Buyers Aren't Liars

As the Perth property market continues to correct itself with prices easing and supply outstripping demand – something positive is finally occurring: affordability is currently increasing. Buyers hold the majority of power in the real estate equation and it’s time for sellers and agents to respect their needs.

Recent figures released by the Real Estate Institute of Western Australia confirmed what most of us already knew – median property prices in Perth have dropped for the second quarter in a row.

This price adjustment is not good news for sellers who are after high, short-term capital growth. But according to Realmark director John Percudani, it is all part of the property market cycle and has a healthy effect on housing affordability. But it also creates uncertainty – and buyers, sellers and agents alike are all feeling a little unsure.

“When people are feeling unsure in the market place, sometimes they go about things the wrong way when trying to find solutions,” says Mr Percudani.

“Right now – and for the foreseeable future – we are seeing a significant adjustment in the property market. Suddenly agents need to focus on buyers and making sure their needs are looked after.”

Instead we have seen an increase in selling solutions – including hybrid selling methods such as “expression of interest” and “price ranging” – that only confuse the buying public.
According to Mr Percudani it is a buyer’s market, and buyers’ needs must be addressed. So what does this mean?

“What buyers need now more than ever is clarity, simplicity and transparency around the buying process, “ says Mr Percudani.

“The way some of the property industry is trying to address market uncertainty is counterproductive.”

Mr Percudani believes a buyer’s needs must be met on several levels – from marketing through to the transaction of selling a property – to ensure the process is a success for everyone.

“Sellers entering the market must work with their agent to establish both desire and value. This should be done by showcasing their property to ensure it stands out from the rest. It also means attaching a pricing strategy that has integrity in the current market.

“When it comes to transacting, buyers need to feel comfortable and have confidence in the process. They are looking for forthright answers and transparent processes. If they don’t see these things, they are not going to be engaged in the process.”

Now is not the time to be trying out hybrid selling methods, he says. Recognising that the majority of property in WA is sold by Private Treaty, Mr Percudani warns against using techniques that confuse or distract buyers. Don’t put a “dream” price on your property and see what the market says.

“Similarly, putting a wide price range which starts well below the seller’s desired or realistic price is also going to create false expectations which can damage the chances of a successful result.”

Mr Percudani recommends using recent sales data to develop a truthful and realistic pricing strategy that makes a seller’s expectations clear to potential buyers.

“No matter the market cycle stage, buyers are the most powerful force in the property market place and should always be shown respect. As a seller, take the time to ensure that both you and your agent approach the process the right way. This is a time when informed advice from a real estate agent could be of high value in achieving a favourable sales result.”

Prestige property deserves prestige marketing

Some of Australia’s most valuable property is bought and sold in Perth, yet the majority doesn’t receive the marketing strategy it deserves. If you had a luxury item to sell, wouldn’t you want to tell as many people about it as possible?

Traditionally, the Perth’s western suburbs located nearest the Swan River have been the city’s most exclusive and expensive. In 2006, Perth took the mantle from Sydney as having Australia’s highest median property value. Although this has now reverted back to Sydney, Perth’s “purple” band – or band of suburbs that have an average house price of more than $800,000 – has grown in number and geographically spread away from the river to include many northern suburbs such as Trigg, Marmion, Sorrento, Wembley Downs and Mt Lawley.
According to Realmark principal Mr John Percudani, selling premium property requires a premium approach from agents yet often this does not happen and these homes are left languishing on the market for months at a time. This has an adverse impact on final sale price.

“We are finding that sellers in prestige suburbs are often reverting to what is safe and comfortable,” says Mr Percudani. “This usually means they select a local agent who only markets to the local community. This surprises me as people who own premium property are likely to be commercially savvy people and would be expected to make informed decisions.”

“If you only market to your local area, you are narrowing the potential buyer pool. If you only take an advertisement in the local paper, no matter how big the ad is , then you will only attract local interest!”

What sellers need to be thinking about says Mr Percudani is a much broader, sophisticated and dynamic marketing approach, especially as the number of premium suburbs and buyers grows.

