The property market is complex whether you’re buying or selling and in recent time even Australia’s most trusted institutions have incorrectly forecast property market trends.
The real estate market often fluctuates in favour of either buyers or sellers, depending on the economy, interest rates, political decisions (first home buyers grant) and as experienced recently, global issues much like the pandemic.
The Australian property market currently finds itself in the midst of a property ‘price’ boom not seen since the early 2000s which is mostly driven by a shortage of properties on the market (currently listings at a 20 year low) with record low interest rates which are predicted to remain for some time. This unprecedented seller’s market is magnified further by a record high level of buyer demand as consumer confidence returns.
What is a seller’s market?
A ‘seller’s market’ is a real estate term that describes a market where demand exceeds supply, or in other words where there are more real estate buyers than sellers. In short, there are not enough properties on the market for all the interested buyers
This often leads to multiple buyers interested in a single property, meaning it is not uncommon for properties to sell above their list price as buyers compete for the hottest commodities.
In a seller’s however it is worth remembering that when upgrading vendors are selling and then buying in the same market and as such may not be disadvantaged
The signs of a seller's market:
- Homes are selling for high prices whether well-presented, located poorly or in need of renovations
- Sale prices are being achieved above asking price
- The percentage of successful sales and auction clearance rates are higher than normal
- General economy is on the rise
- The number of properties on the market is low compared to previous months or years
- Sales are being achieved with low ‘days on market’
How to buy in a seller’s market
- Get finance pre-approved:The pre-approval puts you ahead of the competition. If a home seller is choosing between multiple offers, they’re more likely to choose a buyer who has been pre-approved for financing
- Put down your best, strong offer first:Normal practice typically is to place a low offer expecting a counteroffer from the seller, in this market you may not get a second attempt so start with your strongest offer. At this stage it is paramount that ‘due diligence’ has been completed to ensure purchasers know what you should be paying for the property based on latest market data. Research, research, research!
- Keep offer simple:The fewer requests and conditions to the sale, the better although a pest and building report should always be included.
- Offer a strong deposit: Sellers gain confidence when a deposit of at least 10% is paid and consider a further deposit when contract becomes unconditional.
- Extend settlement to assist seller: in a market with few listings provide the seller with more time, if required. 30 days is standards but 60 or 90 days may again make your offer more attractive.
Avoid the common mistakes buyers make in a seller’s market
- Over-analysing the price:In the same way that impulse-buying a home is not recommended so is over-analysing and taking too long in this market. As mentioned earlier be prepared with finance and market knowledge so you can move quickly and negotiate with confidence.
- Prepared for a bidding war:Often commonplace in a seller’s market the seller will receive multiple offers so set your maximum limit in order to not blow your budget.
- Make your best offer: When it comes to making a purchase, most of us naturally want to offer lower than asking price as a strategy, which could work in a buyer’s market where there is many available properties however making a low offer in a seller’s market with multiple interested parties may knock you out of contention.
- Not proving you are a pre-approved buyer:Make it clear to the agent and seller that your finance is pre-approved to demonstrate you are a serious buyer.
Selling and Buying in a Sellers’ Market
Understandably the majority of property owners have concerns about selling and then buying in the current market, worried about if I sell, will I find something else I like or If I have to rent can I find something (current rental vacancy rates are below 1%), and what if the market continues to increase and I’ve sold. Here are our tips to navigate this:
- Make the most of the current market:Make sure you work with an experienced real estate agent who knows the local market and can support you in provide accurate, recent sales data. Obtain a detailed strategy from the agency that will achieve outstanding results while understanding your circumstances moving forward.
- Extend settlement date:Delaying settlement on the sale of your property could be an approach, instead of the ‘normal’ 30 days settlement; make it 60 or 90 so you have more time to potentially find another property.
- Prepare your home for sale:If you’re hesitant in listing your home before you’re able to buy, consider preparing your home for sale in order to fast track the process when ready to list. This would include:
1/ Choosing your agent and conjunctly conducting thorough market analysis on potential sale price and which strategy to adopt i.e. Fixed, Auction, Offers Over etc.
2/ Have your agent prepare the marketing campaign including signboards, photography, advertising on real estate portals such as realestate.com.au, Domain, All homes, agents database, letterbox drops, print, social media etc.
3/ Refer Riverhaven Real Estate website article for assistance
Contact Simon Gordon for more information
0422 966 774 | email@example.com