Buying & selling property in the current market -September
There has been plenty of talk in the media about how the market has slowed and how property prices have dropped, but what isn’t being reported is how many successful sales have been made over the past 2-3 months. We have had several really busy auctions where we have had multiple bidders and the property has sold under the hammer and over the reserve.
There is also plenty of talk about how auctions don’t work in the current climate, but the statistics say otherwise. Across the whole of New Zealand auctions out-perform any other method of sale by a factor of around 2 to 1. This goes for both clearance rates (i.e. how likely are you to sell) and days on market.
We are part of Ray White City Realty Group.
The group has held 337 auctions from January of this year to the 30th June. Of these, 9 sold prior to auction, 120 sold under the hammer, and 68 sold post-auction. That is a total clearance rate of 58.16%. Compare that to the clearance rate for sales by any other means (including set-date-of-sale): 17.1%….Auctions still work!
So is this a good time to be selling property?
If you listen to the media the answer is a resounding “No!” however once again things are not always as they seem.
If you are thinking of upsizing but think you will wait until the market improves, you may want to think again.
You are likely to be better off selling now: After all, you will be buying and selling in the same market, and if you sell now and are looking at spending more on your next property, it’s cheaper to spend 20% more on a low value than 20% more on a higher value. And of course, once you’ve sold property prices may drop further so you will have sold at a relatively higher price than you buy.
In the previous market we saw plenty of people sell for what they thought was a fantastic price but discovered that if they didn’t buy quickly, prices could run away from them.
On the other hand, if you are downsizing, you will be selling and buying in the same market, and as in the case of upsizing, you won’t have the market running away on you between the time you sell and the time you buy.
So in fact now is probably one of the best times to be buying property:
Prices are low and appear to be stabilising, interest rates are possibly going to increase (so a good time to be locking in your rates) and there is more choice in the market than probably ever before over this winter.
If you are selling the story is a little different: There are fewer people in the market to buy at present and finance can be tough, especially for first-home buyers. If you are selling an investment property below or around the $1m price bracket you may get plenty of potential buyers through your open homes but the number of bidders is likely to be tiny. We auctioned a lovely property in Remuera and had 68 groups through the three weekends of open homes, and three bidders on the day (1 bidder per 23 open home visitors). (It was still a great result for our owners and sold for $70k over the reserve; for just under $1m). Twelve months ago there would have been 120 groups through the open homes and probably around ten registered bidders. (1 bidder per 12 open home visitors).
So yes, the market is tougher for sellers now; it would be fair to say it is a buyer’s market right now.
As is always the case, there are always people in the market that have to buy or sell, so whichever side of the coin you are on you can be pretty much assured of getting a result, but how do you ensure you get the ‘best result’?
If you are buying, the answer is simple – better to buy now than to wait. Take advantage of the supply and perhaps even make a couple of compromises on what you buy. As we will explain in a moment, ‘perfect’ properties are still commanding a premium, so buying something that maybe needs a little work, may mean you get a much sharper deal in the current market.
If you are selling property there are a number of things you should really focus on:
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Presentation
- When there is competition in the market you want to ensure you don’t give buyers any excuse not to buy your property. Staging/dressing your property is very important, and make sure you have decluttered and cleaned, and make sure you take care of any issues i.e. titles that are defective, consents that haven’t had final sign off.
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Method of sale
- As stated earlier – go to auction, the numbers don’t lie! However, not all auctions are created equal, so choose your agent/brand carefully (more on this in next month’s Money Matters)
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Choose your agent carefully
- All agents are not the same either. Choosing your agent based on the cost of their service (marketing and commission) alone is a recipe for disaster.
- Here are three questions you should ask your potential salesperson as the very minimum:
- What is your success rate (how many properties that you take to market do you sell)?
- How many properties have you sold in the past 6 or 12 months? (This is important because it reflects directly on the number of potential buyers they have in their database and how well they operate in the current climate).
- Can I see some client testimonials? Or check out their Google reviews if they have any. Beware relying on some of the portals that suggest agents for your area – many of these ‘referrals’ are in fact paid for by the agent.
Finally, if you are one of those people waiting for the market to change, all I can say is that even economists and banks get it wrong all the time. Picking the bottom of the market is as difficult as picking the top. Even Tony Alexander, one of the few economists to accurately predict anything in the property market over the past ten years, is hedging his bets at the moment!
Lisa and Steve Stone
RayWhite