Some homesellers are selling their homes for lower prices than they were offered a few weeks ago. If you are considering an offer on your property, please consider the comments in this article.
The property market is like an escalator. Sometimes it goes up – as it has recently. And sometimes it goes down. In different areas, it may move at different speeds, even in different directions. One area may be falling while others are still rising. Sometimes the escalator stops. In some areas, right now, the escalator is moving down. Other areas are sure to follow.
In September, a couple in the Melbourne suburb of Essendon auctioned their home. The highest bid was $360,000. Not good enough. Last week they received an offer of $340,000. Uh-oh.
In the Sydney suburb of Denistone a home was passed in at auction on September 25. It was later advertised for $700,000. Today, it is down to $680,000. If it doesn't sell, tomorrow it could be advertised for $660,000.
These are just two of many cases being reported now – mostly it's the middle to upper priced suburbs in Sydney and Melbourne (at the moment).
In these areas, homesellers are starting to find it tough to get the prices they expected to get. Some are getting edgy. The offers they rejected a few weeks ago are now looking like good offers. Unfortunately those offers are gone. The buyers have bought something else. "If only we'd taken that early offer," they moan. It's the old cliché about the wisdom of hindsight.
Although the frenzy is fading and homes are taking longer to sell, many sellers are still confident – at least outwardly. One echoed a typical comment, "We are prepared to wait to get our price.“
Okay, but for those who decide to wait, there's a question they should ask – How long will we have to wait?
Well, instead of hindsight, let's use foresight.
Westpac has now joined the chorus of experts who believe property prices are 20 per cent overvalued. Although no one likes to say it, it's fairly obvious what this means. Prices may be going down. It has happened before – many times. The last time it happened – or started to happen – a lot of sellers ignored the signals and paid a terrible price. They said the same thing, "If we can't get the price we want, we'll wait." And wait they did.
If you owned a home in Melbourne in 1991 and you decided to wait for that great price your neighbours had sold for, you'd have waited seven years. That's if you didn't crack under the strain. Back then, a seller in the Melbourne suburb of Greenvale wanted $350,000. He rejected an offer of $320,000. Six months – and several agents later, when he was desperate, he sold for $260,000.
It happens at the end of every boom. Go back to the eighties in Sydney. If you rejected a great offer in 1981, you'd also have waited seven years to get a similar offer.
The trickiest time to be selling property is when the property escalator starts going down. This is the time when the offer you get today is often higher than the one you'll get tomorrow. However, based on the prices you may have seen other homes selling for, today's offer may seem low. But tomorrow the offer may be lower still. Weeks may pass – and nothing happens. You live in hope. But it's a false hope, because the escalator is on the way down. The longer you wait, the lower your price. You may wait years.
So, how do you know if you should sell? And for what price? Or, should you wait? It depends on your personal circumstances. What you want to do with your life is the most important factor you should consider.
By Neil Jenman
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