Vendor Expectations in a changing market - April 2022
April 29, 2022 / Written by Rich Harvey
By Guest Blogger, Leanne Pilkington, CEO,
Laing & Simmons and President REINSW
In 2021, property values soared. Vendors cashed in, owners slept well, and buyers had their work cut out just to find a suitable property. But the scenario was unsustainable. Prices in recent months have shown an ever-so-slight decline. Laing+Simmons CEO Leanne Pilkington this month looks at what buyers and vendors can – and should – expect in this new reality.
A cooling – not correcting – market calls for a re-alignment of expectations on both the buyer and vendor side. And it starts with agents.
Agents are having to up their game. They need to elevate the level of communication they provide to their customers. They need to listen to buyer feedback, take heed of sales in the local area, and take an honest view of current market trends. Importantly, they need to be authentic in taking this information to their vendors.
These need to be upfront, warts-and-all conversations. Vendors need to be aware of the actual sales occurring in their market, not just in terms of prices, but the level of interest, the days on market, the property types and even property characteristics that are most in demand.
If these conversations skew to become what the vendor wants to hear, not what the vendor needs to know, agents are doing a disservice. The result will be a price expectation out of touch with reality.
Buyers, too, need to adjust their approach. When looking to buy property, it’s always a good idea to collect as much information as you can and educate yourself on what’s happening in the area you’re interested in. A good agent with local experience will be able to guide you. But if anything, the current shifting market requires an even greater emphasis on education.
That’s because some vendors are hesitant to re-align themselves to the new market reality. It’s not realistic to look at the growth achieved in 2021 and re-apply it to 2022. Prices, as expected, have flattened. Vendors have still experienced that growth. But to expect more, now, is to expect too much. Buyers are increasingly aware of this.
Still, there are some great results being achieved. A quick glance at the weekend auction media coverage will show clearance rates may have softened since last year’s peak but are still strong, and new street and suburb records are still littered among the headlines.
Buyers need to be aware of the specific performance of their preferred local market, down to the individual styles and types of properties they’re focused on. Only then can they determine what constitutes a fair price, or if vendors are stuck in the past.
Against this background, and while some markets still lend themselves to private treaty campaigns, auctions remain a great way to sell. But perhaps even more so than in a hot market, agent performance matters, especially around communication.
Auctions are a three-stage process. Before, during and after the auction. Agents must ensure they are having conversations with their customers throughout the journey. This is necessary for their customers to develop a fair outlook of what to expect.
An environment of flat price growth typically means fair value on both sides of the transaction. But it takes work on the agent’s side to educate their customers about what ‘fairness’ looks like. Education has no start and end point. It’s always a work in progress.
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