February 2016 - If the price is right?
By Rich Harvey, Managing Director propertybuyer
Now that the Sydney boom is over, how are agents and vendors going to tackle the question of price in the coming year? Will property prices correct, stabilise or possibly rise a few percent in the coming year? We also have some great events coming up for 2016 with industry leading commentators, keep an eye out in your newsletters for further details.
This February update includes:
1. If the price is right? Are the new underquoting laws actually working?
2. Seminars coming up - capitalise on Sydney's infrastructure boom
1. If the price is right?
The NSW Government recently introduced new laws around the pricing of property. The so called "underquoting" guidelines issued by Fair Trading were designed to make agents provide a more accurate price guide and stop agents from bait pricing which would entice buyers to make an offer or attend auction when the expected selling price would be much higher than that quoted during the sales campaign.
One of the greatest frustrations of buyers is wasting time and money researching properties out of their price range. To be told the price guide is $1.2m for an auction property and "you've got a great chance of owning this property" but then come auction day it goes $300k over that and sells for $1.5m is so exasperating - this leads to tears and heartache in starting the search all over again.
Under the new rules, the estimated selling price must be presented as a single figure or a price range. If using a price range, the highest price in the guide must be within 10 per cent of lowest price. Agents also have to adjust the price range during the sales campaign if they think the eventual price will move outside the range.
Across Sydney, sales agents are responding differently to the new regulations. Some agents are putting no price guides but just listing properties as "for sale" or auction. Others are embracing the price guide system and becoming far more transparent with their price expectations. Agents are no longer allowed to use terminology such as "offers over" or $750,000+". Another key rule change is that agents have to keep written records of the prices they have quoted. This will make it interesting for those agents that had loose lips and quoted different figures to different buyers.
The key message for buyers is still the same - "Buyer Beware". While the intentions of the new regulations are admirable, buyers cannot be complacent and glibly trust the new price guides. Buyers should do extensive research and review at least 20 comparable sales in the area. Visit several auctions to get a feel for what is happening in the market. Research the volume of sales, days on market, vendor discounting and auction clearance rates to get a sense of market strength.
The market in 2016 is changing yet again and it is easy to get confused by media messages and agent speak. A local expert buyers agent can help you evaluate and negotiate the right price to pay for a property. They know the local market and the "modus operandi" (how an agent ticks) and can give you unbiased information and representation in the buying process.
Sydney is likely to show a more stable market during 2016 - the market needs to catch a breath. So for the home buyer sitting on the sidelines, it can be a year of opportunity to trade up. Some vendors were scared to list their properties last year for fear of being out of the market too long.
Dr Andrew Wilson, Senior Economist at Domain, believes that the Sydney market will continue to moderate in 2016, but it will be a solid long term performer due to a very strong local economy, low interest rates and positive jobs growth.
Below are the nine key things agents should comply with when pricing a property under the new regulations: (Checklist courtesy of NSW Fair Trading Underquoting Guidelines 2015).
- The estimated selling price is a reasonable estimate of the likely selling price for the property, with the agent having considered comparable sales, market conditions, the property's features, and other relevant information.
- The estimated selling price is either a single price (such as $800,000) or in a price range where the highest number does not exceed the lowest number by more than 10% (such as $800,000 to $880,000).
- The real estate agency has provided evidence to the potential seller of how the selling price was estimated.
- Marketing material shows the selling price as a single price or a price range that is not lower than the estimated selling price.
- Any statement on the likely selling price quotes a price that is not less than the estimated selling price.
- The real estate agency has written records of any statements made to potential buyers about the likely selling price of the property.
- The estimated selling price has been revised if it no longer reflects a reasonable estimate of the likely selling price.
- The seller has been notified about the revised price in writing and the agency agreement has been amended with the revised estimated selling price.
- Advertisements have been withdrawn or changed (where possible) if the estimated selling price has been revised.
Despite the new laws there are still lots of traps for unsuspecting buyers with respect to pricing. To get a professional Buyers' Agent on your side, please call us on 1300 655 615 or email your wishlist to discuss your requirements today. We'd love to help.
Rich Harvey is founder and Managing Director of www.propertybuyer.com.au, Australia's most awarded Buyers' Advocates. Propertybuyer helps property investors and home buyers search and negotiate the right property at the right price, every time. Visit www.propertybuyer.com.au or call 1300 655 615.
2. Seminars Coming Up
What a response we have had for this Wednesday's seminar on 'Property Directions & Strategies for 2016 with Eliza Owen, onthehouse.com.au and David Allen, Loan Market! The event has completely sold out and we are looking forward to sharing our insights with those who were lucky enough to get a ticket. The event starts at 7pm and with a full house, we recommend coming early (from 6.30pm) to register your ticket.
But don't despair if you missed out on a ticket, as we have lots of exciting seminars with industry leaders coming up for 2016.
Our next seminar 'How to Capitalise on Sydney's Infrastructure Boom' will be on Wednesday evening, March 22nd 2016. We are excited to be presenting with Terry Ryder and Trilogy Finance on where the opportunities are, so keep an eye out in your email in the next week for further information or visit our Seminars and Webinars page on propertybuyer.com.au.