For upgraders in Sydney and Melbourne, the property market downturn is a double-edged sword.
Vendors may be disappointed by price pullbacks, but those purchasing a more expensive property will find that the price gap between their current and next home has likely narrowed.
While home owners can potentially save hundreds of thousands of dollars by upgrading in a downturn, vendors can tip the scales further in their favour with simple strategies to maximise their sale price.
Focus on presentation
Buyers often flock to the safest investments when the market faces uncertainty. This means well-presented properties are most insulated from price falls, according to Tower Property Advisory director Robert Allanadale.
“There is a flight to quality,” he said. “There are fewer buyers around, and those buyers who are there can afford to be more choosy.”
Buyers facing tightened lending conditions are avoiding major renovation projects and negotiating hard on properties that need even minor cosmetic work, according to Belle Property Surry Hills principal Mark Foy.
“If the property isn’t presented well, buyers are just chipping away at it,” he said.
Risk-averse buyers are opting for move-in ready homes, and those with the luxury of time are choosing the best property they can afford rather than one requiring costly repairs and upgrades.
“When we’re in a seller’s market, buyers will just overlook those aspects because they’re keen to get into the market,” he said.
Allanadale said vendors hoping to appeal to family owner-occupiers should invest in their property if it’s not up to scratch. He said refinishing floorboards, painting internal walls and revamping gardens are easy wins for sellers.
“You can get a big bang for your buck just by doing minor improvements,” he said. “You might spend $10,000 and that will lift the place immediately.”
Auction or not?
Although clearance rates are below boom-time levels, vendors in traditional auction markets will still see the best result through an auction campaign, according to Foy.
“Auctions reduce the days on market, which gets better prices for the owners,” he said.
A home doesn’t have to sell under the hammer for an auction campaign to be considered a success. Buyers have the opportunity to make an offer at any point in the process, and agents should try to elicit offers prior to auction if few genuine bidders are expected.
“Auctions reduce the days on market, which gets better prices for the owners.”
“There’s more of an incentive for the agent to try and sell the property before auction,” said buyer’s agent Nick Viner from Buyers Domain. “If they’ve only got that one genuine buyer, they don’t want to take it to the auction and see it fall flat.”
A lower clearance rate environment means an agent who can seal the deal quickly is the best choice, according to Allanadale. “It’s the negotiating skills of the agent that are really critical.”
But he said the auction process isn’t the only way to create a sense of urgency among buyers.
“Private sale by deadline date is another option,” he said. “That’s a method that I think is going to increase in popularity in the future.”
A deadline sale gives buyers a date to focus on without revealing the level of demand from other buyers like an auction would. “It’s got many of the benefits of an auction without the risk,” he said.
Vendors could once get away with buying before selling, but that’s now fraught with risk, according to Viner.
“In the current market conditions, the challenge is actually selling the property, therefore most buyers are selling before buying to have that peace of mind,” he said.
Selling first gives vendors a clear idea of their budget, according to Foy. “The value of your property is uncertain. It’s imperative you have money in the bank before buying.”
Those who buy first are in a much tougher negotiating position, because they don’t have time on their side, Allanadale said.
“Don’t put yourself under pressure if you’re a vendor,” he said. “It’s best to sell your property first, even if it means renting for a while and putting your furniture in storage.”
Longer settlement periods could suit both parties. “If buyers just want a longer settlement time, it’s probably advantageous for the vendor,” Allanadale said. “It then gives them more time to find the perfect property.”