“If I was selling a luxury product, I would want to showcase it in the best possible light to as many people as possible,” says Mr Percudani. “Sellers need to move away from the ‘traditional’ approach of selecting an agent based on friendships and local prominence and instead start thinking outside the square.

“Look for an agent who talks to the widest possible audience and has the marketing tools and approach that uses the best photography, best copywriting and other customised marketing tools.”

Mr Percudani uses a recent example where Realmark recently sold a property in a high-end beachside suburb which had failed to sell with a previous prominent local agent who was the vendor’s golf “buddy”.

“We got the listing, marketed the property highlighting its many excellent features to a wide audience,” says Mr Percudani. “Within 28 days we had three offers on the property and it was sold for a premium price. The competition we generated was due to the wider area marketing we undertook and the premium marketing strategy that truly ‘spoke’ to the premium market.”

Rather than making a decision based on safety and comfort, sellers must embrace a non-traditional attitude believes Mr Percudani.

“This will ensure the freshest marketing approach, attracting the freshest buyers and achieving the freshest price.”

Talking about my generation

It’s hard to pick up a newspaper or turn on the TV without hearing something about generations X & Y and how different they are in their outlook and demands from their baby boomer predecessors. So what does the real estate industry need to do to adapt and relate to this group of buyers and sellers?

For the first time in two decades, baby boomers – those born between 1945 and 1965 – no longer represent the “majority” of real estate buyers and sellers. This mantle is now held by Generations X&Y who represent a whole new outlook on life.

Statistics recently published by www.realestate.com.au paint a very clear picture of today’s real estate buyer:

• 60% are female
• 75% are aged 25-49
• 70% work full time and have a household income of more than $100,000

So what does data tell us? Principal of Realmark Real Estate John Percudani strongly believes that agents need to recognise this shift in buyer/seller population to a younger, more technology savvy and sophisticated market.

“This clearly shows us that women are the primary decision maker when it comes to selling and buying property,” says Mr Percudani. ‘’Addressing their needs and requirements is paramount to agents wanting to grow their business going forward.”

Mr Percudani believes women demand an honest, up-front type of real estate service and place emphasis on honesty and reputation.

“Women like a dedicated contact person within the agency with whom they can develop a relationship of trust,” says Mr Percudani. “They are also natural information gatherers and want good statistical data and lots of relevant detail so they can make informed decisions.
“Customer loyalty matters to them as does a no-nonsense, no-jargon approach.”

This is a shift away from the past 25 years of baby boomer relationships, which were based on repetitive habits and patterns and a sense of strong brand loyalty.

“Baby boomers are really yesterday’s buyers and sellers,” says Mr Percudani. “They also represent a large proportion of today’s real estate agents who are used to dealing with fellow baby boomers. This means that some agencies will need to actively educate their people to understand this new strongly emerging buyer and seller.

“Gen X&Y sellers in particular will be looking for a like-minded agent to represent them,” says Mr Percudani. “They understand that today’s buyers are unlikely to be local to the area, therefore a wide-spread, sophisticated marketing campaign using modern tools and mediums is going to be imperative. They will want an agent who can demonstrate that approach and understands that it is important to communicate with a wide audience.”

Change is the only certainty

Agents take note! Gone are the days when quoting a good selling price for a property was enough to ensure a property listing. Today’s sellers demand much more from their agent starting with a proven ability to communicate campaign updates and statistics honestly and openly.

It’s not surprising that recent statistics show a fundamental shift in what is important to real estate clients when selling their homes. The entire market place has changed and the old “born local, stay local” mentality has all but disappeared. We have a much more itinerant population who are open to moving not only suburb, but state and country to find the lifestyle they are seeking.

The shift towards a more modern style of client representation is imperative and agents need to adapt in order to meet their clients’ expectations and build sustainable businesses. We examine the top 5 “then” and “now” agent criteria.

Traditional top 5:

1.Recommendation by family member or friend – although there is nothing wrong with taking a recommendation, making a decision on that basis alone is no longer enough.

