Deciding the right time to buy or sell doesn’t always have to be a guessing game or a game of roulette. By getting to know the market as it stands (kudos on reading this), market trends and fluctuations and a great marketing strategy, your end goal, be it buying and/or selling, can hopefully be achieved within your required timeframe.
Buyers’ vs sellers’ market
One thing to look at when you decide to enter into the property market is whether Glendowie, Kohimarama, St Heliers, Orakei, Mission Bay or Remuera is currently a buyers’ market or a sellers’ market.
It’s important to drill down to the individual suburbs as trends can be quite different across each suburb and at different price levels
What’s a buyer’s market?
In simple terms, a buyers’ market benefits the people looking to buy a property. Generally, there are more properties on the market than buyers. Sellers are essentially vying for their attention as sales are harder to come by in this environment. Buyers can benefit through increased negotiations over price as well as having more choice and less competition regarding the properties they are looking at.
I think most can agree that we are slowly moving into (if not already in) such a market given the flat-lining of median prices in the general Auckland market over the past year and the very gentle decline in prices in certain neighbourhoods. The number of properties being auctioned is declining (and auction clearance rates can be even more so) and many vendors are preferring to pick other methods of sale. The Days On Market are increasing, as homes take longer to sell. Sales levels are low as vendors prefer to yank the property off the market and rent it out instead.
Under such market conditions, the marketing of your home becomes critically important when houses do not ‘sell themselves’– and more so than the experience or ‘negotiating skill’ of the agents. If your home attracts the buyers over other homes on the market, then you have already won most of the battle and the negotiating power swings right back into your favour. It’s just a simple case of supply and demand – have you ever paid more for something that no one else wanted? Not me, for sure.
Remember – the job of your agent is to bring the buyers and offers to you. More views = more buyers = more offers = better $. What is your preferred agent doing in addition to the usual methods to attract these buyers? Is he/she stuck with ‘old-school’ ways of listing the property in local papers / Property Press (have you seen how much they’ve shrunk) and praying someone sees it?
Or is he/she deftly employing the latest strategies to promote your property online where your buyers are? You are paying for the advertising after all – and be careful around ‘free advertising’.
They are just not worth it (that’s why they are free) and here’s why:
- Facebook is not free – it didn’t get to being worth approximately US$570 billion (yes you read that number right) without the advertising revenue. This is why the ‘number of followers’ of a page do not matter. If you don’t ‘pay to play’, the agent’s posts advertising your home will simply not be seen.
- Agents generally get ‘free’ TradeMe standard listings. But paying for a premium TradeMe listing often makes sense because they get way more views – and that’s where all active buyers look for homes online. If your new listing is buried in page 3 of any suburb, you can bet that your sale price will suffer from a lack of buyers’ interest.
- Google advertising is not free. Most agents don’t use it for various reasons, primarily because they don’t understand how it works. But they can be stunningly effective – also another reason why Google is worth approximately US$792 billion (yes, that’s the right number too). If the big brands are using it to advertise, why are you not using it to sell your home?
In short, your house needs to be actively marketed to reach as many buyers as possible in those avenues that the buyers are browsing properties (aka online). Old-school techniques no longer work as well, and the law of diminishing returns quickly set in for those.
Invest in agents that have invested their time, money and effort into understanding and mastering these platforms for your benefit.
What’s a seller’s market?
A seller’s market on the other hand is essentially the opposite. There are multiple buyers looking and fewer properties for sale. This generally forces more competition and can increase sale prices as a result. In such cases, you can stick a sign into the lawn and the house basically sells itself. In such markets, auctions are a dime a dozen as they are simply excellent methods of sale in extracting the most from buyers in a frenzied, competitive environment.
How can you make use of your understanding of these numbers and trends?
If you are selling and buying at the same time, it can be a bit of a balancing act depending on the current market environment. I’ve discussed the ‘trade-up premium’ in my previous market update and how it is declining. This is especially great for buyers.
For example, if house prices are generally on the rise this can be great for when you sell. But this also means you may be forced to pay over the odds for a property when you buy in the same market as you compete against 10 other bidders. Reversely, if house prices are low you may get a good deal buying but when you come to sell you own, it may not reach your full expectations. The trick is to maximise your sale price (but not be overly greedy) and to buy spectacularly by negotiating a bargain.
The seasonal impact
Across the seasons, you will generally encounter different times for when it is most effective to buy and sell.
Although each year can differ depending on the economic climate, generally speaking in Auckland, the summer and spring seasons are when most of the property sales occur. Even what seem like the smallest things, like extra sunlight and warmth, can affect how a house is viewed. As a result these seasons are more conducive to properties changing hands. A lot of people in the market tend to avoid the busy Christmas and New Year period.
Other factors to consider
There are many other factors you need to consider when you decide to buy or sell a property. Regardless of market conditions and current trends, you need to look at your personal circumstances. If you need to sell by a certain time for example, you don’t have a choice and that has a bearing on the method of sale. However, perhaps trying to sell earlier and having a later settlement date, instead of starting to sell close to any deadline date would be a better option.
Some other important factors that you need to consider include:
- Economic climate – is the current climate meaning people are holding onto their money?
- Interest rates – are they low and making buying an easier prospect for you?
- Neighbourhood developments – is a nearby development (for e.g. a retirement village) going to affect whether you buy a property, or how does it impact you when selling?
- Defining features of your property – is there something that sets your property apart from ones nearby? Or, is a characteristic of your property (for e.g. pools) highly sought after at the moment?