What fractured property market means for your home

Home prices across the country are fracturing into a series of submarkets, whose value is influenced by a unique set of factors.

I’ve worked in this industry as an auctioneer, trainer, agent and real estate columnist for around four decades and this one of the most unique markets I’ve ever seen. I just can’t put my finger on it.

I can go from one property with 10 people bidding that sells for half a million over reserve, and then drive 10 minutes to another property that has no-one interested in it at all. There is no such thing as the ‘normal’ real estate market anymore.

Real estate is now made up of submarkets and these submarkets are all highly influenced by unique contributing factors that can mean, one type of property in one suburb does very well, but another does appallingly in terms of sale price.

Home prices across the country are fracturing into a series of submarkets, whose value is influenced by a unique set of factors. Picture: Daily Telegraph/ Brendan Read

For instance, recently, a unit in Monterey NSW, sold for $300K more than what the owners bought it for just one year ago. The only thing they added was a coat of paint. At the same time I seen houses sell for $400K less than what the owners paid for it, one to two years ago.

Here are some of the factors that contribute to these discrepancies:

1. Quality

There is a shift towards quality – if you have a property that has everything going for it, it will attract all the buyers which in turn creates top dollar. On the other hand, if a property has a cross against it, e.g. busy road, or a bad layout, buyers will often reject them.

2. Renovations

The appetite for the fixer-upper is no longer there. Builders are going broke, and inflation is deterring buyers from buying a dump and renovating. This was not the case a few years ago.

3. Highly-leveraged markets

If you’re buying a property in lower socio-economic areas where the loan-to-value ratio is very high, property prices are impacted more negatively. This is because borrowing capacity has dropped significantly. So if you have a property in an area where people are borrowing 80-90 per cent of the value of the property, they simply won’t be given the funds by the banks that they had previously has access to.

Apart from the factors above, there is another very important factor, and that is – agent selection.

In this marketplace, agent error can be very expensive.

When you’ve got a great market and everything is booming, the selection of the agent is nowhere near as important. Right now, you need an agent who has a great marketing strategy, a good process, and most importantly, is a great negotiator. The difference between a good agent and a bad agent can be 10 per cent of the sale price.

So how does one do their research in agent selection?

Using realestate.com.au, a consumer can easily establish which agent sells the most properties, what their average price is, and the satisfaction of past clients. Furthermore, there are other review sites such as RateMyAgent that can give you an insight into what past clients have thought of the agent’s performance.

However, I often find that one of the best ways to work out the difference between a good agent vs. a bad agent, is to visit open for inspections of other properties and see how the agent acts, behaves, and presents the property during the open home.

+ Do they connect with you?

+ Did they follow up with you soon after the inspection?

+ Did they listen to you?

+ Are they prepared to provide you the details of their last ten sellers for a reference check?

+ And most importantly, did you like them?

We have a couple of months until Christmas and that includes two RBA meetings this year.

If you’re a seller, you’ll have your fingers crossed that they don’t go up because this without a doubt will be the biggest influencing factor in the market for the rest of this year.

* Tom Panos is an auctioneer, real estate coach and trainer with over 30 years experience in the industry.

Originally published as What fractured property market means for your home