2.Expected sale price quoted by the agent – in other words, the agent who quoted the highest expected sale price was often the most successful. Yet often as the campaign progressed, the expected sale price was adjusted down and the seller was left wondering why… Today’s sellers are more likely do their own research and know exactly what is a fair price for their property. They want the truth, not an inflated number that discourages realistic buyers.

3.Online marketing – everyone offers marketing on the internet today and that ability alone is no longer a differentiator. Sellers are looking for more wholistic marketing approach.

4.Have previously used the agent to buy or sell a property – using an agent you have previously had a good experience with is still a good basis for making a selection, but only if they have adapted to meet today’s requirements.

5.Experience and local knowledge – taking the “if they live and work locally, they must really know my property” approach. What is clearly evident today is that buyers often come from outside the suburb they are buying in to.

Today’s top 5:

1.Demonstrated professionalism and ability – sellers are now looking for agents who can back their “talk” with the “walk”. Facts, figures and a way of demonstrating the ability to market a property and close a deal are vital.

2.Deep neighbourhood expertise – it is important to sellers to feel that their agent really understands the “lifestyle package” that their property represents. If an agent can demonstrate that understanding to a seller, they will feel confident that they can demonstrate it to potential buyers.

3.Marketing acumen – sellers are much more savvy about the importance of marketing. It is no longer just about placing a classified advertisement in the newspaper and some photos on the internet. It’s about a campaign. Sellers are looking for agents who deliver a fully integrated campaign that uses the best photography, copywriting and other modern marketing tools across a wide range of mediums.

4. Value for money – what does an agent’s commission and fee truly represent? This is what today’s sellers are asking. If the value is there, clients will pay a fair fee for the right result.

5. Communication and responsiveness – providing accurate, honest reports with real data on a pre-defined, structured basis is what sellers demand. Being able to demonstrate a communication methodology and responsive manner is important – especially for women who are now represent the majority of property buyers and sellers.

Today’s smart seller will think outside the traditional and some what comfortable square of just calling in the local agent and focus on truly selecting an agent and an agency that can deliver today’s top 5 and get a top sale result for them!

Succeeding in today’s market: Advice for buyers and sellers

The amount of property on the market in Perth has ballooned over the past six months. There are now 17,000 homes, units and town houses for sale on any given day. Although buyer demand is positive, it has not grown to match the recent dramatic increase in sellers coming on to the market. But as we know, the market can change from one week to the next. So how can buyers and sellers stay ahead of the curve?

At the height of the Western Australian property boom in 2006, there were as few as 5000 properties on the market day to day. This lack of supply, along with low interest rates, played a large part in creating the dramatic price increases that saw the median Perth house price soar above $500,000.

Today there is more than triple the number of properties for sale creating an abundance of housing, and with a steady number of properties entering the market every day, last quarter’s statistics show a current median sale price of $457,000.

This is having a flow on effect for sellers – their homes are staying on the market for an average duration of 71 days. This is far from ideal and leads to a compromised sales price.

So what can both sellers and buyers do in this current market to maximize their position. Here's some tips for both groups:

Sellers

Ideally, your property should sell while it is still “fresh” on the market, i.e. between 30-45 days. To ensure your agent is focused on this outcome, employ the following tactics:

• Insist on a bold, multi-media marketing campaign that showcases your property and generates buyer excitement – quickly in a crowded market

• Only sign up with your agent for 60-day authority. This is the prime window of opportunity in which to achieve a premium price. After 45 days on the market, your property will appear “stale” against new stock in your area

• Insist that your agent provide detailed written reports on buyer feedback and interest each week. This will help you tailor your campaign and make any necessary adjustments to the price or presentation of your property.

Buyers:

The current market is well suited to buyers, even if interest rates are the highest they’ve been for 10 years. Here’s what prospective buyers should be thinking about:

• There is a unique range of choice in Perth’s property market today with 50% more stock on offer than “normal”. Properties and opportunities that would not normally be available are being flushed into the market place

• Sellers are more likely to be reasonable in their price expectations and terms and conditions. Opportunities to buy “fairly’ are increased.

• There has been a lot of talk about interest rates and their steady increase over the past year, but with median prices decreasing at 2.7%* last quarter buyers need to see the clear offset in house price (savings that may be in the tens of thousands) against the interest rates which are now likely to remain steady for some time going forward.

