Who Dictates The Sale Price - The Buyer or The Seller?

I’m thinking more broadly than yesterday. The price is dictated by the market. The market is made up of buyers and sellers. The price of a single property depends on what overall demand there is for that property - no buyer demand, then the price will go down. This also depends on what other alternatives the buyers have - they could decide to rent, buy elsewhere etc. Of course, they have to be in the position to buy - which can come down to the willingness of the banks to lend, government policies, political stability etc (macroeconomics) and how much banks they will lend.

Now an individual seller can put their home on the market and they can choose to accept or reject buying offers. But that’s all within the above framework. The seller can dictate the sale price to a degree - e.g. they may be able to sell their apartment in suburb X for anywhere between 500k or 550k depending on their patience and the condition of the property. But the very reason it is in the 500k to 550k price range rather than say, 300k to 350k or 700k to 750k is dictated by the macroeconomic framework. If you have a dying country town with big losses of jobs in that area then the overall price will fall. Ditto if the area is marked as flood prone and you just had massive flooding, then the property prices will fall. People will look to alternatives and sellers in that area may not be able to sell.

Individual property traits play a factor.
An individual (at the time of purchase) can make their best judgement as to whether they think their property will have superior demand to others when they buy (A grade property), or they could buy a B or C grade property, which they can usually be bought cheaper. If they do end up buying that B or C grade property, they are much more at the mercy of buyer’s offers if they decide to sell when the market has turned. When it’s a sellers market, it doesn’t matter too much if your property is A, B or C grade. But in a down market, a B or C grade property is a lot harder to sell and it’s much more likely that the vendor will accept any offer that comes along just to get that property off their hands. These properties will be much more subject to the buyer dictating the sale price and the seller just has to accept it if they are forced to sell otherwise it’s possible no sale could ensue. The A grade property can still have several buyers seeking to purchase it so the seller is more likely to command solid selling prices. Once again, it is up to the seller whether they decide to sell (accept an offer, which includes a sales price) or not though.

So...
1. Selling price is dictated by macroeconomics. Are banks lending, and how much, are jobs available, are the jobs stable?
2. If the property is B or C grade and it’s a down market, the price can be strongly dictated by the buyers
3. If it’s an A grade property, it’s seller circumstances that come into it but they can usually dictate a sales price - force the buyers to come up with a solid offer. Those buyers of course, could choose to buy an alternative property - but the seller will often be able to accept an alternative offer.
4. Macroeconomics will dictate whether a market will rise or fall.
5. A seller often has power to decide whether to accept a 500k offer or 550k offer for one individual property that’s worth 525k, depends on their own circumstances (forced sale/can they add value/can they wait for the right buyer willing to meet their expectations to come along/how good is their agent?) but usually there is a price range that the property falls into, and anything out of that price range tends to be almost unheard of unless the property is truly unique. There is rationality involved.

Long term, Australian property tends to go up over time.


Ps. I am no expert, and these are just my thoughts

 

The word dictate has many meaning including “set”, “control”, ...

This is the “set” meaning but we are discussing sale price, not asking price.

Now we are taking sale price. There is only a sale if an offer is accepted by the seller. The seller can say yes or they can say no to any offer. They are in control; they determine/dictate the actual sale price of a property and ONLY if they say yes.

If they say no, the buyer can increase their offer or walk away. They are NOT in control of the sale price for a property.

Sounds like you are agreeing with me.

Sellers set (dictate) the asking price AND sellers control (dictate) the sale price.

In all these examples, the seller is controlling the sale price. They can say yes or no to any offer/bid.

Give us an example of a sale where the the seller rejected all offers/bids.

 

Yes, sounds like you are getting my point .

The seller is in control of the sale price, not the buyer.

 

@Gockie, I am asserting that sellers control (dictate) the sale price.

They may not be happy with the offers buyers are presenting but only a seller can accept an offer or reject it.

The control the outcome, they dictate the sale price.

Whether they are happy or not, whether it is above or below FMV, ... is a totally different discussion.

