As the market has settled into a steadier, more “normal” pace, many observers are noting lower clearance rates at auctions across all market places and it’s important to reflect on the reasons. Have prices dropped? Possibly in some isolated cases, but in the main, the answer is no. What has changed is the way buyers and sellers are perceiving value and how agents are appraising properties in the face of the new laws around underquoting.
Many buyers are still adding 10% to agents’ estimates and, given the climate of 2016-2017 along with the broad spread quoting practices prior to the law changes last May, this is not an unreasonable expectation. However, as has been noted now for some time, most agents seem to be getting prices “pretty right”. Of course, there’s always the odd auction that goes well beyond the indicative selling price, but these are driven mainly by competition above reserve. Most are selling within range and a few even a little below. So buyers are urged to make their own assessment of market value and attend auctions even if they disagree with the agents range or think that there’s always going to be a 10% premium.
Agents must do due diligence – and most are – in arriving at a realistic indicative selling price.
And vendors – well, they must be prepared to listen to the market – not propose to drive it. Listen carefully to agents’ reasoning on price and be prepared to question it and analyse it. Above all, avoid the over-optimistic agent whose appraisal sounds compelling but lacks substance – it’s likely you’ll be back in the market 3 months later looking for another agent.