The most important question to ask your real estate agent

Amid price falls and rate rises, the real estate market is shifting so rapidly it’s hard to know what to expect. A simple question could help solve all that.

Every week real estate prices are dropping, days on market is growing, clearance rates are falling, and agents complaining about lack of stock.

In addition to this, the RBA just announced the second interest rate raise in 12 years to 0.85%

There is no doubt this is going to be a hard and cold winter for the real estate market.

Gone are the days of the average (or below-average) agent who made a decent income doing very little over the last two years.

There are more signs that some agents are beginning to feel the pinch and exploring careers outside real estate.

But this is not the case for the agents who are in it for the long run.

Experienced agents have a larger market share, a longer track record and are better prepared for the headwinds that are coming.

These agents will not only survive, but they will also thrive in this market because consumers will go back to relying on agents who have shown the test of time.

The market has changed, so sellers need to changed their expectations with that. Picture: NCA NewsWire/Joel Carrett

WHAT TO LOOK FOR IN A REAL ESTATE AGENT

If you are looking for an agent to sell with this winter, below is a checklist of the top qualities you should be looking for:

1. Are they visible? Do they have signboards up, new listings on www.realestate.com.au and will you hear from them as they actively call past and potential clients?

2. Are they a deal maker or an order taker? Here’s a great question you should ask at the listing before appointing an agent: “Can I have a list of the last 10 sellers you’ve worked with and their contact details for reference purposes?”

3. Are they a strong negotiator? Does your agent know how to extract the best possible offer from a buyer and qualify buyers who may have just had their financing re-rated?

4. Do they having raving fans on social media and the review platforms, or are they more interested in looking good and showing off their cars on Insta?

The market has changed.

And I’m generalising here, but if you’re selling to cash in, you will be making a loss.

If you need to sell, you will have to sell for less than what you expected.

If you’re transacting in the same market, you will sell for less and buy for less.

In fact, if you’re a buyer reading this right now – this might be the winter where you can pick up that bargain you have been chasing for years!

RATE RISE OPPORTUNITY BECKONS FOR HOMEBUYERS

The first interest rate rise in 12 years, and the first of many we expect over the next year or two is not all bad news for those who use real estate as a tool to grow their financial net worth.

As interest rates continue to go up, a borrower buyer will be re-rated by the banks.

Bottom line, the higher rates go up, the less you can borrow, and the less you can borrow means the less you can buy in your purchase.

The result is that prices decline as buyers can’t pay the vendors price even if they want to.

So here is the opportunity that many smart savvy property speculators adopt in this market but of course comes with risk.

They sell now, while rates have not gone too high and then set themselves up to be a buyer when rates are higher and there is a lot of stock on the market.

In short, cash is king in this market.

So when will the big buying opportunities become available? As far as I’m concerned, there is a glimpse of opportunities right now.

Recently, I have seen a few properties sell for $200,000 to $400,000 lower than I would have expected.

However what is undermining prices for now is the election that has delayed a lot of vendors listing in May.

In fact very few vendors want to auction on election day around it.

This delayed stock will hit the market in June and I expect this to be the first of the good buying opportunities. I expect this to continue through the rest of the year with a pause button hit in July for those who are desperate to go overseas in July to make up for lost international travel during the Covid years.

Where there is upside, there is risk, and the risk here is that you sell and can’t find something or prices don’t drop or even go up (unlikely). As a seller, asking for a long settlement will give some breathing space and take the pressure. If you’re keen to buy and sell within a few months, you can put a 12 week settlement in your contract.

However before you get super excited or think this strategy will make you millions, it’s important to remember, it’s highly unlikely we are going to see prices collapse.

Yes they will be adjusted by maybe 10 per cent but if you are expecting drops of 20 per cent to 30 per cent, it’s highly unlikely. Even if rates went up 2 or 3 per cent, rates are still very low when you look at the chart of rates over the last 30 years.

Originally published as The most important question to ask your real estate agent