3. March 2017 09:30
Many years ago I started using a term which I called "Market segment" in response to the recognition that the spread of price range in prestigious suburbs like Applecross, Mount Pleasant and Attadale was huge.
You could have properties for $400,000 right up to $10M plus.
So when buyers ask me things like, “What is the average price per sqm of land in Applecross” or I see reports of official data such as “the average days on market was 63 days”, sometimes I want to either laugh or scream.
The reality for me in the areas I work it is never the norm or the same as that reported as “average”. There is no sensible way to talk norms or averages in areas that has such a massive variation of properties and values.
I divide Applecross into 10 segments, essentially to make some sense of what was happening simultaneously in the same suburb, depending on price. I measure days on market for unsold stock, sold stock, average and median values and days. It paints a vivid picture of contrast, and is fascinating to monitor and understand.
All buyers and sellers must understand this concept to fully appreciate what is really happening in that respective market at that time.
I often see some price categories (Market segments) take 300 plus days to sell, and sometimes we see properties on the market 3 or more years.
The simple explanation of this valuable concept is this. If a particular market can absorb 12 sales a year of a particular type/style of property, and there are 20 on the market right now, it would take 20 months for the market to absorb (Sell) all 20 without any changes to the market, or no new stock coming on.
In layman terms, the terms oversupply or under supply are a more general term for this phenomenon, whereas absorption rate is more quantifiable.
This is very important to understand how many sales in your market segment have occurred in the past 6 months, and how many competing properties are on the market right now.
DAYS ON MARKET: - How accurate is it?
We also see a huge manipulation of data, depending on who you listen to. There are many tricks to reduce days on market which make a lot of industry data inaccurate and even irrelevant.
Did you know?
A property listed with 3 agents for 100 days each, that changes agents as soon as the listing expires, and sells with agent number four in 3 days, is recorded as selling in 3 days. I regard that information as incorrect; the real figure is 303 days.
ALSO, properties can be pulled up and down off the internet, or signs come off or up (At agent will) yet are never really off the market. You see them go up again with the same agent a week later as “new” online. That is manipulation of data and not accurate. We regard that as not a new listing at all.
A property totally off the market for 60 days or more (Off all websites, sign down and out of the agent window) is considered off the market.
“Coming soon” or “Market launch date”, is sometimes another way to try to create a perception of lower days on market. We record the very first date a property is ever seen in the market (Be it sign, internet with an address or not, or any print media, as launch date).
If you would like a detailed explanation of any of these terms and how they relate to your specific property, and even more how it would affect your strategy, please drop me a line.
1. January 2017 13:34
Blog . Real Estate
Traditionally, New Year always means a fresh new impetus in the local property market.
Buyers and sellers alike set goals to move on, interstate transfers happen and people want to get the kids settled for the new school year.
Homes present well with the summer weather and generally people are more active.
I am particularly interested in recent years with the New Year, as I think a break from all the negative press of the previous year, is also a good thing. Also, people tend to look forward after Christmas, whereas there was a lot of crystal ball gazing and rear mirror reflection of the events of 2016 going on late last year.
2017 is no different. No doubt there are new buyers emerging, as is evident from the large enquiry over the Christmas break.
All in all, a great time for sellers to consider a move as there is good buyer activity, and often more new listings coming on for the buyers.
If you are looking for a move, contact the team at Evolution Realty and we would be delighted to assist you with your moving aspirations.
1. January 2017 09:31
Blog . Real Estate
The sales figures for 2016 are fascinating, even DRAMATIC. Despite what anyone says or thinks about the local real estate market, I expect to see big things in 2017.
The basics are still quite good. (Affordability, interest rates, unemployement still relatively low, housing supply).
There is a definite trend of reduced volumes of sales, quite dramatically however, so this is not a time for sellers to be too bullish. There is undeniable evidence that changed market conditions, sentiment, tighter lending and a lack of price growth now for a long time (Many suburbs sitting at 2006/2007 prices), the Buyers know that they can wait for the right property at the right price.
THE FACTS: (To illustrate I am using Applecross and Mount Pleasant only).
Sales in past 5 years- APPLECROSS
2012- 180 (Days on market 164)
2013- 201 (Days on market 146)
2014- 174 (Days on market 109)
2015- 149 (Days on market 105)
2016- 138 (Days on market 132)
In other words, volumes down 32% on the peak of 2013 and 8% down on last year. (Source: Complete Data).
