Vendor Conditioning - how real is it and what does it mean?
I have been delighted by the response to the series of articles I wrote detailing the personal process of selling our house. I have now edited the individual articles into an e-book which is available to download for free, so hopefully people can read and share freely. It has been interesting to hear comments people have made to the articles. It is very interesting to me to hear these comments realise that a lot of people did not have a clear idea as to the many parts of the process.
Naturally not all comments have been enthusiastically supportive. This does not surprise me, and to be honest I am always glad to have challenging comments raised. The debate and interchange is a vital part of the exercise, I think it adds hugely to the overall value of articles as a validation process.
One particular commenter of the final article was forthright, he challenged me to the extent of believing I was gullible and should not have been so naive. He described a part of the process, which he referred to as vendor conditioning. The process whereby agents “manage” the vendor expectation so as to ensure that the agents objective of a sale are achieved irrespective of the outcome for the vendor. In effect fundamentally challenging the very principle that the agent is working for the best outcome of the vendor. I know it is subtle, but it is an important distinction.
He stated that in our case when our agent provided what I judged to be incredibly valuable insight into the prospective buyers, our agent was in reality manipulating the facts, he was, he proposed choosing to be selective in the feedback he gave us - choosing to only share with us the buyer feedback that downplayed the value expectation and thereby kept from us the more aspirational feedback which might have indicated that our property was worth more than he as the agent had originally indicated.
The logic he put forward was to ensure that we set a lower reserve at the auction, so that firstly the property would sell ‘under the hammer’ and secondly that the sale price would be above this ‘conditioned’ expectation and therefore he, the agent would look to have over delivered. This is a very interesting comment and supposition. I can clearly see the potential for this to happen and in fact I can find no way of refuting it as a generalised rule. I can however categorically state that in our situation the original assessment we had made of the market value of our property baed on my knowledge and experience even before we engaged with the agent was very close to the final sale price we achieved. Further the final sale price was at a level that I would describe as “a very nice price”, as opposed to at one extreme “OK” and at the other extreme “highly delighted”.
So whilst I would defend my comments and defend our chosen agent and state that we were not the victims of vendor conditioning, I am left with a view that this is a real possibility. It therefore leads one to ask the question - how do you establish objectivity in the process of selling your house, and thereby avoid conditioning?
The simplest answer is to get a professional independent valuation of your property before you engage an agent. I personally think that too much of the focus of the engagement of an agent is based on the ‘appraisal’ of the property. That too often, the choice of agent is based on the agent who provides the highest appraisal. This is so wrong. The real danger in choosing the agent with the highest appraisal is that they might well be appraising a higher valuation simply to “win the listing”. The hard truth is that no matter what any agent thinks your house is worth you will only get for it on the day of sale what someone is prepared to pay for it. The agent is there certainly to maximise the price, however that skill is not related to their skills as an appraiser so the choice of agent should be the one who is the most consummate at negotiating, the best at marketing and the best at facilitating the buyers to ensure the property generates the maximum number of prospective buyers.