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Should you sell in a buyer's market?

It's natural to feel uncertain about selling your home in a buyer's market, but it can stack up financially.


The real estate market moves in cycles, and no one – not even the experts, can pick when the market reaches its peak, or conversely, its lowest point. But it is easy to recognise the different market stages.

A sellers’ markets occurs when prices are high and rising. Buyers scramble to compete for listed properties, homes sell quickly, and at the market peak, auction clearance rates can be very high.

However, at some stage, for a whole variety of reasons, buyers will retreat from the market. The level of competition between buyers softens, and homes take longer to sell. In a bid to sell, vendors become more open to price negotiations, and as the supply of listed properties starts to outweigh demand, prices begin to fall and the pendulum shifts in buyers’ favour. The result is – you guessed it, a buyers’ market.

Are we in a buyers’ market?

After several years of big gains across a number of property markets, we are now seeing a buyers’ market in several cities across Australia including Sydney, Melbourne, Darwin and Perth. 

As a home owner it’s a no-brainer that you want to secure the best possible price for your property. And if you’re thinking of selling, it can be tempting to hold off until market conditions swing in your favour. But this can take time – and as we noted, no one really knows when the market cycle will turn upwards again.

Selling now can mean saving on your next home

An important point to note is that selling in a buyers’ market can offer a financial advantage – especially if you are planning to upgrade to a higher price bracket. An example will help to illustrate how this works.

Let’s say Lucy wants to sell her home, worth $500,000, and she plans to buy a place priced at $800,000. This would give her a changeover difference of $300,000.

If the market falls by 5%, Lucy’s home will drop in value by $25,000 to $475,000. However, the home she wants to buy will also have fallen in value by 5% to be worth $760,000. Lucy now faces a changeover difference of $285,000. By upgrading in a buyers’ market, she has saved $15,000.

Even better for upgraders, research group CoreLogic found that the bulk of price falls have been experienced at the top end of the property market. More affordable homes are often more likely to hold their value even in a buyers’ market, because they are often highly sought after by first home buyers and investors.

This is a key issue for upgraders as it can make a buyers’ market a smart time to take the next step on the property ladder.

Ways to maximise your home’s value

Successfully selling your home in a buyers’ market can call for a little extra work – but it’s worth the effort.

Partner with a skilled real estate agent – look for an agent who is getting runs on the board even in a cooler market. “Sold” signs will indicate an agent’s strike rate.

Don’t just go with the agent who provides the highest market appraisal. Set a realistic price that will see your home sold in a reasonable timeframe. Check out other homes listed for sale in the area to gauge how yours compares in terms of the price an agent is recommending.

Give your place an edge – look at your home through a buyer’s lens. What are the best features? How can you emphasise these? Conversely, what are the possible shortcomings and how can you address them? If the property doesn’t have a garage for instance, adding a car port is a relatively low cost solution that can make your home attractive to a wider selection of buyers.

Spruce the place up – major renovations aren’t necessary as a buyer will want to add their own touch. However, people can afford to be picky in a buyers’ market, and even small maintenance issues can become a big turn-off. Fix broken fence palings, remove dead plants from the garden, and replace chipped tiles or badly worn carpet. If necessary, give the place a fresh coat of paint inside and out. It’s far cheaper and easier than a big overhaul but it can seriously boost buyer appeal.

Be prepared, be realistic – selling in a buyers’ market can be frustrating. You may have to deal with tyre kickers who make ridiculously low offers or impose unrealistic demands only to bail out of the purchase at the last minute. Be prepared for this possibility.

What really matters is to take a realistic view of the market and be open to negotiation. Holding out for a high price could see you miss out on genuine buyers, leaving your home to join a growing selection of listed properties all competing for a limited pool of buyers.

Your Mortgage Choice broker can help

Yes, we’d all like to sell our home in a sellers’ market. But sometimes it just doesn’t work out that way, and if you’re selling to upgrade to your next home, a buyers’ market can work in your favour.

Mortgage Choice’s home loan experts understand the challenges of a buyers’ market, and can offer advice to streamline the changeover process and help you upgrade to your new home sooner. Give your local Mortgage Choice broker a call today.

