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 12:05
Spring has come late in 2016, with early October still with a winter feel about it.
As soon as the cooler, wetter months subside traditionally spring represents a more buoyant and positive lift in local real estate markets.
More stocks to come on, more buyers are out and about, and a generally more upbeat disposition overall. We expect this year will be the same.
Right now, Applecross has 81 listings which are now up to 302 days average (median 171) on the market and Mount Pleasant has 70 properties
on the market which are now up to 159
days on the market average (75 days median). Stock numbers are down too about 15-20% in listing numbers.
This tells me that three things have occurred.
1) The sellable/best value properties have been sold
2) Many properties have been rested (unsold) where sellers are contemplating a new launch in spring. Watch for some more listing numbers
3) The properties priced optimistically have remained unsold as buyers continue to seek value.
We are also noticing finance from the banks is very tight, with examples of some properties coming back onto the market due to finance declines, as well as extensions being sought by brokers/banks for some finance applications as the lending criteria tightens.We see buyers prepared to engage the market and make offers where they see properties that broadly meet their criteria.
Buyer activity continues to be bold with many offers coming in way below expectations. This is quite normal as some buyers are looking for perceived distress sales or windfall opportunities.
Mostly, the sales that occur are in line with market value and we remain confident that the remainder of 2016 will be strong, in sales volumes and buyer activity.
Thank you and see you in the market place.
1. September 2016 09:37
The market is very price sensitive at the moment.
Time and time again we see properties sit stagnant whilst the buyers grapple with getting the best value they can find. When a property is priced 10% or more above what buyers think is fair market value, usually the property will not only not attract offers, but probably the wrong buyers are viewing the property.
As soon as the price is adjusted to within 5-7% of current fair market value, some interest starts to firm up, and we find that when the figure is 3-5% several offers usually occur and buyers emerge.
Typically, when a property is on the market longer than 6 weeks, or has had more than 12 inspections and no offers, this could be a sign that the asking price is too high.
Even slight adjustments to an asking price can have a positive effect. (Psychologically, the first 2 numbers are all the buyer looks at), hence $995,000 appears $100,000 less than $1,000,000.
Thank you and see you in the market place.
30. June 2016 14:00
Blog . Real Estate
In what is a tough, difficult period in the local property market where we continue to see large gaps in expectations between buyer and seller alike, the ability to get the deal together is often a case of how the negotiation is handled?
I have found recently several sales occur where the dates between first offer and final offer, for the same buyer was anywhere from 7-90 days.
The large gap in expectations is due to many factors.
2. Internet articles
3. Doomsayers predicting the sky falling
4. General fear and uncertainly
5. Global factors
6. Agent has not educated seller properly
8. Seller and/ or buyer with unreasonable expectations
Sometimes, early offers come in and the seller is yet to understand or accept the reality of the current market. Often, once the seller is certain that they are in fact dealing with what may indeed be “highest fair market value” in many cases sellers will do a deal with a genuine buyer, even though the offer may be lower than what is ideal.
Sometimes buyers might try on a low or cheeky initial offer, only to realise that a property they want might not be available at a certain level, so increase their offer as they realise that they need to pay more in some cases to get what they want. (Not all sellers will take any figure that is offered).
My advice in this market for buyers and sellers. - “Never be the first to walk away.” Often, good agents need time to "nurse" the offer through as each side comes to terms with what is the actual situation. Rejecting an offer achieves nothing in most cases. I have sold properties to buyers that had offers "not accepted" only to represent and repackage them later in terms agreed by the seller. In other words, the sellers did not walk away first.
Buyers need to understand that many sellers may be “shocked” by some of the market feedback in relation to expectations and need some time to take all of that in, especially new listings. (Despite how much factual information the agent may have provided the seller).
Sellers need to understand that buyers will obviously be in this market empowered and in many cases do not fear prices going up in the short term, and will often try a lower offer to see how genuine the seller is. (Riskiest when the seller sets overly optimistic or aspirational prices).
I believe that if the initial asking price is about right on day one, the seller has the best real chance of a premium sales price as the buyers will know that the seller is very genuine, very serious and therefore will have some fear of loss. They usually then make their first offer a serious one.
Recently we sold 2 properties at the $1M market segment in 44 days and 32 days respectively. This was in my opinion due to, through appropriate motivation by the sellers and the right asking price strategy, caused by being able to communicate to the respective buyers that the sellers were very pragmatic, reasonable and motivated in relation to price. The buyers therefore had no reason to wait and procrastinate waiting for the price to come down.
- Buyers get a good property at a fair price.
- Sellers get a result and can move on and at what I think it usually a higher price than the poorer cousins (other properties) that sit on the market 3 months to 2 years as some sellers are praying for better times past that are now gone.
Moral of the story, get it right the first time. Price right to sell, and you will. Buyers love it and sellers do to, as they get more and can actually move on.
18. February 2010 10:52
What an amazing end to 2009! It appears that for the time being buoyancy and in some cases bullish optimism exists with many buyers, creating a mini boom in some price categories. Properties in Mount Pleasant, below $1 million, have been snapped up and are selling quickly, often close to full price. We think that in many cases, within this category, we have seen an upwards market correction of 10-15% in the space of 3 short months. The same applies in Applecross, in properties in the mid to high $1M range. Lower priced properties in Ardross and surrounds are also changing hands in rapid fashion.
Buyers, as always, are looking for value. In this market the location is very important. Homes in excellent condition, presented to a high standard and/or in superb locations will attract the most interest and usually sell quickest.
Several top end properties have changed hands in this period, indicating strong demand for the premium end of the market. All of this is caused by a general lack of stock and the subsequent strong demand causes upward pressure on prices.
Generally we are finding that Buyers have more confidence as they have seen consistency of pricing, albeit at a higher level than last year and sellers have a renewed sense of perspective having seen sufficient recent sales. As a result the market has established a new equilibrium, based on actual sales evidence, rather than the varied and often erroneous data that existed in the first half of 2009.
Evolution Realty has finished the year strongly, registering many sales in December and has started the year with an amazing record number of appraisals. Our interpretation of the number of appraisals is that many potential sellers are aspirational buyers, taking stock of the value of their current homes as they consider upgrading. We find that this is often the case in the New Year. Many new listings have hit the market for Evolution Realty and we expect strong selling months in February and March 2010.
On a happy note, we recently celebrated out first Anniversary with a bang, and are well primed to continue the massive success enjoyed in 2009. We look forward to meeting you, at our website www.evolutuonrealty.com.au, at our office at 15 Kearns Crescent Applecross or at many of the homes open that we conduct every weekend though the City of Melville and surrounds.