When we look at Sydney’s property market in 2020, as with most things, it has been characterised by uncertainty and rapid change.
Things are altering at a fast clip and if you can’t quickly read the signs and respond, opportunities will slip through your fingers.
This is why, time and again, I see today’s go-it-alone purchasers missing out on properties.
Many buyers assume they know and understand the market but in reality, they’re getting it wrong. Unless you are working in the property market day-in, day-out it is nearly impossible to remain on top of its everchanging nature.
Here are several errors I see buyers make in this fast-moving market.
1. Poor Market Interpretation
Real estate is a spectator sport in Australia. We all have opinions about property and most of us are happy to share them with anyone who will listen.
The biggest misconception I’ve seen this year is buyers believing the market is soft – or on the cusp of a price plummet – and it’s resulting in repeat disappointment for these purchasers.
When this pandemic first hit, and shutdowns put a stop to the trading of real estate, those looking to buy thought they were in a plum position. They assumed most sellers would want to offload their assets and shore up their finances. This would flood the market with options and drive down prices.
Whilst there were a few “fire sales” at the beginning of COVID Many vendors of premium Sydney properties decided to bide their time and see how the pandemic unfolded.
In the end, listings dwindled and while buyer numbers were also limited, they still exceeded supply. The result was that prices generally held firm.
As we’ve progressed through the year, many buyers have been waiting for the softening, but it hasn’t eventuated. Low interest rates, government support measures and the fundamental necessity of shelter have seen demand and supply remain balanced.
In fact, the latest CoreLogic numbers show that in Sydney, house prices have risen 1.7 per cent across the year to date and are up 4.6 per cent across compared to 12 months ago.
But many buyers still aren’t learning the lessons and some still expect that an economic fiscal cliff in 2021 will result in property prices dropping. In reality, the extension of JobKeeper, the progress with effective vaccines against COVID and general mood of positivity is keeping sellers upbeat and values firm.
In short, any buyers holding back their property purchase plans in anticipation of a discount will be sorely disappointed.
2. Negotiating Poorly
Everyday buyers don’t negotiate on properties for a living. Buyers’ agents on the other hand are professionals who hone our skills over decades and forge deep networks in the industry.
I see go-it-alone buyers make some basic errors in the field of negotiation.
Firstly, for example, price is just one component. There are several possible negotiable conditions in each contract that can get a deal across the line. Settlement periods and the list of inclusions are tools that can be bent and flexed within the agreement. If you are trying to negotiate on price alone and in isolation, then you are at a severe disadvantage.
The other thing I see is buyers being too aggressive with selling agents. Relationships are key in this industry. If you do not maintain a civil approach to negotiation, you will soon be cut out by the selling agent who may prefer dealing with another buyer. That is not to say that you give in or don’t hold your ground but remember that selling agents are your gateway to the seller and are seasoned professionals who should be treated with respect during the process. You cannot afford to put them offside.
3. Misinterpreting Sales Evidence
Using comparable sales to assess the market value of your potential purchase is essential. However, if you don’t understand the way sales should be interpreted, or how the various components that make up value are weighted in the comparison, you’ll come up with the wrong figure.
Was the sale between family members at a discounted price? Could it have been bought by an adjacent owner willing to pay a premium? Were there special conditions attached to the contract? Was it an extended settlement, or subject to some sort of development approval? Was the property negatively impacted by WestConnex tunnels?
All these can affect the selling price and have an outcome on how you assess your property’s value.
Also, in terms of the property you’re wanting to purchase, do you understand the significance of proximity to water, transport and facilities and the degree to which they influence market value? How about factors such as site orientation and elevation, or even heritage issues.
Everything must be taken into account in order to make an accurate comparison between the property you are considering and the sales evidence.
Being a purchaser in today’s market is much tougher than it looks. The best approach is to outsource your search to a specialist. Buyers’ agents are skilled, informed and well connected, and give you, their client, an extraordinary advantage when it comes to beating out the competition and securing a home.
If you would like to find out how we can help you with your property search, contact us today.