseas migration statistic of 250,000 is a pretty positive figure. Not forgetting there are a million Aussies working abroad most unburdened by the strangling ATO....
The clowns here who reported the big Aussie housing crash 12 months ago in sensational and exaggerated language were very wrong. And the new stats on immigration and housing shortages would suggest their big crash has just been put off another few years.
The one million plus Sydney market is now tightening. I know. I'm in the market...The bargains were six months ago.
A net overseas migration statistic of 250,000 is a pretty positive figure. Not forgetting there are a million Aussies working abroad most unburdened by the strangling ATO....
The clowns here who reported the big Aussie housing crash 12 months ago in sensational and exaggerated language were very wrong. And the new stats on immigration and housing shortages would suggest their big crash has just been put off another few years.
The one million plus Sydney market is now tightening. I know. I'm in the market...The bargains were six months ago.
Grandpa Aerotart
Who are the main beneficiaries of the First Home Scheme?
Its not the first home buyers its the sellers. Data indicates that by the time the first home buyer leverages up that Govt grant they are paying 35-50k more for the house.
The house seller in the sub 500k market are pocketing 35-50k extra in cash.
They in turn leverage that extra 35-50k and that is calculated to have effected house prices in the 750k-1.5mill range by 150-200+k.
After all its a rare person who sells his/her house and goes down market.
Its not hard to understand the effect the Govt first home stimulus is having - its equally easy to understand the effect removing that stimulus will have in a few months.
I recently read an article suggesting that the Rudd Govt has relaxed foreign ownership regulations and, as a result, as much as 25% of the market above $1mill is Chinese money. If memory serves the article was talking about the Melbourne market but you'd be a fool to believe Sydney, Perth and Brisbane/Gold Coast was not following that trend.
Given the very small number of homes, as a % of the total, that are on the market at any one time its very hard to accurately value a house. Anyone who has bought and sold a few knows this if they were paying attention to the valuation process - hit and miss understates the process - in the past it has been more like "What do they need it to be worth to borrow X amount?."
Too a seemingly small increase in the % of homes for sale, say from 8% to 11%, can have a HUGE impact on prices. That is after all a 37% increase in available dwellings.
So what happens when the Govt stimulus ends?
What happens if/when China suddenly finds its bubble bursting like the Japanese did in 1990 - remember when Japan was buying up the east coast of Australia in the late 80s?
Why will the Chinese bubble burst?
Well despite what you read in the media the US economy is not getting better merely getting worse at a reducing rate - so far - there is still a very good chance this will be a W shaped economic cycle like that of the 1930s. To date the financial indicators are still tracking horrifyingly close to the way they tracked in 1929/30 and on to 1941.
Unlike post WW2 recessions this one has been bought on (in the US) by enormous private debt relative to incomes. As in the US and Europe, Australian house prices have been increasing at a much faster rate than wages for decades - people have been borrowing more believing the house they are buying will increase in value in a relatively short time. People put down 5-10% deposit (often in the last years NO deposit and borrowed for the legals/stamp duty etc - 105% loans) buy a house for 300k and a few years later sold realising a substantial capital gain - 30-50%. All of a sudden they have 100-150k as a deposit on their next home and they leverage that up and borrow 450-550k. In 3 years they have gone from 270k in debt to 500k in debt while there wages might have increased a little (but in real terms have actually gone backwards - nobody here really believes the CPI do they?)
This is the issue we face as the world enters the first economic de leveraging cycle since WW2.
Its happening elsewhere already and there is no reason to believe YET that Australia is not meandering in the same direction.
When the govt housing stimulus is removed it will remove that upwards shove housing has been getting the last while - and not just the lower end of the market - maybe at the same time as Chinese buyers are replaced with Chinese sellers.
Too understand that the vast majority of 'Boomers' are not nearly as wealthy as the media/Govt would have you believe if their houses are removed from the equation. Most expect to sell the family home now that the kids are off living their own lives and downsize into a nice apartment near the beach and top up the retirement fund with the (substantial) balance.
If Australians stop borrowing/spending money the way the Yanks have and start saving/reducing debt - and lets face it the 'consumer driven economy' we have all heard about endlessly these last years cannot be sustainable - then unemployment will rise dramatically. The de leveraging will get more manic as people sell the only thing that will get them out from under that 500k debt burden - their house - hopefully it will still be worth more than they owe.
Remember what I said about the small % of houses for sale at any one time?
Still its an ill wind that blows no good - Boomers retiring/downsizing NOW are about the only demographic REALLY benefiting from the First Home Buyers stimulus.
Its not the first home buyers its the sellers. Data indicates that by the time the first home buyer leverages up that Govt grant they are paying 35-50k more for the house.
The house seller in the sub 500k market are pocketing 35-50k extra in cash.
They in turn leverage that extra 35-50k and that is calculated to have effected house prices in the 750k-1.5mill range by 150-200+k.
After all its a rare person who sells his/her house and goes down market.
Its not hard to understand the effect the Govt first home stimulus is having - its equally easy to understand the effect removing that stimulus will have in a few months.
