In Hungary, a real property is typically advertised by 6 to 8 real estate agents at the same time. The reason for this is that owners prefer to have generic contracts with several agents while disfavouring exclusive agreements. As a result, several dozens of ads show up for the same property within a short period of time, often overpriced in the beginning due to the owner’s emotional attachment.
However, the owner sooner or later realizes that the property has been overpriced, so the next agent gets to advertise it at a lower price. At the same time, owners usually fail to inform their earlier commissioned agents about the price reduction, so from this moment on, the older (more expensive) ads coexist with the new, cheaper ad for the same property – unless the earlier commissioned agent(s) closely monitor their portfolios.
The average price difference for properties offered at various prices is 4 million forints, but this discrepancy can reach up to 10-15 million forints for more expensive homes.
We can use the following two indicators to assess the situation:
Chaos Indicator: percentage of real properties for sale listed at various prices. Currently the Chaos Indicator is 20% in Hungary, meaning that one fifth of listed properties are offered at different prices; the average price difference is 4 million forints.
Overpricing: the total amount of possible savings, ie., how much buyers could save if they bought their homes at the lowest price instead of the highest one. This amount currently reaches 75 billion (or 75,000,000,000) forints – the total possible savings if buyers could review all ads at a glance.
Arminimum.hu and the free browser extension – available for download from the website – attempt to clean up the chaos by showing buyers the best price for the chosen real property.