Welcome to Spring 2018.
After six months of price correction, the Inner West market now seems to have stabilised and both buyers and sellers have mostly accepted the adjustment “that the market had to have”. Market swings or changes traditionally take a bit of getting used to, especially for sellers who usually have to make the biggest adjustment.
As opposed to last year where I saw buyers suffer from FOMO (fear of missing out), I am now seeing FOOP (fear of over paying), with buyers hesitating to make a move even for a property they love. Social proof has never been so important for buyers, and they are now missing out because they simply don’t know what to pay for a property. With far less buyers bidding at auctions (mostly due to finance restrictions), there is a lack of social proof or evidence about a property’s worth, making the decision process harder for them.
So why do Agents still believe that Auction sales are the way to go?
Agents prefer the auction process because it sets a time frame for buyers. It forces them to make a decision by a certain date (auction day). It’s also a public process which means that it’s transparent and buyers can see what someone else is prepared to pay for a property and must act if they are prepared to pay more (social proof). The auction process can also force a buyers hand early in the piece to avoid competition, but to secure a property before auction their offer must be too good for the seller to knock back. So in theory, the auction process allows the seller to sell before the auction (for a fantastic price), at the auction (if they have competition which can force up the price) or after the auction (and accept the current market value). The auction method also avoids your property having an asking price which is essentially a price cap. Remember, a property is worth what someone is willing to pay for it, and it could be more than what you think.
Most properties that don’t sell at auction sell shortly afterwards, and in Sydney we have the shortest “days on market” than any other state or territory in the country. Perhaps we have become too accustomed to expecting ultra-quick property transactions, and just need to accept a more realistic timeframe when the market changes. Sellers who are patient in this market can achieve great prices, they might just need to hold out a bit longer than normal until the right buyer comes along.
Spring is a great time to have your property appraised, whether it be for an equity check or a re-finance. There are some great rates out there at the moment and I suggest that you speak with local mortgage broker Mike Davies from Nectar Mortgages on 0424 885 878 if you’d like to take a look at your current home loan. It could save you tens of thousands of dollars in the long term.
We’ve had some excellent results this month and congratulate all of our buyers and sellers. If you have any questions about the property market, I am always happy to take your call.