Sales in past 5 years- MOUNT PLEASANT
2012- 159 (Days on market 162)
2013- 161 (Days on market 121)
2014- 183 (Days on market 100)
2015- 162 (Days on market 93)
2016- 112 (Days on market 111)
In other words, volumes down 39% on the peak of 2013 and 31% down on last year alone (Source: Complete Data).
WHAT DOES IT ALL MEAN?
I am more excited than ever!- about the opportunity that 2017 presents, as we normally see new buyers and sellers alike jump into the market either now or early in the New Year anticipating a move.
Now more than ever getting the right agent is critical.
The best agents make things happen, have energy and proactive systems in abundance.
I expect big things in the New Year as the market settles back into a new kind of normal.
Buyers will buy, sellers can and will sell and everyone realises that the local property market is quite resilient and an excellent long term buy as far as value and lifestyle.
Please feel free to drop me a line to help you get moved in 2017.
1. December 2016 09:19
Reason 1) -The marketing is incomplete or ineffective.
Not all real estate agents are alike and unfortunately, some do a minimal job in marketing the property once they’ve obtained the listing.
I often research properties as part of my commitment to my craft. I’m frequently surprised by the number of incomplete property descriptions, lack of multiple attractive photos, and many times, just incorrect or incomplete information reported in the listing. In most situations, once a listing is entered onto the internet and the REIWA website it will appear on many sites on the internet, as well as the agents own sites and national real estate sites they may participate in.
Those properties with limited information, or worse, just a few photos or unflattering photos are eliminated by buyers and their agents without the buyer ever setting foot on the property. There are three groups of people your property must appeal to: agents, local buyers and out-of-town buyers. All three are influenced by the computerized representation of your property. If your property’s online and printed marketing isn’t appealing, you will have no physical showings.
While a very small percentage of homes are bought "sight unseen," the general rule is if the buyer doesn’t step inside your home, they won’t be buying it.
Reason 2) - The home shows poorly.
Let’s face it; your home has to compete with all the shiny model homes going up in every corner of the city. You are competing with professional decorators and landscapers who are experts at creating emotional appeal. These model homes don’t have real families living in them while being on the market.
Thankfully, this is one of the easiest things to fix. A good cleaning, de-cluttering and cosmetic facelift is pretty inexpensive compared to the return in a higher sales price and faster sales time. Sparkling windows, kitchens and bathrooms, professionally cleaned carpets and fresh paint make a world of difference.
Curb appeal from an attractively-maintained yard and an inviting front door doesn’t require a professional or large amounts of money.
Reason 3) - The property is in a bad location.
This is one thing that can’t be changed. A good real estate agent will be able to maximize the positive aspects of your property while trying to minimize the negatives. It may be possible to screen an adjacent property with landscaping either to lessen the visual impact or the sound impact of a busy street.
If your home is located in a less desirable school district or close to perceived nuisances, the best way to compensate is usually to reduce the sales price.
Reason 4) - The market is the market.
It’s all based on supply and demand. All real estate markets are cyclical, sometimes hot, sometimes cold, and sometimes just in balance. They are affected by any number of things that you have no control over, such as interest rates, the economy, weather, national or local disasters, consumer confidence, and sometimes the time of year, such as the winter holidays.
If there are many buyers for a type of property and there is a limited supply, the market will be faster and sellers won’t need to pay as much attention to condition, marketing and proper pricing. If there is a large supply of inventory, with little buyer interest, homes will languish on the market and buyers will choose the best of the available inventory.
That’s the time that paying attention to the items mentioned above makes a real difference in terms of how long it will take to sell your property and ultimately the price you’ll receive.
Reason 5) The home is overpriced.
I’ve seldom met an owner who doesn’t think his/her home is "better." I’ve been told many times about specific features that "should" make the home be worth more money than comparable homes. No matter how much you may appreciate your home and its particular special features, the buyers ultimately set the price by what they are willing to pay for the property. Overpricing, either by you or by an agent willing to suggest a higher price in order to obtain the listing, begins a chain of events that often works against you.
Real estate agents and qualified buyers currently in the market will see your listing within the first two to three weeks, and if it’s overpriced they will note that and move on to other properties. After those important first few weeks on the market, the only buyers who will see your property are those that are new to the market, and your property will be labelled as "overpriced." Buyers and their agents always look for "days on market" when searching the REIWA member website listings.
