In a seller's market, where demand for properties in a specific location exceeds supply, multiple agents may represent the same property in hopes of securing a commission. While this may seem like a win for the seller, it can lead to confusion and frustration for potential buyers who are inundated with offers and approached by multiple agents.
In this blog, we'll explore the challenges that arise when too many agents are marketing the same properties in a seller's market, and offer insights into how buyers and sellers can navigate this complex real estate landscape.
A seller's market occurs when there is high demand for properties but a limited supply available for sale. This situation is particularly prevalent in certain areas of Kampala, such as the upscale neighborhoods of Kololo, Naguru, Nakasero, Ntinda and lower level neighborhoods including most parts of western Kampala (Rubaga division).
In these areas, there are few listings available for sale, which leads to intense competition among agents to secure these limited properties for their clients. As a result, buyers may find themselves inundated with offers and approaches from multiple agents, making it challenging to navigate the market and make an informed decision.
In a seller's market, it is not uncommon for multiple agents to list the same property at different prices. This is because, when a property is first listed, the landlord typically provides it to the initial agent at a specific price. If the property fails to sell, the landlord may then work with another agent at a lower price, and continue to do so until the property sells.
As a result, the property may be listed at several different prices as it is passed from one agent to the next. This can make it challenging for buyers to determine the true market value of the property and negotiate a fair price. It is important for buyers to work with a trusted agent who can help them navigate these complexities and ensure that they are getting the best possible deal.
A new law regulating real estate agents in Uganda is expected to require licensed agents to sign a listing agreement with property sellers. This agreement will help to address the issue of multiple agents vying for the same properties. Under the new law, landlords may opt to work with a limited number of agents or even a single agent, as they are obligated to pay commission to the agent(s) who successfully sells their property. This will help to streamline the process and reduce confusion for buyers, who will have a clearer understanding of which agents are representing which properties. Ultimately, the new law is expected to create a more efficient and transparent real estate market in Uganda.
When there are multiple agents representing a particular property, potential buyers may find themselves touring the same properties repeatedly. As buyers engage several agents for field tours, they may begin to exhaust all the properties that fit within their desired location and specifications. As a result, subsequent agents may end up showing the buyer properties that they have already viewed or visited earlier in the process.
This can lead to frustration for both the buyer and the agent, as the buyer may become disinterested or feel that their time is being wasted. This situation is particularly common with potential buyers who need to see many properties before making a decision. Agents can alleviate this frustration by working collaboratively with other agents in the market to ensure that buyers are shown a range of properties that fit their criteria, without seeing the same ones repeatedly.
When multiple agents are competing to sell the same property, another issue that can arise is the agent chain, locally known as "Kajegere." This is where one agent contacts another agent who is believed to have information about the property, and that agent then reaches out to another agent, and so on. Before long, a chain of agents is involved in the same transaction.
This can create confusion for both the seller and the buyer, as it can be difficult to keep track of who is representing whom and what agreements have been made. Additionally, this agent chain can lead to disputes over commission, as each agent in the chain may claim to have played a role in securing the sale. To avoid these issues, it is important for sellers and buyers to work with reputable agents who are transparent about their roles and commission agreements.
To avoid duplication of properties and clients, real estate agents should consider diversifying their listings by expanding their focus beyond the city center. This can help agents tap into areas where competition is lower and supply is higher, enabling them to differentiate themselves from other agents who are primarily focused on the same high-demand properties.
Additionally, prices in these areas tend to be more stable and uniform across multiple agents' listings, which can help reduce the likelihood of clients becoming confused or overwhelmed by multiple listings for the same property. By diversifying their listings, agents can expand their reach and offer clients a wider range of options, while also reducing the risk of being caught up in the agent chain or competing against each other for the same properties.
In conclusion: The real estate market in certain areas of Kampala is experiencing a seller's market, where demand for properties outweighs the limited supply available for sale. This has led to intense competition among agents, resulting in multiple agents listing the same property at different prices, and potential buyers being inundated with offers and approaches. However, the new law regulating real estate agents in Uganda is expected to streamline the process and create a more efficient and transparent market.
Additionally, agents can alleviate frustration for buyers by collaborating with other agents to avoid showing the same properties repeatedly, and by diversifying their listings to tap into areas where competition is lower and supply is higher. Ultimately, by working collaboratively and being transparent about their roles and commission agreements, agents can provide clients with a wider range of options and ensure a fair and efficient real estate market.