John McGrath - Tips For Buyers In The COVID-19 Era
Current as of 14 April 2020
Since onsite auctions were banned in Australia, we have seen a substantial shift in the way property is being sold across the country.
Whilst many auctions have proceeded to live-streaming online, a large number of vendors have transferred their campaigns to private treaty.
This is no surprise. Private treaty is the traditional way of selling in Australia, so many vendors feel at present feel more comfortable with this compared to livestreaming, which we’ve successfully rolled out in recent weeks.
We’ve also seen a big increase in properties selling prior to auction. It’s understandable that in the midst of Covid-19, motivated buyers and sellers are keen to get a good deal over the line.
The property market is functioning very well under Covid-19 restrictions. Our company recently sold 190 homes to a value of over $185 million in just seven days along the eastern seaboard.
Amongst the properties that we’ve taken to auction online, we’ve seen very good results.
In Sydney, 10 bidders registered and five participated in the auction of 5 Park Street, Epping. About 140 people logged in to watch and it sold above the price guide at $1,320,000 with 54 bids entered.
A healthy 270 people viewed the auction of 42 Bombay Street, Lidcombe, with 13 bidder registrations and three bidders entering 25 bids for a sale price of $1,222,500.
In the ACT, four registered bidders and 35 viewers were at the auction of 24 Brigalow Street, O’Connor, which sold for $1,060,000 after 21 bids from two parties.
Inevitably during economic disruptions, some buyers and sellers choose to delay. The percentage of withdrawn campaigns has recently spiked to more than seven times the weekly average nationally, according to CoreLogic. This will change as we all get used to living with Covid-19 over the next six months.
Meantime, buyers have no reason to exit the market. Property is a long term purchase and from a capital growth perspective, what is most important is time in the market, not timing the market.
To help you along, here are my top tips for buying during Covid-19. I hope they give you a confidence boost to buy when you’re ready.
Tips for buying via private treaty or pre-auction
- On auction campaigns, ask the agent if the owners are willing to consider pre-auction offers
- Tell the agent you’re interested but don’t let on that you’re emotionally attached
- Don’t start with your best offer. When it’s rejected, pick an odd amount next to imply you’re at your limit. Rather than offering $960,000 or $965,000, try $963,500. Say to the agent: “I’ve looked at the comparable sales as well as my finances and costs and I can offer $963,500.”
- Use any common ground, like a desire for a longer settlement, to incentivise the vendor
- Don’t make negative comments about the property. Vendors are influenced by their emotions, too!
Tips for buying at auction online
- Watch some auctions online to get familiar with the process first
- Have your agent of choice step you through the online platform
- Register to bid early and ensure you have good wi-fi signal strength
- If you’re going to bid, take your time and understand the incremental advances
- Stick to your budget. Short-lived disappointment is better than long-lasting remorse
- Understand your legal requirements when executing contracts online
- The online bidding process is easy to use and can be done from the comfort of your own home
I hope these tips give you a confidence boost to buy when you’re ready. Covid-19 is a short term disruption when considered in the context of long term home ownership (usually 10+ years!).
See you next week. JM
This article originally appeared in The Real Estate Conversation (April 14, 2020)