Back in 2020, property buyers were living the dream. Out of touch bank economists where saying the property market would never go any higher, property owners were going to be wiped out and prices would tank by 20% or more.
A few conservative property owners started putting their properties on the market and were actually negotiating with buyers to meet the market price so they could sell and get out.
Then the market went crazy. Thanks largely to that famous RBA ‘no interest rate increase until 2024’ line, buyers swarmed into the market and prices leaped by 30% – 50%. Real estate agents actually became popular and – if you were a buyer – it was a miracle if agents actually returned your calls.
Now, of course, things have changed again. Buyers have a little more leverage, though sellers seem to have retreated to wait out the current phase of interest rate hikes. The market seems to be poised on a knife edge and the new guessing game is ‘which way will rates go this month’.
With uncertainty abounding, it’s times like these that create great opportunities for buyers as long as you master one critical piece of the buying process . . you need to know how to determine the correct price to offer on a property.
Assessing price has always been a dark art in the property industry, and it’s currently the sneaky secret rolling out in the market across Australia.
All players use price to their advantage – banks control valuations to determine lending limits, vendors have emotionally high price expectations, buyers hope for bargains, and agents use all this to achieve their own goals.
Not always the villains . . but close this time
While it’s easy to point to selling agents as the villains, it’s important to firstly acknowledge their role is to achieve the best possible price for their vendors.
Good agents know how to do this professionally, but current market conditions are providing the perfect excuse for the big issue buyers will never know they’re facing = underquoting.
There’s a legal definition for underquoting which relates to overt misleading of the market, but it’s very difficult to prove in ‘normal’ market conditions, let alone in today’s tricky market.
The game agents play
The way the agents set things up is at the start of the selling process. When an agent agrees on a sale price with a vendor they will agree to a price band. Then – to attract the maximum amount of buyers – the agent will allocate a ‘guide price’ that will be on the lower end to appeal to buyers.
This will mean the property attracts a range of buyers, creating competition, driving the price up. Then . . .surprise . . the property sells for thousands of dollars over the price guide.
Buyers can take control
Of course under quoting isn’t the only strategy agents use. There’s the ‘I have another buyer’ game, the ‘if the vendor doesn’t get their price they will take it off the market’ story, the ‘if you don’t buy now the price will only go up’ approach – along with a handful of other games agents play.
Love them or hate them, real estate agents use whatever leverage they can to their clients’ advantage . . which is actually what they’re supposed to do. As a buyer, you can’t expect them to be on your side.
But there’s something you can do – as a buyer – to take control. Understand pricing.
How to determine price
In any type of market – fast, slow, or tricky – one of the pivotal skills you need to protect yourself and succeed in the property market is to know how to run good comparisons and determine the price to pay for a property.
Get this right and you’ll save countless hours wasting time on property that will never perform, won’t meet your requirements, or just isn’t right for you.
Many buyers think they have a ‘negotiation’ problem, when really success is all about assessing price correctly.
Once you know how to assess price, you then have the ability to compile an attractive offer or confidently participate in an auction that you’ll have a much higher chance of winning.
It sounds simple, yet it can take you years and a few mistakes along the way to get the skills you need.
That is why we developed the ‘Buyer Success Pack‘. Now you can quickly discover:
– the key elements to assessing price
– how to quickly identify pricing influences
– what factors you can use to leverage your position
– and a whole heap more.
The Buyer Success Pack covers the critical elements you need to make great property decisions and avoid the traps of buying in the current market. It provides you with the skills you can use to know how to make an offer the sellers and agents can’t resist, and also how to win your property auction.
**Access more information about the Buyer Success Pack HERE****
One thing is certain, it will be an action packed market for the next few months and we’re here to help you.
About the author
Debra Beck-Mewing is the Editor of the Property Portfolio Magazine and CEO of The Property Frontline. She has more than 20 years’ experience in buying property Australia-wide and has extensive experience in helping buyers use a range of strategies including renovating, granny flats, sub-division and development. Debra is a skilled property strategist, and a master in identifying tailored opportunities, homes and sourcing properties that have multiple uses. She is a Qualified Property Investment Advisor, licensed real estate agent and also holds a Bachelor of Commerce and Master of Business. As a passionate advocate for increasing transparency in the property and wealth industries, Debra is a popular speaker on these topics. She is also an author, podcast host, and participates on numerous committees including the Property Owners’ Association.
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Disclaimer – This information is of a general nature only and does not constitute professional advice. We strongly recommend you seek your own professional advice in relation to your particular circumstances.