Day-old bread, leftovers, and overstocks are always discounted. The longer your home is on the market, the lower the price you will eventually be offered. Every property will sell, if it is priced properly. I have said it all of my career, the way to get the highest price is to price the property correctly at current fair market value.
Thank you and see you in the market place.
3. October 2016 11:55
Blog . Real Estate
Please find below ten of the most important questions that should be considered when selling your home. Before you select an agent, it may be a good idea to have an agenda to help provide the meeting with structure and determine the most suitable agent for you. After all if you don’t have the best agent representing you, you can’t expect the best results.
1) REPUTATION: What do others say about the Agency and the sales consultant? What is the agent known for? Are they reachable? Would they cut corners to make a deal? Can you trust them with your house keys?
2) TRACK RECORD: How many sales have the sales agent made in the past 3 months, 6 months, 12 months and 5 years? You need your sales agent to be active in the current market. Sales made in years gone by do not qualify your agent to represent you in today’s market unless they are still highly active. Is the agent proven as a success over a sustained period?
3) CREDIBILITY: How many properties have the agent sold locally in the past 1-5 years? Where have they sold them? What type of properties? What do their clients say? Does the agent have written references?
4) SKILLS: What is the sales agent’s ‘Average Days on Market’? Can they close? How is their marketing skills and acumen?
5) APPROACH: How will buyers be found? How will the highest price be achieved? Does the agent understand the different types of buyers and how to achieve “Buyers highest price”.
6) AGENCY: Is the agency an active member of REIWA? What is the office/ agent personal conjunction policy?
7) SERVICE: How many written testimonials can the agent show dated in the past 12 months from satisfied clients? Do they show them on their website? (Check ours if you like).
8) RESOURCES: What are the internet capabilities of the agency? How many registered buyers does the agent have right now for the property? IS their website fast to load, attractive to buyers, easy to find?
9) RISK REVERSAL/ PEACE OF MIND: If you are not totally satisfied with the service, are you “stuck” with the agent or can you be released without penalty to appoint another agent?
10) PROFESSIONAL AND ONGOING DEVELOPMENT: What professional training seminars has the agent attended in the past 12 months and what ongoing professional development have they undertaken to keep abreast on industry leading trends and techniques?
15. December 2015 02:45
Blog . Real Estate
This is the quintessential favourite question for many property owners and buyers and real estate experts alike, and a question which depending on who you talk to, has lots of different answers with potentially huge variations on the values.
All owners of course value or see their property through a set of different eyes to what an independent third person does. This is called the "endowment effect" and is the reason everyone perceives their own pet dog, football team, choice of restaurants/ wines etc. as "special" and the best. Clearly everyone has a view on these matters, and this is always subjective, as it is with the value of a property. Fortunately, some methodology can be applied to assist in determining value.
TYPICAL METHODS CENTRE ON SOME OF THE FOLLOWING:
1) Comparable sales evidence (make sure "apples for apples" comparisons). This is actually the most reliable as long as the sales evidence is recent, and similar in its comparison. Also it is essential that the market has not changed since the comparative sale occurred. NOTE: Scarcity or uniqueness or what we call "WOW FACTOR" can add 10-20% in some cases to what seems reasonable market value. Sometimes, "BRAND SPANKING NEW" achieves the same outcome.
I often smile how some owners will see sales evidence compared to how some buyers see the same properties. Each sees "comparable" properties to suit their own arguments. The main areas to compare are land size, land location, frontage, elevation, views, high side or low side of the road can matter, front or rear, even the direction that the block faces. Then the next most significant determination is the quality and value of the improvements, i.e. the house. Owners rarely allow enough depreciation of dwellings once they are ten or more years old, and buyers usually depreciate them too much.
2) Land value plus improvements- Owners don’t realize that once a house is built on a block, the property is no longer a "house plus a block" but a going concern. It is often the case that vacant land sells for a premium of up to 10% more than what would be paid for an old house on it. This is because the only purpose for a vacant block is to build on, whereas once a house is built, it is unlikely that the property will ever be used as a building block again for 20-40 years, so the buyer is one that wants that exact house and the improvements that come with the block.
