Cutting Through The Noisy Headlines When Selling Property
Originally published on Linkedin.
As a seller, it’s easy to go into the market with high expectations right now. The headlines keep reinforcing how much of a boom there is in Australia’s property market, there are stories about properties that are going for as much as a million above reserve at auction, and because of that, the slowest of markets in the country can feel like a runaway opportunity, for every property.
Overall, the “pandemic property boom” has driven house prices up by 25.2 per cent nationwide for the year, January through December 2021. In several key markets (such as Sydney) it was as high as 33.1 per cent.
Now, however, agents are warning sellers to temper their expectations somewhat. A report on the SMH suggests that agents are advising their clients that buyers are becoming cautious about overpaying for a host of reasons, and that’s affecting the prices that they can expect for their property, even if the similar house netted its owners a healthy bonus.
“Sellers naturally think their properties are always worth more than what the one sold [for] down the road, however, that’s not the case,” Ray White NSW chief auctioneer, Alex Pattaro, said in the report. In the same report, Pattaro warned that uncertainty looms later in the year over the federal election and possible interest rate hikes.
For one particularly significant example of just how much sellers can now be asked to temper their expectations, we’re working with a client for who agents pitched a property at Camperdown in Sydney in November 2021 at $2.5 million. Despite having 130 buyers through there were no offers at that price, and nor were there any at (the subsequent reduced asking prices of) $1.99 million and $1.8 million. The advice that the seller is now being given is to aim for $1.6 million and to run another auction campaign – a significant drop on what they would have hoped for at the start, and a time-consuming effort to sell!
This was always going to be the line the agents took once the explosive growth in property values started to ease, and it’s important to be able to cut through what agents are saying to arrive at the truth of the matter.
If you are considering the sale of a property, the agent is likely to draw on the following strategy to set your expectations, so watch out for it:
Firstly, they will encourage you by letting you know that while the white-hot demand is easing, the numbers are still good and the market is still robust. To prove their case, they’re going to point to data from 2021. In particular, expect to see a lot of end of 2021 sales results quoted, which are particularly impressive across Australia.
That’s step one, and the foot in the door. Once they have convinced the seller that the best time to sell was yesterday, but the second-best time to sell is right now, the agent will then move to introduce fear into the process. They’ll do that by convincing the seller that there aren’t many buyers out there so the sale should be closed quickly, and that this might require some compromise.
This, too, was there when you read between the lines in the SMH report, with The Agency general manager for Victoria, Peter Kakos, saying “if vendors are sitting waiting for that premium, they need to quickly align to the market to get sold.”
Finally, you’re going to see a lot of agents pointing to negative media headlines to further back up their claims. Stories such as rates increases, affordability issues, dropping auction clearance rates, and more supply entering the market will be used by agents to set expectations among sellers. It’s not to discourage them from putting the property on the market, but simply to moderate their expectations on what the property will “likely” sell for.
What can sellers do?
Understanding the true value of a property, independently of what the agent will tell you that it’s worth, is the most important thing that a seller can do in the current market. This means researching the prices that equivalent properties in the area have sold for. It also means interviewing multiple top agents (at least three) to get a cross-section of their perspective on the market and your property’s potential.
It's important not to panic. Even within the context of negative headlines and the perception of an easing market, rushing to a sell can result in a disappointing sales figure. Taking the time to properly prepare the property, and find the right agent and buyer, will always trump a reactionary move based on the news cycle.
Need help with determining the value of your home, and finding the right agent that will represent it in the market? At Hello Haus, we are experts in negotiation, and we can help you determine the real value of your home, and find the right agent that will help you sell for a premium while keeping more of the additional profit for yourself.