It is the media that screams out that property prices are falling. It is the media who tells us that the interest rates are going to remain on hold; it is the media that tells us who is going to win the next election and also who deserves to win. And most of the time they have actually no more knowledge than the next guy… They simply have a louder voice.
It is for this reason that we need to look at what the media say about the property market. Most of the time, they have no clue what is happening in the market place. Many times, they will put up banner headlines, that are so far from accurate, you wonder where they actually got that thought from. The mass media will almost always be pessimistic about most things. People want to know how bad it is for others, so their lives don’t seem so bad!! People read bad news a lot more than they read good news!!
So why am I bashing mass media? Because what they say is quite often believed. And when people believe their properties are worth less than yesterday, they behave differently in a negotiation. When people believe the market price is falling, not as many prospective buyers will try to buy a property. Auctions don’t work well unless you have multiple bidders!!
When prices appear to be stagnating or falling, it is more likely that agents will do a deal prior to auction. If an agent thinks they are likely to have only one bidder on the day, the better agents, will try to close the deal on the Wednesday or Thursday prior to the auction. In this way, there is still some fear of loss for the prospective purchaser, as opposed to a passed in auction, where the purchaser is well and truly in the box seat.
As a purchaser, choosing whether to do a deal on the Thursday before auction or running to auction can be daunting. On one hand, you have an agent “chasing” you for a deal that sounds too good to be true. He is giving you an option to buy the property over and above “all” other interested parties. Do you do a deal? Or do you wait and see what happens at auction?
The answer is simple? Make sure the agent makes you an offer. This is paramount. If he/she does not make an offer to you, GO TO AUCTION! If the offer made to you is well within the acceptable range of what you are happy to pay, then do the deal. If they want anything over your wish price, then run to auction.
Just remember, the agent may not know everyone who is interested in the property. He/She may not know of someone who is intending to bid. The prospective purchasers may have told him/her they are not interested, when in fact they are. IF YOU ARE GIVEN AN OPTION TO PURCHASE A PROPERTY AT A FAIR AND REASONABLE PRICE, AND YOU LIKE THE PROPERTY – DO THE DEAL!
This also is a great reminder to always let the agent know when you are interested in a property. If he doesn’t know, he may sell to someone else without seeking instruction from you.
If this sounds all to hard, you can always get a professional involved. Give us a call if and we may be able to help you, even if you have already started the negotiations.
If you are considering buying or selling a property give us a call to have a free no obligation chat about how we can assist you.
Director JPP Buyer Advocates