The Property Market Is Finally Easing. Here’s What You Need To Know When Selling
Originally published on Linkedin.
New data from CoreLogic shows that the expected is finally happening: housing prices are easing in Sydney and Melbourne. The value of property remains robust in other cities and regional areas, but they’re expected to follow suit in the near future.
What is interesting is that while it was always expected that 2022 would see some easing of property values, it is happening a little earlier than expected. The Reserve Bank was meant to drive a decline via an official interest rate increase later in the year, but the market is adjusting even before that has happened. The cause, in this case, is the banks. Ahead of the expected rates increase, buyers have been rushing to get fixed interest rates locked in, and this is affecting bank behaviour. They’re reducing the amount that they’re willing to lend.
For buyers, this means that buying a house won’t necessarily be getting easier, though there may be fewer people vying for each property. For sellers, it’s still a good time to sell! Though property prices have eased slightly, they’re still well up over the last couple of years. However, you need to make sure that you’ve got the right agent in this kind of market.
How Agents Might Behave In An Easing Market
One thing to be particularly careful of in this market is agents that will be tempted to underquote to try and drive up interest in a property from a smaller pool of buyers. Buyers will be aware that property pricing is easing, and an agent might try to exaggerate that to create the perception that the property is a “bargain.”
Underquoting is illegal, of course, and as the ACCC lays out, agents are expected to advertise the selling price based on a reasonable market appraisal or the price the seller is likely to accept. If the agent is encouraging you to allow them to underquote, you should refuse to sign off on the proposal.
Your best defence against underquoting is to know the local market yourself. Are values in your particular area declining? If so, by how much, and what are properties that are comparable to yours selling for? If you can come to an independent understanding of your property’s worth, you can negotiate with the agent from a stronger position.
Another common (and likewise illegal) tactic that some agents employ is to convince a prospective buyer that you’ve rejected offers of a greater value than the one they’re making. This is a pretty blatant effort to get the buyer to offer more, but while it can be undeniably effective, agents are required not to make false claims like this.
Finding The Right Agent
The ACCC lists a couple of useful tips for screening and dealing with agents:
- Ensure the agent has a licence. Check with your local state or territory consumer protection agency.
- Do some research to understand the going rate for homes for rent or sale in the area. An independent evaluation may help.
- Read contracts and documents carefully before you sign. Get legal advice if you are unsure about what the contract means. Ask for explanations to ensure you understand:
- all costs and what they cover
- any limitations
- lease or settlement time frames and any cooling-off periods.
- Ask yourself whether the information the agent has given you seems fair and accurate.
- Never sign blank sales authorities, contracts of sale or rental agreements.
However, we also highly recommend that you do full due diligence and research more than just the going rate for houses in your area. Also, take the time to research all the agents in your local area, and shortlist a top three or four. Listen to all of their pitches, and don’t necessarily assume that the highest sales price of the group will be the best one – especially if they’re promising well above what the others are.
Finding the right agent takes experience and an understanding of how they operate in order to spot potential issues and red flags. This is the service that we offer our clients at Hello Haus. With decades of experience in selling property, we can take the due diligence and negotiation process with the agent off your hands.
As an example, we recently helped a client in NSW, who contacted us with an off-market verbal offer from a buyer/agent, and asked us to quickly determine the real market value and whether or not they should accept. As it panned out, we encouraged the owner to seek further market appraisals from local agents, and were able to establish a higher sale price expectation. We helped them to select the right agent to represent their needs, negotiating their selling fees to the lowest point possible. They then sold the property for $75,000 higher than the initial offer, and achieved all of this within 14 days of marketing it online.
With the right agent, even in a softening market, you can make the most of your decision to sell your property. Even more than during a booming market, however, what’s important is that you have a reasonable sense of what you can expect from the sale and your agent ahead of time.
Considering the sale of a property? We can help cut the stress, find you the ideal agent, and negotiate the best possible terms. Contact Hello Haus today!