After another huge weekend of almost 1100 auctions and 644 private sales recorded by the REIV, we still had a clearance rate in the 60% range. This is showing us that although the market has well and truly turned from last year, good property that is well priced still sells, and sells easily.
We no longer see three or four people bidding for every property. When we are negotiating face to face with an agent, we do not assume there is another party waiting in the wings to pounce if we do not agree to the vendor’s agent’s price. In fact the agents do not tend to play the card: “I have another buyer who will pay that much – you need to give me more”. Or even the throw away line that everyone has heard as soon as they show interest: “I have another offer that will probably buy the house today – you had better give me your best offer”. These lines no longer sit very well, even with die hard agents.
On Saturday at one auction that I attended, when the property was passed in to us the lead agent immediately made a bee line for the other interested party. Now normally I would have raised quite a commotion, because it was fairly obvious he was trying to negotiate with the other party in order to put me “over a barrel”. This is a very common technique used by agents to give themselves, both an unfair and arguably, illegal, advantage. (The agent represents during the auction that they will FIRST negotiate with the highest bidder.) But, in Saturday’s situation, whilst I was inside speaking to another of the agents (who was not the negotiator) our second team member watched the exchange between the lead negotiator (who should have been in with me) talking to the other interested party. It was the lead negotiator that came away with his shoulders dropped and the other party walked off and left the area. When my partner called me to tell me this, it was the most valuable piece of information to allow me to negotiate from a position of immeasurable strength. Needless to say, we bought the property on the day and our clients were extremely happy with the outcome.
Property assessment and negotiation have become as important as property selection. Last year, negotiation was all about securing the property at a fair price, now it is about both securing the property and paying a “good” price. The market will not remain balanced for long. It will turn back to a sellers market probably before the end of the year, as investors flood back to property after being mauled in the stock market. The old adage, “Make hay while the sun shines” is very apt at the present time.