Both buyers and sellers need to have a clear plan when entering the property market. A good agent will provide sellers with the most up to date information and statistics enabling the vendor to make realistic pricing decisions.

And buyers need to remember that the market can change very quickly – almost from one weekend to the next. The data we are seeing today is already “old” and if demand builds up again, the next rise in the cycle will kick in. Now is the ideal time for buyers to capitalise.

* Source: REIWA

Demand more from your agent

Realmark has bucked the trend for lengthy sale periods in the current slow market conditions, selling properties almost a full month quicker than their competitors – scoring an average 44 days on market for March.

Realmark properties are averaging just 44 days on the market while REIWA recently announced that the average home is taking 71 days to sell.

I believe that while the Perth real estate market is in a period of uncertainty, sellers should not accept a slowing market as an excuse for lengthy sales periods.

At Realmark we are selling homes in a third less time than our competitors because we have adapted to the changing climate.

Seller’s really need to be aware that time on market is a critical factor in terms of achieving a favourable selling price, a lengthy sale period can result in the loss of tens of thousands of dollars.

The best advise I can give is sellers need to make their agent accountable, when signing an agent, do not issue them with an authority of longer than 60 days, if they can’t find the right buyer in that time, you need to reconsider your position.

Many agents use the market as an excuse, but the fact is for an agent to survive they need to be able to sell in both the good times and the hard times – unlike Perth’s recent boom years, homes no longer sell themselves.

Agents have to employ a strategic range of initiatives which takes the market situation into account and offer sellers effective solutions.

My 5 key points of advise for sellers;

1. Only issue your agent with a 60 day period to sell your home to ensure they retain focus and remain accountable.
2. Do not accept that market conditions are an excuse for lengthy sales periods – time on market is critical to price.
3. Find an agent with a strong track record, a detailed knowledge of your suburb and positive seller testimonials
4. Understand the value of investing in good quality, strategic buyer attraction marketing with a point of difference.
5. Expect weekly written reports from your agent detailing buyer feedback

Your comments and/or questions regarding this post are most welcome.

Private Treaty: Going, going, gone…

Western Australia, unlike its brother and sister states in the east, is fixated on Private Treaty as a method of selling property. But why? In today’s information age, buyers hold the power. So why haven’t sellers and agents adjusted their approach to make it work for them?

Ask most Perth real estate agents which method they recommend when selling a property and the answer will almost always be “Private Treaty.” But does it necessarily deliver the best result?

Western Australian’s have always been hooked on Private Treaty while most other states in Australia have a more balanced approach with at least 50 per cent of suburban property being marketed without a fixed price, culminating in an auction or tender process.

The essential difference between these two approaches comes down to setting the price.
Using private treaty requires the seller to set a fixed price for the property and making that price public knowledge. This sale price is often based on their real estate agent’s recommendation.

In fact, sellers often mistakenly select an agent purely based on the price that the agent forecasts and agents are tempted to quote sellers a price they want to hear!

Alternatively, going to market without revealing a set price means the market place (i.e. buyers) bid for your property to the maximum price they are willing to pay.

The Real Estate Institute of Australia lists the differences between the two approaches however, important issues for a seller include:

Set Price
also known as Private Treaty or Open Market
• No set settlement period
• No set terms of sale
• Price that is attacked by buyers
• Buyer is in control

No Set Price
also known as Auction, Tender or Offers Invited
• Set settlement date
• No price barrier
• Set sale terms
• Seller in control

I believe Perth’s fixation on Private Treaty is based on an era when buyers didn’t have easy access to market information and real estate agents controlled that data. Today, buyers are very well informed and have access to ample market data. They are capable of making their own decisions about the value of a property. The no set price approach, especially when combined with the auction sale process, brings a concentrated and defined marketing campaign to a climatic conclusion where buyers are forced to offer their best price.

Agents need to let go and encourage sellers to ‘take the lid off’ and let the market decide. You want buyers to compete. The result may exceed expectations.

And sellers remember, even at an auction, you don’t have to sell unless the result is right for you.