Spring market to gauge housing market.
The housing market experienced two events over winter – low stock levels and strong price growth. When interest rates are low in combination with tight stock levels, price growth is never far behind. But it can set up a misread of the market too. Many buyers competing for few listings in winter can carry a different outcome than when many buyers are picking over many listings in spring.
Historically, the most transactions occur in the last third of the year, from September to December. If prices hold or even rise from current levels between now and Christmas, the price gains in winter will be justified. If the extra stock on market causes a softening in prices, it will suggest the strong prices achieved in winter were aided by a lack of seller competition.
Buyers can expect stock on market to rise by 30-40% in spring. The good news is that whilst spring will bring extra sellers into the market, the buyer pool does not expand to the same degree. Prices have risen by around 10% this calendar year, so further growth would be a surprise, but not an impossibility.
However, one thing buyers wont find this spring is good property at a bargain price. Regardless of what happens in spring, 2014 will go down as a sellers market, the second year in a row that sellers have held the upper hand.
To ensure an accurate read of the spring market, buyers and sellers are well advised to gauge the market on the basis of real time results. A sale in the same street three or four months ago is largely irrelevant. Buyers can only make offers on properties that are currently listed for sale, and sellers can only sell to buyers active in the market. Whether the market rises, falls or stagnates in spring will depend on the factors driving today’s market. Previous sales are now history.
Come what may, the real market conditions will become evident during spring.
The goal when you list your home for sale is to achieve the highest possible price for it. This seems like an obvious goal for any homeseller, yet it is often lost during the campaign.
Agents will focus on, days on market, clearance rates, or the reserve price. None of these indicators should ever supersede the vendor’s ultimate goal, yet it can be the focus of the agent if you allow it to be.
The reserve price is simply the lowest price at which the owner is prepared to sell. If you keep your reserve price confidential from the agent with instructions to establish the highest paying buyer in the marketplace, you stand a much better chance of controlling the sale toward a favourable outcome.
Many agents like to spruik the high auction clearance as a guide to success. But everything sells in a real estate boom. A high clearance rate is a given regardless of the selling process. Getting the highest possible price must be the ultimate goal when selling.
When selling your home, many agents will suggest that you invest money upfront in advertising. This money is not refunded should the campaign fail. Even worse, the agent can promise a high price and still charge whopping advertising fees should the property fail to reach the price they promised.
The expenditure will be positioned as a normal path of employing an estate agent. But you need to be aware that it is not normal to spend thousands upfront in advertising. To ensure a cost effective campaign, advertise your home where buyers are looking – the Internet.
In the digital age, avoid expensive and unnecessary print campaigns in newspapers and agents magazines. Often the agent is simply building profile for their brand with the owner’s money. The owners are mistakenly advertising for buyers in a medium where buyers are not even.
The market conditions are extremely buoyant – an agent that requires excessive advertising upfront is essentially admitting that they don’t have any buyers for your home. The best agents have genuine buyers ready to buy.
An entire chapter is dedicated to cost effective marketing in Real Estate Uncovered.