For many following the Auckland property market (or just simply read the news), you are likely to have noticed that the real estate market cycle has changed. The gears have seemingly stepped down. Gone are the days where there is breathless reporting about how auction rooms are packed or how properties sell for way above CV.
Auction clearance rates across Auckland are down and buyers’ behaviour has generally been subdued. FOMO (fear of missing out) has often been replaced with FOBN (fear of buying now). If you are a keen reader of my monthly updates (thank you!), you would have known all these for a few months and the likely reasons behind them. In short, we are moving slowly into a buyers’ market.
None of those factors causing the flattening of the property market has disappeared. Therefore new strategies and change in tactics are required for those who are thinking about selling in this Auckland market successfully.
So what do you need to sell successfully in a changing real estate market?
1. Accepting that the property market in Kohimarama, St Heliers, Glendowie, Orakei, Mission Bay and Remuera has changed
If you’re serious about selling, there is no point reminiscing about the market that once was (aka the good old days). The market and the current buyers have no memories. It’s unlikely that the buyers looking now were even around during the boom years of 2012 to 2017. And if they were waiting that long, they are not particularly motivated and would take this opportunity to eke out a bargain at your expense.
Where there are new buyers, that means new buying behaviours. And new buying behaviours need a fresh approach. And we are not just talking about the current mentality prevalent among buyers – that they are happy to take their time to browse the ever-increasing stock on the market.
We are also talking about:
- the shift in buying patterns – from single dwelling houses with large backyards on a quarter-acre section to compact, low maintenance stylish townhouses
- the shift from browsing using only TradeMe (or newspapers/classifieds) to Facebook/Instagram and various other online platforms.
But don’t be afraid to sell. Remember that if you sold at the peak and needed a new place, you are also likely to be buying at the peak. In this market, once you sell successfully, you are in a great position to make cash-unconditional offers and negotiate sharply like a boss. What you need to do is to arm yourself with the right ‘weapons’ and maximise your chances of success in this battle.
And this brings me to my next point.
2. Engage a real estate agent who has experience and has unique marketing strategies to maximise your chances.
Now more than ever it is very important that you take the time to choose the best real estate agent for your sale. Simply because houses no longer sell themselves. There’s of course constant debate around what constitutes the ‘best’ real estate agent. Is it that guy who sells the most houses or the one who extracts the most out for his vendors? The two types do not necessarily correlate. (And that’s if you can even scientifically measure “negotiating skills”.)
I’ve always taken the view that the best real estate agent is the one that’s most suitable for you in your circumstances and works best with you. And the most important part of our job lies in marketing your home. Simply because when a house is marketed well and fairly priced, the buyers will come and the resulting competition is the greatest factor in driving up prices. Who pays over the odds for a property when no one else is buying? Not me for sure.
As the old saying goes: you just can’t sell a secret. And today, with the amount of media (cat videos, funny memes etc) constantly being produced to entertain us in the same 24 hours we always had, your home has that few seconds of standing out in the sea of listings. You therefore need to ensure that your house is ‘in front’ of the greatest number of viewers to maximise your chances of success.
3. So how can you attract buyers to your house in the current property market?
Over the last few years, the most difficult aspect of the job of a real estate salesperson has been managing the overwhelming buyer enquiry when any property hits the market. There is a huge sense of urgency and a palpable “fear of missing out”.
But as the property market softens and moves into buyers’ market territory, an entirely different problem arises – getting buyers in the door into your property (and not your neighbours). Presenting your home well is the bare minimum. Ensuring you have a unique and comprehensive advertising campaign covering the various mediums on which buyers are on today is critical.
Agents who have strong online presence and working with a large pool of active buyers will not only be beneficial, but may be instrumental, to the success of your sale.
So, when you are interviewing agents, consider asking the following questions around the marketing of your home:
- How is your marketing different from other agents and how can you make my house stand out in this crowd?
- Do you have your own website which is actively advertised and can showcase my home on it?
- Do you run your own Facebook ads and what sort of targeting options do you employ? (Don’t be surprised at the answer – “this is run by third parties so I am not too sure.”)
- Do you run remarketing campaigns to market my home to buyers who have gone through the open homes or seen the ad once? (Don’t be surprised if they do not know what this is or if they don’t do it.)
- Do you run any Google ads? (Again, don’t be surprised if the answer is no or “I don’t know.”)
- Will you be doing any print advertising? What is the rationale for it and do you have any data on the return on investment for print advertising?
- How will you market my property to active buyers who may not have come across it through their own search methods (for e.g. on TradeMe)? (This could be the agent’s personal databases or the office’s database.)
- How else do you acquire buyers? (I acquire buyers from running my own ads on platforms where the buyers are. Without giving too much, I have a large active list of buyers (sorry, not some old outdated ‘past buyers’ list) whom I can call upon for any type of property at any time.)
Hopefully, you can get a satisfactory answer. As with many things in life, the devil is really in the details so do not be afraid to probe and ask more of your real estate agent about such marketing. After all, you are likely to be paying for it so why would you not want the best possible return?
