We all know it is a buyer’s market, with more properties for sale in most markets than buyers. The amount of property advertised for sale has lifted across all capital cities and most, if not all, regional towns as well. According to one data provider, there are about 275,000 residential properties currently advertised for resale across the country. This is up from 220,000 (or by 25%) on the same time last year.
I am not saying it isn’t a buyer’s market or that the amount of stock advertised for sale has not risen, but the question is, when is a property really “for sale”? You see, most data houses source their “for sale” lists from the internet. Some are more careful than others to ensure they don’t double count. But it is just a count after all, and little or no attention is given to what is actually being measured.
As I have said many times – and find myself repeating more frequently of late – “It is the easy things that are most often measured, rather than the things that should be measured.” This applies directly to these “for sale” lists.
I recently asked a dozen or so veteran real estate agents (sadly, most like to be called such) about the number of properties that are really for sale in their trade area. By really I mean that they are priced to sell and the seller is motivated to do so. In other words, the seller needs to sell rather than wants to sell. We would sell our house, for example, if someone offered us enough money and the terms of the contract suited us. Our house, by the way, isn’t advertised for sale – it is a buyer’s market after all.
The typical response confirmed that about half of the properties listed were really for sale – though even then, only one-in-three (on average) of that fifty percent had the property priced appropriately to do so. You see, the internet is a wonderful thing; it has driven down the cost to advertise, so sellers (let’s call them that) can cheaply take a punt in the hope that someone will like what they see, offer them a big wad of cash and Bob’s your uncle…or Robert’s your mother’s brother, which ever saying takes your fancy.
Partly to blame here, too, are those real estate agents who list property this way. Experienced agents don’t waste their time listing overpriced property – and especially in a buyer’s market.
I did a little bit of a test to validate what I had been told. Apparently, in the Kenmore area of Brisbane (postcode 4069), there are 350 properties listed for sale on the internet. By my way of reckoning, only about 200 of those are really “for sale”, and from what I can gather from the internet, agents windows and actual inspections, only about 75, maybe 100 tops, are priced to sell within the next three to six months.
My constraints required that the property had a physical “for sale” sign; gave the address on the website; offered a time to view the property; provided some indication about price expectation or an auction date, and had a real estate agent engaged on behalf of the seller. Now, some readers will dismiss these parameters, but unless these details are provided then I would not be interested in investigating the matter further.
In our street alone – which comprises 74 properties – there are seven homes currently listed for sale on the internet. Yet only one has a “for sale” sign in front of the property, and all are way overpriced for the current market conditions. Several of these seven have been “for sale” since we moved into the street in late 2005. The one with the sign is the only somewhat motivated seller and even then, they “aren’t in a particular rush”.
It would be great if data houses – instead of trying to out-pip each other in the press – provided some meaningful statistics once in a while. I do think that RPdata is the best of the lot, but their weekly “advertised stock on the market” table would be greatly enhanced if they provided some extra vigour and listed those properties priced (and sellers motivated) to sell, separate from those that would like to sell.
Food for thought.
“This report is republished with permission of Matusik Property Insights.”