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7 spring selling dangers

7 spring selling dangers

Spring selling season
by Reporter 0 comments

Spring historically attracts a flurry of positive activity in the industry, but there is a risk that property overvaluations can turn the traditional boom season to bust.

Seekology property expert and buyer’s agent, Tim Godden, outlines seven hazards caused by overzealous property valuations.   

1. Initial buyer interest lost 
If a seller’s asking price is too high, in most instances a property will sit on the market, while more appropriately priced properties are sold. As a result, a seller may drop their asking price but in doing so, risks losing the initial round of buyer interest.

2. Attracting over-promising agents
Sellers should always consider a valuation from more than one real estate or valuation agent. Buyers should do the same before making an offer as this will assist in sales negotiations.

3. Lender mismatching 
Most banks or lenders independently value a property before granting a loan. If there is a difference on price, this may jeopardise the loan approval process and require the buyer to pay a larger deposit. 

4. Emotional over-extension 
Certain buyer demographics, such as owner-occupiers, are known to place a higher price on a property when emotions are involved. Buying a property is a major life investment, but too often buyers stretch their finances to secure their dream home.

5. Investor defaults
Housing loans to Australian investors were more than $11.8 billion in July and the 30-plus day delinquency rate for prime residential mortgage backed securities is reportedly rising. Less sophisticated investors risk biting off more than they can chew at a time, like now, when interest rates are at record lows.

6. Seasonal trend distortions
Sellers equally need to be mindful that buyer competition, trendy locations and investor hotspots can come and go. Just because a property is sought after at the time of auction or sales campaign does not mean the property will be valued at the same amount in 12 months’ time. 

7. Improvement loss 
Short-term investors risk losing time and money if they overestimate a property’s post-renovation value. Before buying, advise buyers to obtain quotes from at least three qualified trades companies to compare costs – once a building inspection is completed – and obtain market intelligence on properties sold in the area to ensure sales history aligns with expectations.

7 spring selling dangers
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