 

Yep, that’s true.

 

If seller says No.............no sale happens.

 

Everyone is so bloody binary.

Its both.

 

That’s my point. No sale, no sale price, ...

Only a seller can say no. Only they can dictate the sale price.

I don’t believe it is.

Buyers have an input into the sale price but it is sellers who control the outcome - sale or no sale.

Another example that I have intimate knowledge of:- a person who I was ‘mentoring’ wanted to buy a property in Melbourne at auction. They got a bank valuation of $550,000 which they were happy to pay.

They were the only bidder at $475,000. Property was passed in. Post negotiations started. We stayed on the footpath, the sellers stayed inside the property and we made the REA walk between both parties many, many times. As time passed, we watched the crowd (our competition) dissipate.

In the end, our offer made its way up to $510,000. This was after the offerer phone his sister and asked her for a $2,000 loan to help cover expenses, all in front of the REA.

The seller accepted the offer $510,000 and dictated the sale price.

I know the offerer was happy/prepared to go to $550,000 before they were going to walk.

Obviously, the buyer was happy with the price but they weren’t in control of the sale price.

I don’t know whether the sellers were happy with the sale price (in our eyes, they left $40,000 on the table). But they were in control of it and they dictated the sale price (so they must have been) when they accepted the offer.

 

its like arguing over whether the sperm or the ovary is more important for a baby.

 

2 houses down a house was on the market 400,000k. It was overpriced and didn't sell. The seller can dictate any price they want but the market will tell them if that price is acceptable or not.

To set a market price you need a buyer and a seller. Without a buyer, no price is set.

The seller is in control of the sale or in the case above, in control of no sale

 

That is easy. Sperm of course .

 

Exactly.

The seller is always in control of the sale and only they can approve an offer.

Only the seller can accept an offer and set (dictate) a sale price or no sale price.

 

This is a quote from a book by Micheal E Gerber..The E --Myth ..


Most salespeople think that selling is “closing.” It isn’t. Selling is opening.”


There is also a page within this book ,where he states --Value is what people perceive it to be nothing else..,

Add all the media --next government tax changes and fear about property investing then it could be the start of the perfect storm if you selling and everyone else is heading for fire escape and exit..

 

In all seriousness, it is not a bad analogy.

Normally, there is one egg (seller) and many sperm (buyers) trying to win the “battle”. Sometimes there is fertilisation (a sale); while, other times, no-one wins the battle (no sale).

The only slight differences is that sometimes more than one sperm wins and, sometimes, a sperm winning is not viewed as success .

Thanks for helping out.

With this in my head, I can’t wait until my next purchase .

 

Not even close...
Seller can list for whatever they like... seen plenty of sellers shoot themselves in the foot with this one. Especially when markets turn, or seller over capitalises on the property etc

I wonder why banks actually require a valuation on property? Do they simply ask the seller for its value??

 

What’s a situation where more than 1 sperm wins?

 

Agree with this.

Buyer demand has significant influence on the market.

At the moment we have markets where there is more stock than demand, why prices are going south.

 

I am not an expert but “According to a study published in the Mar. 28 issue of Human Genetics, two sperm fertilized one egg and created the twins. The phenomenon occurs in about 1% of the population ...”

Breaking News, Analysis, Politics, Blogs, News Photos, Video, Tech Reviews - TIME.com

 

Very unusual. Thanks for that. I’ve just learnt something new today.

 

Totally agree but here you are talking about asking/listing price. This thread is about sale price (if there is one).

I assume a person of your experience understands the difference between the two.

Now you are talking about bank valuations.

I assume a person of your experience understands the difference between bank valuations and sale price (if there is one).

I believe we are close to total agreement .

Can I request that you stay on topic. We are NOT talking about asking/listing price, we are NOT talking about offers/bids that have been rejected, we are NOT talking bank valuations, ...

You might like to re-read the thread’s subject line, namely “Who Dictates The Sale Price - The Buyer or The Seller?”