Monthly Archives: June 2014

How’s the Market?

The property market cooled during May prompting many to predict the end of the current boom. However, recent sales throughout June suggest that buyer confidence has returned and prices are looking healthy for vendors.

The market was unlikely to suddenly fall as many had predicted. We were probably due for a pull back at some stage, as market confidence was getting ahead itself. However, interest rates are at record lows and look set to remain whilst employment is strong in Sydney.

The negative sentiment around the Federal budget hurt consumer sentiment, however, as the reality overtakes the scare campaign of the budgets effect; buyer confidence is returning to the property market.

Stock levels are always low during winter, causing artificial strength in the market. Whilst conventional wisdom suggests that spring is the best month to sell, many current home sellers are working out that winter can be a better time to go on the market.

Those considering holding back from selling until spring maybe pleasantly surprised at the winter market.

Why the price guide is no guide at all!

Interpreting agent’s price guides has become harder than earning enough money to purchase a property for many home buyers. Each agency takes a different tact on how to position their respective listings to the market.

Some firm’s price accurately, some throw berley in the water and price well below market price, in an attempt to bait price buyers along to the auction. Others price high, hoping to give their client (seller) room to negotiate.

One of the great errors that a buyer can ever make is to submit an offer solely based on the agents price guide. Or to assume the true value of the property is even loosely related to the guide given by the agent. These are sad but true facts about buying in the Sydney real estate market, as many will attest too.

Many buyers have learnt in recent times that its common for properties to sell for over 30% above the agent’s price guide.

Buyers who are conditioned to this style of selling can then fall into the trap of adding 20 to 30% to every agent’s price guide. In the process, they are unintentionally ruling themselves out of the running for homes that are priced accurately and are affordable.

The frustration doubles when a suitable property sells within your price guide that you did not even bid on, due to thinking it was going to sell “way over”.

The rule with price guides is simple, believe nothing and check everything.

Attend inspections and auctions of every home in the immediate area that you intend on purchasing. Become an expert on the market then form a clear view of what your target property is worth and what you are prepared to pay for it.

There is nothing wrong with assessing the value of your dream home and being prepared to pay slightly over the odds to secure it. Note, this is not a great strategy for investors though. Slightly overpaying to secure your dream home is fine. Being misled week in week out by agents who are simply lying to your face is demoralising.

If the agent’s price guide seems too low, it probably is, if it seems to high, it probably is.

When the Department of Fair Trade claim they can find no evidence of under quoting, take note they are simply looking in the wrong place.

The price guide is no guide at all.

7 Questions to ask an agent when selling?

What evidence did you rely on when valuing our property?

We are all susceptible to believing what we want to hear. If an agent quotes a high price for your property, it’s natural to want to believe them. However, if an agent cannot justify their price to you as the owner, they will have an even harder time convincing a buyer!

If the property sells below your quoted price, do we still have to pay full commission?

When you sign an agency agreement to sell, the agent must provide a written assessment of value. You, as the seller, enter into the agreement, in part, based on the written assessment of the agent. If the agent fails to achieve their promised assessment of value, you should have an ability to penalise the agent for getting it wrong. By being firm on this point when interviewing agents, you will flush out what the agent really thinks your home is worth.

How do you have an auction with one buyer?

Auctions rely on competition i.e. multiple bidders. Unique homes often require unique buyers. In soft markets, you can be fortunate to have even one buyer. What happens if only buyer attends the auction? What if two buyers attend the auction, one whom absolutely loves the home and one who is a bargain hunter? The bargain hunter sets the price at which the emotional buyer becomes the highest bidder. Don’t sign with an agent until they offer a plausible explanation on how they handle a situation where they only have one buyer at the auction.

What strategy will you employ to get the highest price for our property?

Agents love to talk about ‘clearance rates’ when selling and marketing their firm. As a home seller, you want a high price, not to take place in an agent’s clearance sale. Focus on the agent with the best strategy for achieving the highest price, not clearance rates.

If you already have buyers, why do we need to pay advertising upfront to reach those same buyers?

It’s the greatest paradox in the market. The agent claims to have readily available buyers, and then asks for advertising money to find buyers. Why?

Who is the agent that will attend the inspections with buyers?

Many lead agents will list the property and then palm off the selling of the property onto a junior or assistant. Get it in writing that the agent you list with will be the agent handling inspections and negotiations. You don’t want the sale of your home to be treated as a training exercise.

Can we have the names and numbers of 10 previous clients?

Real estate agents sell houses to buyers and services to sellers. The house is tangible yet the service is intangible. Judging the value of any service in advance of actually receiving the service is difficult. Speak to the agent’s recent clients to ascertain whether the promises match the delivery.