It’s one of those clichés you’ll often hear in real estate … properties that are priced appropriately are selling. It seems so obvious, really. When you’re making such a big investment surely you’d only do it at the right price? But of course buying houses is emotional and there’s so much more that goes into it than rational thinking about whether it is money well spent. It could be the look and feel, the layout, or the location that sways one buyer to pay a whole lot more than the rest.
If you want to look at how complicated human decision-making is just look at how we pick which political parties will win government. Now that there’s a federal election looming, we’ll all have more than enough opportunity to gawk from the sidelines as votes are won or lost on looks, tone, sound, hair colour, and a little bit of policy, real or perceived.
Nevertheless, when it comes to houses, a lot of real estate agents are saying that buyers are being a lot more careful, and really weighing up where to put their dollars. Less competition from other buyers is providing house hunters with more choices, and they’re taking their time, choosing wisely, and demanding properties are up to scratch.
Agents are saying many vendors are yet to catch up with the swift market cooling of the last couple of months and want higher prices than buyers are prepared to fork out.
I saw a great example of the old price-is-right mantra this week when I spied a sandstone home for sale. Double fronted, it looked like the perfect family pad – except that its immediate neighbour was the car park of a sex shop, and only four doors down, across the road, was a train line. Oh and it had a pretty busy road a few doors the other way.
It could have easily been a house that languished on the market while the vendor held out hoping that the prestige of the neighbourhood that it bordered might rub off. But the vendor was either in a hurry to sell or had a good sense of where the market was at because the home was priced at about $200,000 less than comparable places just a few streets away. On the first open there was a surprising buzz – not quite a swarm – but a healthy hum of activity from house hunters. And less than a week later, a big SOLD sign was slapped up out the front.
Part of the problem for vendors is the market has been moving so fast lately that it’s hard to keep up. One moment it’s hot and the next it’s not. In pockets there’s still plenty of buying action, for example one Sydney agent says she had 53 people inspect a property in the trendy inner west over the weekend. But in others, real estate agents are ringing around trying to drum up interest.
When you’re selling working out what price you should go for is hard. But just as house hunters are told to find up to a dozen recent comparable sales when they are researching a house’s value, vendors can do that too. The advice for house hunters is to look at the prices places nearby have sold for in the last six months, being careful to compare apples with apples by finding properties that have similar land size, bedroom numbers, layouts and car parking. Sales in the last three months are particularly telling.
If you’re a vendor and you want to find out where the buyers’ thinking is in terms of money, you’d do well to do that research. That way you will find out which direction the market is going in your area, and will be using the same pricing method as your buyers. Of course, if you decide your home has special features and it’s worth holding out for a better price, you might just be lucky – after all spring is just around the corner and the warmer weather brings out the buyers.
Story by Carolyn Boyd – Domain.com.au