Buyers, sellers, agents and brokers are all dealing with a new reality: for the first time in decades, the real estate market is finding a new equilibrium. After a run of almost-uninterrupted market (= price) growth for the better part of 30 years, price increases are slowing, remaining flat and – in some rare circumstances – actually dropping a little.
With changing circumstances comes a change in the way we need to think about real estate. There are certain things that buyers and vendors need to be aware of in a fluctuating market.
Buying in a soft real estate market
Buyers love a bargain, and when the market feels a bit shaky, there’s a tendency to wait just another week or month or more, just to see if prices drop further.
Of course, the lure of lower prices brings plenty of buyers into the market, and any property that seems to offered at a bargain price will probably attract more people. Bidding wars can quickly erase any perceived bargain and any advantages of a flat market. Good properties will always sell for good prices. Waiting for further drop in the market might pay off, but finding the right property is still the main game, no matter whether which direction prices are moving.
Buyers also need to keep in mind that they might not have the upper hand in terms of bargaining. Vendors sell for a wide variety of reasons, even in a slowing market. But given the current situation, vendors are unlikely to be shooting for the moon with outlandish prices. Under advice from agents, this is a time when asking prices are more likely to reflect the vendors genuine price demands, so treat negotiations cautiously. Consider the long term; don’t let your ideal property slip by because of a couple of thousand dollars.
Tips for selling in uncertain times
It’s human nature. Just just as vendors are always the first to realise that property prices are surging, they are also last to realise that the market is slowing. Prospective buyers won’t look twice at properties they believe are over-valued, and we tend to see some properties remain on the market for many, many months.
The choice facing vendors is either to reduce the asking price or take the property off the market. Both choices perpetuate negative sentiment and can hasten the slowdown.
This doesn’t mean vendors can’t still get great sale results. If you’re selling a property after holding it for several years, you’ve probably seen its value increase. Sure, it might not have double in value in seven years (ahhh, the 2000s!), but there’s still profit. Also, of course, if you’re selling with the aim of buying something else, you’re transacting in the same market. You might sell for less than you hoped, but you’ll probably buy for less too.
The price is right
Understand the market right now. Agents can help, but realise that their number one aim is to sell your property and pocket their commission. If you know what comparable properties in your location have sold for recently, you’ll be in a stronger position to set a reasonable price. This is not the time to get greedy; prices set too high will severely reduce the appeal to buyers.
Whether you’re buying or selling, we can help with advice and information, including obtaining a free property report showing recent results in your location. Our services come at no cost to you, so you’ve got nothing to lose. Drop us a line at Mortgage Broker Group and one of our property experts will be happy to help.