The real estate market moves in cycles, and no one – not even the experts, can pick when the market reaches its peak, or conversely, its lowest point. But it is easy to recognise the different market stages.

A sellers’ markets occurs when prices are high and rising. Buyers scramble to compete for listed properties, homes sell quickly, and at the market peak, auction clearance rates can be very high.

However, at some stage, for a whole variety of reasons, buyers will retreat from the market. The level of competition between buyers softens, and homes take longer to sell. In a bid to sell, vendors become more open to price negotiations, and as the supply of listed properties starts to outweigh demand, prices begin to fall and the pendulum shifts in buyers’ favour. The result is – you guessed it, a buyers’ market.

Are we in a buyers’ market?

After several years of big gains across a number of property markets, we are now seeing a buyers’ market in several cities across Australia including Sydney, Melbourne, Darwin and Perth. 

As a home owner it’s a no-brainer that you want to secure the best possible price for your property. And if you’re thinking of selling, it can be tempting to hold off until market conditions swing in your favour. But this can take time – and as we noted, no one really knows when the market cycle will turn upwards again.

Selling now can mean saving on your next home

An important point to note is that selling in a buyers’ market can offer a financial advantage – especially if you are planning to upgrade to a higher price bracket. An example will help to illustrate how this works.

Let’s say Lucy wants to sell her home, worth $500,000, and she plans to buy a place priced at $800,000. This would give her a changeover difference of $300,000.

If the market falls by 5%, Lucy’s home will drop in value by $25,000 to $475,000. However, the home she wants to buy will also have fallen in value by 5% to be worth $760,000. Lucy now faces a changeover difference of $285,000. By upgrading in a buyers’ market, she has saved $15,000.

Even better for upgraders, research group CoreLogic found that the bulk of price falls have been experienced at the top end of the property market. More affordable homes are often more likely to hold their value even in a buyers’ market, because they are often highly sought after by first home buyers and investors.

This is a key issue for upgraders as it can make a buyers’ market a smart time to take the next step on the property ladder.

Ways to maximise your home’s value

Successfully selling your home in a buyers’ market can call for a little extra work – but it’s worth the effort.

Partner with a skilled real estate agent – look for an agent who is getting runs on the board even in a cooler market. “Sold” signs will indicate an agent’s strike rate.

Don’t just go with the agent who provides the highest market appraisal. Set a realistic price that will see your home sold in a reasonable timeframe. Check out other homes listed for sale in the area to gauge how yours compares in terms of the price an agent is recommending.

Give your place an edge – look at your home through a buyer’s lens. What are the best features? How can you emphasise these? Conversely, what are the possible shortcomings and how can you address them? If the property doesn’t have a garage for instance, adding a car port is a relatively low cost solution that can make your home attractive to a wider selection of buyers.

Spruce the place up – major renovations aren’t necessary as a buyer will want to add their own touch. However, people can afford to be picky in a buyers’ market, and even small maintenance issues can become a big turn-off. Fix broken fence palings, remove dead plants from the garden, and replace chipped tiles or badly worn carpet. If necessary, give the place a fresh coat of paint inside and out. It’s far cheaper and easier than a big overhaul but it can seriously boost buyer appeal.

Be prepared, be realistic – selling in a buyers’ market can be frustrating. You may have to deal with tyre kickers who make ridiculously low offers or impose unrealistic demands only to bail out of the purchase at the last minute. Be prepared for this possibility.

What really matters is to take a realistic view of the market and be open to negotiation. Holding out for a high price could see you miss out on genuine buyers, leaving your home to join a growing selection of listed properties all competing for a limited pool of buyers.

Your Mortgage Choice broker can help

Yes, we’d all like to sell our home in a sellers’ market. But sometimes it just doesn’t work out that way, and if you’re selling to upgrade to your next home, a buyers’ market can work in your favour.

Mortgage Choice’s home loan experts understand the challenges of a buyers’ market, and can offer advice to streamline the changeover process and help you upgrade to your new home sooner. Give your local Mortgage Choice broker a call today.

 

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