You have probably heard many of the cliches bandied about the real estate industry, but do they ring true?
Perth experts take a closer look at some of the phrases that we know so well.
TIME IN THE MARKET, NOT TIMING THE MARKET
Explaining this adage, Momentum Wealth managing director Damian Collins said it was far more important to get into the market to make money in real estate than to focus on buying at the perfect low point in an economic cycle.
“Everyone would have liked to have purchased a property in October 2019; that turned out to be the low point in the last property cycle,” he said.
“Since then, despite COVID-19, high inflation, the war in Ukraine and everything else, Perth residential prices are up almost 27 per cent.
“That doesn’t mean there aren’t significant returns still remaining over the long run, particularly in a market like Perth where our median house price is the cheapest capital city of any state and about $1 million less than Sydney.”
Mr Collins said it was important to always consider market conditions and be more cautious if there was a recent significant increase.
“However, no one can say exactly when a market will peak or trough,” he said.
“I’ve seen many people sit and wait for the ideal conditions that usually never come.
“Far more money has been lost by trying to time the market than has been lost by getting in at the wrong time.”
KITCHENS AND BATHROOMS SELL HOUSES
Harcourts WA chief executive Shane Kempton said kitchens and bathrooms were big selling points for most owner occupier homebuyers, especially off the back of COVID-19 when many owners renovated these areas.
“Kitchens are often the centre stage for conversations with family, friends and the occupants of a home,” he said. “Having a welcoming and inviting kitchen creates a sense of belonging — a key human desire.
“Bathrooms are both your private space to indulge in some peace and quiet, and an opportunity to showcase the quality of your home to visitors.
“Couple all this with the knowledge of the investment it takes to create a beautiful space in these rooms and this cliche often proves true.”
A FAST SALE IS A GOOD SALE
Realmark managing director and licensee John Percudani said time on the market was an important consideration for many selling agents because buyer interest tended to wane over time and shift to new buying opportunities.
In states where auctions are popular, the process provides a structured and wide engagement of buyers, as well as time for sellers to consider market interest and optimise the time of market, which is often within 30 days.
However, in WA, most listings are offered for sale by private treaty with an asking price, which can result in buyer offers being presented singularly or even prematurely.
“A sale achieved quickly to the first buyer or at the first home open may not signal comprehensive buyer engagement of the market,” Mr Percudani said. “As a result, the fast sale may not have achieved the best outcome for the seller that a measured time on the market could provide or, at least, the assurance the property has not been undersold.
“Across a large number of sales, Realmark often witnesses unexpected results when properties are transacted through its set date sale process or the orderly method of an auction.
“This suggests a measured time on market can lead to better sales outcomes for sellers.”
BUY AT THE BOTTOM, SELL AT THE TOP
Mr Collins said this strategy suggested buying property at its lowest point of the economic cycle and selling at the highest, then potentially buying back in at the next trough.
“While it sounds good in theory, the reality is it’s almost impossible to perfectly time the market, even for professional investors,” he said. “Real estate prices in large capital city markets are less volatile than asset classes, like shares, and come with high transaction costs, largely due to stamp duty.
“When you add in potential capital gains taxes, it could mean real estate would have to drop 15 per cent or more to make it worthwhile to sell out and buy back in again. Historically that doesn’t happen very often.
“For the vast majority of investors, the focus should be on long-term investment not trading in and out.”
With much of WA’s population situated on the coast or river, Mr Kempton said water views had become a sought after symbol of success during working life or as a retirement perk.
“It should be no surprise that most of our high-value properties in WA boast amazing river or ocean views,” he said.
“For that extra bonus, a river and city view would be a desirable quinella.
“For others, views of our hills or beautiful bushlands create a sense of peace and serenity, again, adding intrinsic value to the buyer looking for that added lifestyle extra.
“It is the sense of having both the feeling of security of a home, yet the freedom and access to open areas and nature.
“We’ve had buyers who purchase multimillion-dollar homes solely for the views.”
THE FIRST OFFER IS THE BEST OFFER
Mr Percudani said WA agents often advised sellers that the first offer was likely to be their best offer.
“This may be on the pretext that the agent is seeking to bring their qualified or active buyers to a listing early in the market process,” he said. “However, this adage may not ring true and sellers would benefit by having buyer offers being drawn in and presented in an orderly manner.
“This allows for a full test of the market, comparison offers and wide buyer feedback.
“They can then make an informed selling decision with assurance that the best offer has been tabled.”
Pointing to auctions as an example, Mr Percudani said a keen buyer would often seek to make an offer ahead of auction day to neutralise buyer competition.
WA agents who presented offers prior to the auction could prevent a proper test of the market.
“Realmark has regularly witnessed how the dynamics of open and transparent market competition can deliver a better-than-expected sales outcome and, often, not from the first buyer,” he said.
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