There is no doubt that 2011 was a challenging year for the Australian residential property market in general, and I’m sure that many agents felt the pinch.
With somewhat depressed property values and ongoing woes in international financial markets, many areas saw buyers delaying a purchase decision with properties staying on the market for longer periods, being taken off the market or selling at a discount.
But with a new year comes a fresh start, and I believe that the property market in 2012 has the potential to present agents with some substantial opportunities for success. Having said this, in order to make the most of any prospects I expect that many agents will need to reassess their approach so as to achieve the best outcomes for their clients and, in turn, themselves.
So what kind of conditions are we expecting to see in 2012? At the moment, the market looks to be ripe for home buyers and investors, with continued strength in stock levels (trending down from the highs seen 12 months ago), low vacancy rates and subdued values, and two interest rate cuts late last year helping to create affordable debt and financing options.
Despite this, however, many prospective purchasers continue to sit on the fence, showing a reluctance to make a purchase. As a result, for those buyers who do act there will likely be ample opportunity for price negotiation, particularly in the upper end of the market.
It’s always hard to predict the floor but we believe that around June or July this year the commentators will be saying that August/September of 2011 was the bottom of the market. Apart from the doomsayers predicting a 50 per cent fall in values, most market experts agree that growth will pick up in 2012.
For agents operating in this market, never before have client relationships and follow-ups been more important, particularly with those prospective buyers who don’t end up purchasing a property – a group that is often neglected.
In the midst of the busy lives that agents tend to lead, it can be easy to forget that while these people may not act now, one of your other properties currently or in the future could be a perfect alternative option.
With many agents neglecting to follow up, the agents that treat prospective buyers as importantly as they would do their vendors can easily put themselves in a standout position to achieve future sales and repeat business.
On the other side of the table, in 2012 agents will also need to ensure that their relationships with vendors are strong. In market conditions such as these where price negotiations are becoming more frequent and expected (from the buyer’s side especially), it is not uncommon for transactions to fail due to unsuccessful discussions in which the vendor is unwilling to meet the lower-than-expected offer of the buyer.
Key to the success of negotiations (and a property sale) is the early and ongoing management of your vendor’s expectations. Nobody likes to be told that their asset may not achieve the value they believe it to be worth, and it can be hard to accept the initially low offers that buyers may put forward.
Providing your vendors with an honest assessment about realistic sales price expectations and the very nature of price discussions from the outset should help in achieving a successful sale in a reasonable timeframe.
When conditions are challenging, true skill, savvy, and the ability to fine tune your tactics will more than likely be required if you are to make it as an agent.
While it is difficult to predict the future of the Australian real estate market, it appears to me that attractive purchase opportunities for buyers will likely exist in 2012. As a result, conscientious agents who focus on building relationships with their prospective clients and educating vendors should have great opportunities to realise personal success.