Desperate Agents – Confused Buyers – Nervous Vendors – “Make this market work for you”!

Desperate Agents – Confused Buyers – Nervous Vendors – “Make this market work for you”!

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The only consistent trend since the GFC of 2008 has been that neither agents, buyers, nor vendors, have any real confidence that the future of the financial world is set for a recovery in the foreseeable future.  This has culminated into a confused market perpetuated by misinformation and rumour, resulting in the proverbial fence sitting i.e. don’t sell or buy now. Despite this general sentiment my experience is slightly different.  I am dealing with some very discerning vendors and buyers who are making this market work for them by taking advantage of the current conditions to achieve their personal goals for their families.  Where for most others, ‘negative perception is reality,’ these vendors and buyers are dealing with the real facts and are turning them into opportunity.

I am not talking the market up today, I am just trying to shed light and clarity for those who now consider that the property market exists in a deep fog and cannot see a clear path from which to make an educated decision.

BUY PRINT

MISINFORMATION is everywhere so make sure you are informed and not misled. For example:

Media two weeks ago (14th May) The Mosman Daily published that there were 243 houses listed in the last 4 weeks in Mosman over $3m. The fact is that in Mosman, there were actually only 80 houses (in total) on the market, in all price ranges.

Most purchasers constantly search properties via the Internet by price range, to fine-tune their selection.  Recently, a senior banker sent me his property analyst’s residential property report for Mosman, which was sent to thousands of their clients. It claimed that there were over 50 properties for sale at $5M plus and 10 properties at $10M plus. The facts at the time were that there were 16 at $5M plus and 3 properties over $10M. His mistake is a common one. Any specified price range can include properties at any price. For example any agent with say, a $3m property, can include it in a price search for properties at $5m and so on.

Vendors­ in Mosman, are most often told that every property should be auctioned and that their agency clearance rates are 90%. In 2010, Australian Property Monitors recorded around 330 house sales in Mosman, of which 49 sold via Auction. If we all agree that around 75% of all houses are initially placed on the market via auction, then the real auction clearance rate in 2010 was only 20%. So why, do most real estate agents rush to recommend an auction for every property they represent? We agree that some properties are ideal for auction, but most are obviously not, so vendors must seriously consider other selling methods if they are going to get the results they hope for.

THE GRASS IS NOT ALWAYS GREENER

Most vendors believe that now is not the time to sell but most do not realise that although there are less buyers, there is much less choice and ultimately most buyers will buy within three months rather than wait for years. Honestly, my most frequent buyer complaint is that there is not enough choice in their price range and many have been searching for over 6 months. Vendors believe the market has dropped appreciably over the last 12 months. Technically, market reports confirmed recently, that top-end properties dropped by only 3% last year. This negative trend isn’t significant enough for vendors to delay their decision to sell, given that most accept that this property market may show no capital gain for years to come and the financial proceeds of their house sale can be used better elsewhere, or to fund their re-purchase.

Many purchasers still want to believe that the incredible deal is yet to come, when the best deal is right in front of them. They have the right to dream, but they are reading negative Sydney property headlines and incorrectly applying them to our local market. They will tell me that half of Mosman is for sale, prices will drop by another 30%, interest rates will go through the roof, yet when you present them with the facts, they prefer to find comfort in their fantasy. For those who follow the market closely, there have been some poor sale results.  Most typically, the properties were either grossly over quoted initially, or are actually B Grade properties compromised in some way, were sold by poor agents, or a combination of all three.  We have also seen many strong results for the $2m to $15m price range and in the apartment sector. Money is out there, particularly for good property.

Selling trends are not seasonal but are tending to run in six monthly spikes. In our experience since the GFC, March/April is the 1st peak and August/September have been the strongest sale periods. Buyers are taking longer to purchase as there is less property to choose from and the market is flat. This Spring market will start slightly earlier than usual to allow enough time to complete campaigns prior to September school holidays. There will not be a huge influx of property which will advantage the vendors with well priced property, selling to realistic purchasers. Spring is shaping up to be a strong sales period.

To help you in the coming period here are my top 10 tips for you to consider

  • The only measure of a good result for those selling and re-buying in this market is the ‘change over cost’. So drop 10% of the sale price and try to buy even better.
  • Since the GFC, sales levels may have halved but so have the buyers. Demand is still close to the level of supply, therefore prices will remain reasonably stable.
  • The best agents all have the ‘gift of the gab’ but purchasers will remember 80% of what they read and 20% of what they hear.  Does your agent prepare quality written property documents, personalised to each buyer’s ‘property brief’ to close the sale?  If not and biased by misinformation, vendors are losing the best buyers.
  • Currently, vendors can dominate by having a greater voice in this smaller property market.
  • Vendors – not every house is best sold via auction, based on a real auction clearance rate of 20% in Mosman last year (Source APM). Quiz your agent’s rationale for the most effective method of sale for your property.
  • Buyers – take a long term position in this market and look to get a good deal for an ‘A’ grade property rather than a better deal on a ‘B’ grade property, which will never have the same level of capital appreciation.
  • The best agents should perform more as your informed ‘property advisor’ rather than just trying to make a sale at all costs. Working to place the right buyer in the right property, always achieves far more sales and at higher prices.
  • Consider your agent’s track record closely since the GFC.  For example, 50% of our last 22 sales have been street records, so how does your preferred agent’s track record measure up in this market?
  • Buyers – focus your property brief on measurable property credentials and not just emotion. Here’s a general list. Note, the best properties will have all or most of these credentials. Good views – desirable land size for your needs – ideal location – tranquil – privacy – best aspect – good potential: factor in any re-development costs, or totally finished, nothing to spend – strong capital appreciation
  • The best Agency Internet platform will introduce the most qualified buyers to your property and many local agents only rely on domain.com.au or realestate.com.au. This is not good enough, as on the main real estate portals, your property competes with all properties. We measure all buyers 1st point of inspection for each property and our own site at www.rwm.com.au commonly records nearly the same hits as realestate.com.au, with domain.com.au the strongest portal.

That’s enough from me and thankfully, my brother Robert will be returning to write next week’s edition. From our team, we wish you all good fortune in the property market. We look forward to meeting you and maybe we will sell you your ‘dream home’ this Spring.

For this week’s sales in Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Cremorne real estate, Cremorne Point real estate, Neutral Bay real estate, Cammeray real estate Click Here

Richard Simeon

Director

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