Sydney Market Worsens as Sellers Offer Discount
We’ve seen first hand how vendors across Sydney have shifted their approach to discounting to help sell their properties. We recently had a client who purchased a property in Merrylands for a reduced price of $945k due to negotiations and limited demand. Comparable properties listed down the street were listed this time last year, sold for over $1.1 million and $1.09 million.
With the average listing period extending by 3 – 6 months it is now placing further pressure on vendors and agents to force owners to discount to help drive demand. Apartment developers and home builders are also offering never before seen incentives such as offering to pay the first years mortgage, paying off the stamp duty or upgrading the property. Properties are now going stale and as a result are changing real estate agent hands more often due to an inadequate response to their marketing campaigns or because there is greater supply in residential properties and more room for negotiations.
Over the past three months, the median vendor discount nationally was recorded at -5.7% which is the greatest since August 2012. A recent client we helped secure a loan for their investment property in Villawood (Sydney West) had comparable properties that were being sold for over $850k. Our client secured the property for $707k after 4 months after being listed by two different agents. Businesses such as interior designers, landscapers and stylists are also capitalising on the fierce competition as sellers look to renovate to attract more eyeballs and potentially a higher price.
Signs that a seller might be ready to negotiate a discount include:
- Property has been on the market for an extended period, typically more than 6 – 12 months. In some cases the vendor might not need to sell in a hurry, this isn’t always a green light for negotiating a deal. They might be renting out the property, covering costs and just waiting for the right buyer to come along.
- Postcodes where there has been a lot of apartment construction and sales to investors, particularly in the inner city. Many apartments are coming back on the market at reduced prices, particularly from overseas buyers.
- Price reductions. It might be the original sale price was too high for the current market.
- Forced or distressed sale. An increasing number of mortgagee sales are appearing online where the property is being sold by the lender. Situations involving divorce or deceased estates can also be more “price flexible” as lawyers or agents selling the properties are under pressure to achieve a result.
- Changing sales agents. Check online to see whether real estate agents have been replaced, or if the property is being put back on the market as the seller may not be seeing any or limited offers.
- Agents willing to negotiate a sale before auction day. This is often a sign the seller might not be confident of competing bids.
- Market trends. We believe quality houses in coveted postcodes will continue to hold their value. He recommends buyers research why the property is being sold and then review the local market in terms of volume of supply and turnover.
Our team can ensure you’re not overpaying when purchasing your next property. Talk to our experts before you make your move (02) 9897 1039.