Why you shouldn’t bother to ask about negotiating skills
Because you can’t measure it accurately. Period. How do you even start the comparison? No two houses are the same so what makes one salesperson a ‘better’ negotiator than another? I smile when people mention that so-and-so sold their house for 10% more than market value. Think about it. Isn’t the final sale price the ultimate reflection of market value? The buyer chose to voluntarily pay that price because he/she felt that the house was worth that price under those market conditions.
Putting pressure on buyers is all part of a salesperson’s job, but the real pressure on buyers comes from market conditions created by the salesperson – such as buyers’ competition in a multi-offer situation. Not from mere talk from salespersons about why you should be paying more.
4. How long will my house in Kohimarama, St Heliers, Glendowie, Orakei, Mission Bay and Remuera take to sell successfully?
Most important point is to be patient. Just because you’ve been on the market for a couple of weeks, or your house didn’t sell at the deadline sale date or at an auction, doesn’t mean it won’t sell.
Here’s a timeless trick to get your house sold faster: just give it away for free. Of course you wouldn’t do that, would you?
As the market changes, days on the market starts to increase. The average days on the market has been creeping up for the past few months, especially for the property markets of Kohimarama, St Heliers, Glendowie, Orakei, Mission Bay and Remuera.
As the market changes gear, it’s especially important that you’re prepared for the sale to take a little longer and to give your agent more time to find those buyers. This means you should avoid timing the sale on the only assumption that it will definitely sell at auction etc (unless you are willing to significantly drop the price) and start having such discussions early with your real estate salesperson.
This also goes back to the primary question you should consider – why are you selling?
More thought also needs to be given to the pre-market preparation, discussions and marketing approach (as outlined above). And unfortunately, these days, getting it wrong upfront (i.e. picking the wrong salesperson) could be the difference between selling or not selling at all.
5. What do you need to do before the launch of a campaign?
In this market, buyers aren’t willing to pay a premium for a home if they see that it requires serious refurbishment and therefore they are taking on significant deferred maintenance. Maintenance is not capital improvement at all. In a boom market, escalating land prices hide the cost of the work required and buyers often pay over the odds to bet on capital gains (i.e. the price of land going up). Back then, they used to have depreciation for buildings which tells you all you need to know about the value of buildings.
When the market softens, and the FOMO (fear of missing out) disappears amongst buyers, buyers look for reasons not to offer or to beat you down in price. And guess what? They certainly will exaggerate (either to you or in their minds) the amount that they need to spend in bringing the property up to standard.
So, if you’re planning on taking your property to the market and would like to get a premium, ask your real estate agent what needs to be done prior to the launch of the campaign. Don’t be afraid to show them the house in its current state.
I often work with my clients and point to them which areas will need the most attention and can get the best bang for the buck. You have limited time (and presumably a limited budget) so I doubt you want to be spending all day renovating, painting etc on something that ultimately adds little value.
As always, the sale of a house is all about selling the lifestyle, especially in the beautiful Eastern Bays and Remuera area. Your house needs to meet the target market’s needs. But that doesn’t mean it needs to appear in the Home and Garden Magazine.
Take the time to prepare your home for your target market. Basics involve having a good street appeal (first impressions!), a well-groomed section and clean, clutter free surfaces. This all works wonders when it comes to making people fall in love with your home. But don’t let your hard work go to waste. You will want top notch photography that can flag the key features, a well-considered photo sequence and solidly-written advertising copy that is bereft of grammatical errors.
6. Always Be Prepared to Negotiate.
In a boom, auctions are aplenty and there’s little need for any negotiation as buyers fight among themselves to purchase that property. Those days are slowly slipping except for the truly exceptional homes (exceptionally priced, presented, located or a combination of all 3).
You need to ensure that you get as many buyers through the door, and negotiate each and every offer. Don’t just dismiss the first offer for being too low and getting angry with that buyer.
At least your buyer is sincere in making an offer when many properties on the market today do not receive a single offer. Often, that’s likely your best offer and you may live to regret not even negotiating it.
Many may feel that the real estate salesperson is just trying to get a sale and so pushing you to reduce the price. I certainly cannot speak for everyone. But the simple truth is that properties that sit too long on the market lose their shine, and therefore their appeal to buyers. The final sale price is often way lower than what it could have been, especially in the current property market. This is also the reason why you should be seriously careful of real estate agents that promise the sky (and the moon and the stars) to get the listing.
Hopefully with these tips, you can maximise your sale price and succeed in this changing property market.
And if you are currently on the market (or have a friend that’s on the market and struggling), think about these points and perhaps consider your next steps – for e.g. relisting with a different agent and a different angle. After all, Albert Einstein once said: “The definition of insanity is doing the same thing over and over again, but expecting different results.”
Don’t be guilt-tripped and end up with regretting ‘what it could have been’ when the ink on the paper has dried and you’ve sold for a less than satisfactory price (or not sold at all).
Found this post useful and have more questions?
Work with someone with a unique marketing campaign to maximise your chances of success.
Do not hesitate to contact me for a no-obligation discussion over coffee on your future plans to either buy or sell.
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Short commentary on Eastern Suburbs’ real estate market statistics for …
Short commentary on Eastern Suburbs’ real estate market statistics for …