3) Comparing to asking prices of similar properties- The worst and most unreliable method as asking prices often have no correlation to sale prices or market value. We have seen homes come on the market for $8.8M and then sell for $6M, we have seen homes take 2 years to sell, and we have seen buyers offer 30% below asking prices. Really asking prices are irrelevant to market value. Sellers and buyers should ignore them. Asking price really means "Wish for price". More and more you are seeing property come to market without a price, as agents and owners realise the value of having buyers focus on the home, not the price.
OTHER SOURCES OF OPINIONS OF VALUE FOR A BUYER OR A SELLER:
1) Neighbours- I believe one of the worse sources of reliability. There is enormous self interest in "wanting" the value to be more. Not reliable or impartial at all.
2) Other agents- As above. Many agents will "bag" other agent listings, especially if there is resentment that they think they should have won the listing or strong competition between some agencies. Often, the "expert" agents have not seen the property in question.
3) Valuers- Can be reliable, often at the conservative end of the scale, and rightly so.
4) The selling agent- Can be biased, have emotional investment in the valuation of the property. Will certainly be able to justify her opinion as to value if any good as an agent.
5) A specific buyer- Only qualified to what she will pay, not indicative of market value. Some buyers are really way off, we often see buyers make offers 10-20% below what we sell them for. We refer to these buyers as "bargain hunters" and are often making low ball offers on properties. I have never met a seller that wants to sell to a bargain hunter. We can pick these buyers by the type of questions they ask. They are more interested in "the deal" than in the home. We find many buyers are 6-12 months behind in their understanding of values, as they pay too much attention to graphs and old sales evidence from a year or so ago, and do not update based on recent market activity. Also, we have sold properties for $500,000 more, or 15% more than a specific buyer was adamant that a particular property was worth on a given day, proving no one buyer (or seller for that matter) determines market value.
6) The seller- Can be biased as they are emotionally attached to the home. Often they will rate erroneous and subjective factors in determining value such as their wants, needs, or even a wish for price that they had in mind. They often perceive certain improvements as adding a lot more value than what it actually does to a buyer.
7) Mates/ friends of seller- As for neighbours. We find in some instances that the friends that are trying to provide support, and may have watched a few too many Foxtel episodes of "How to make a $1M property sell for $1.5M" have strong views of value that do not match current market conditions. The active local agents will always have the up to the minute feel of the market and often be 3-6 months ahead of the papers and graphs on the official websites.
WHAT IS CURRENT FAIR MARKET VALUE?
After the property has been tested in the market for a reasonable amount of time (I think 45-60 days is plenty) and buyers have had a chance to see the property, it should sell. If it doesn’t then there are only a few reasons.
1) Agent is not doing her job.
2) Poor marketing (refer to 1).
3) Price is wrong.
4) Wrong or poor location (refer to 3).
5) Poor market (refer to 1) and 3).
6) Seller is not motivated to sell or unwilling to meet the market.
7) Absorption rate (Too high a supply for the current demand on that particular property type and market segment).
8) Demand for that specific market segment slow at moment. (Some price segments move through different phases through an economic cycle)
Ultimately, the property is worth what a willing buyer is prepared to pay at a given moment, and able to fund ***, persuaded by a competent and skilled negotiator. After having exposure to a fair pool of buyers, that result is called "fair market value". ***NOTE: offers made by buyers that do not have the ability or capacity to fund in this tight market are not indicative of market value.
10. February 2014 16:17
Blog . Real Estate
I am in the business of being asked often, "What do you think is this property worth?"
It is interesting as I always see massive variation between different agents when I am competing on appraisals, and always see "lowball" offers coming in from supposed serious buyers, only to see properties sell for 10%-20% more a week later to another buyer.
I also see owners that are certain that their properties are worth a specific figure, yet we see some properties sit on the market years, proving that the market doesn’t share the same level of enthusiasm about the value as some owners.
So what is a property really worth?
We all know it is worth what a buyer is prepared to pay, and in this article I am not going to go through that lengthy discussion.
This (below) is a light hearted illustration of how, depending on whom you are, on what your own agenda may be, how we all look at the same property. The old saying that we all see with rose coloured glasses works both ways. Many buyers see things worse than they really are, and many sellers and allies of the seller, see things a lot better than they really are. Often the reality is somewhere in the middle.
Please enjoy this illustration.