I recently read an article suggesting that the Rudd Govt has relaxed foreign ownership regulations and, as a result, as much as 25% of the market above $1mill is Chinese money. If memory serves the article was talking about the Melbourne market but you'd be a fool to believe Sydney, Perth and Brisbane/Gold Coast was not following that trend.
Given the very small number of homes, as a % of the total, that are on the market at any one time its very hard to accurately value a house. Anyone who has bought and sold a few knows this if they were paying attention to the valuation process - hit and miss understates the process - in the past it has been more like "What do they need it to be worth to borrow X amount?."
Too a seemingly small increase in the % of homes for sale, say from 8% to 11%, can have a HUGE impact on prices. That is after all a 37% increase in available dwellings.
So what happens when the Govt stimulus ends?
What happens if/when China suddenly finds its bubble bursting like the Japanese did in 1990 - remember when Japan was buying up the east coast of Australia in the late 80s?
Why will the Chinese bubble burst?
Well despite what you read in the media the US economy is not getting better merely getting worse at a reducing rate - so far - there is still a very good chance this will be a W shaped economic cycle like that of the 1930s. To date the financial indicators are still tracking horrifyingly close to the way they tracked in 1929/30 and on to 1941.
Unlike post WW2 recessions this one has been bought on (in the US) by enormous private debt relative to incomes. As in the US and Europe, Australian house prices have been increasing at a much faster rate than wages for decades - people have been borrowing more believing the house they are buying will increase in value in a relatively short time. People put down 5-10% deposit (often in the last years NO deposit and borrowed for the legals/stamp duty etc - 105% loans) buy a house for 300k and a few years later sold realising a substantial capital gain - 30-50%. All of a sudden they have 100-150k as a deposit on their next home and they leverage that up and borrow 450-550k. In 3 years they have gone from 270k in debt to 500k in debt while there wages might have increased a little (but in real terms have actually gone backwards - nobody here really believes the CPI do they?)
This is the issue we face as the world enters the first economic de leveraging cycle since WW2.
Its happening elsewhere already and there is no reason to believe YET that Australia is not meandering in the same direction.
When the govt housing stimulus is removed it will remove that upwards shove housing has been getting the last while - and not just the lower end of the market - maybe at the same time as Chinese buyers are replaced with Chinese sellers.
Too understand that the vast majority of 'Boomers' are not nearly as wealthy as the media/Govt would have you believe if their houses are removed from the equation. Most expect to sell the family home now that the kids are off living their own lives and downsize into a nice apartment near the beach and top up the retirement fund with the (substantial) balance.
If Australians stop borrowing/spending money the way the Yanks have and start saving/reducing debt - and lets face it the 'consumer driven economy' we have all heard about endlessly these last years cannot be sustainable - then unemployment will rise dramatically. The de leveraging will get more manic as people sell the only thing that will get them out from under that 500k debt burden - their house - hopefully it will still be worth more than they owe.
Remember what I said about the small % of houses for sale at any one time?
Still its an ill wind that blows no good - Boomers retiring/downsizing NOW are about the only demographic REALLY benefiting from the First Home Buyers stimulus.
Last edited by Chimbu chuckles; 4th Sep 2009 at 13:25.
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Excellent Chimbu, (but what else would I expect from a PNG lad) but have to dispute the amount made by sellers to first home buyers. Had a investment townhouse on the Gold Coast, in late 2008 it was valued at $495,000, by the time I finally offloaded it the best I could get was $450.000 (march 09) (I paid 295,000 in 2001) I found the first home buyers choosy and were very savvy to what was worth what, and were no pushovers and good luck to them. My point is I don't think I am alone, and of course you have to take in when and where your property is, but there was not too many who made a fast buck out of first home buyers, and many did not go on to purchase more expensive properties as a result of their sale. Personally I think the country is cruising at the moment, but like that dreaded credit card, eventually, sooner or later we are all going to have to pay for it, your kids, my kids, for years to come it will creep up slowly but surely and as my dear old dad used to say "no matter what, for everything you do there is a price to pay" and ain't that the truth.
Grandpa Aerotart
Real Estate Agents are the classic example that most people will experience of an 'expert' whose interests are not aligned with their own. You think to yourself "I am paying these people a LOT of money to get the best possible price for my house" and you are.
The problem is that the difference between what they will get in their back pocket (the Agent's commission is a small part of the % the Agency charges you) if your house sells quickly at a price that falls slightly short of the expectation they gave you initially, and what they will get by marketing the house better and longer, is not enough incentive for them to do so. A study was carried out in the US ages ago that showed when Real Estate Agents sold houses they owned the property was on the market for an average of an extra month and sold for 10% more.
When it is their property they pocket the extra 10% - when it is your property they pocket maybe another $1000.
Their agenda is different to yours because the incentives are different.
The problem is that the difference between what they will get in their back pocket (the Agent's commission is a small part of the % the Agency charges you) if your house sells quickly at a price that falls slightly short of the expectation they gave you initially, and what they will get by marketing the house better and longer, is not enough incentive for them to do so. A study was carried out in the US ages ago that showed when Real Estate Agents sold houses they owned the property was on the market for an average of an extra month and sold for 10% more.
When it is their property they pocket the extra 10% - when it is your property they pocket maybe another $1000.
Their agenda is different to yours because the incentives are different.