This month Real Estate Business talks to leading economists, trainers and agents about the best way to win sales at any time of the year, while determining if the spring selling season is all it’s cracked up to be
EVERY YEAR as September rolls around, the excitement for the spring selling season is palpable among real estate agents. The sun is shining, the flowers are blooming, and more importantly, buyers are out in their droves, flocking to open for inspections. But are agents putting all their eggs in one basket when it comes to the legendary spring selling season?
Perhaps they are missing out on great opportunities in usually ‘quiet’ periods. While the rest of us were enjoying leftover Christmas dinner last year, Lew Toop of Toop&Toop Real Estate in Adelaide sold the state’s most expensive property. The luxury property settled on Boxing Day last year for $4.6 million, almost nine times the area’s median price.
Meanwhile, in May of this year, an unnamed Double Bay real estate agent reportedly sold a Point Piper mansion for more than $50 million. The property that sold in autumn is the most expensive residential sale Sydney has ever seen.
These big-ticket sales show that property never sleeps, according to Rick Nolasco, senior sales executive at Belle Property in Double Bay. In fact, Mr Nolasco’s biggest sale occurred in March 2008, when he sold a property for $32.4 million.
“When the buyer comes along and is looking for that sort of product, it doesn’t really matter what the timing is,” he says. “There are obviously times, like winter, when there are fewer listings available, but that doesn’t mean that sales aren’t there.
“You’ve really got to know your area; it isn’t about a certain time of the year.”
Michael Sheargold, founder and owner of Real Estate Results Network (RERN) agrees. According to Mr Sheargold, it’s possible for the best agents to avoid any ups and downs during the real estate yearly cycle. He says that if agents are too focused on the spring selling season, they could miss opportunities that come up outside of that time.
“A great agent and agency can avoid the speed humps of real estate,” he tells Real Estate Business. “It is like a real estate rollercoaster – when a great month is followed by a poor month, it has nothing to do with the marketplace and everything to do with the level of motivation that the agent is feeling.”
Those agents who excel during the spring will generally achieve great results all year round, says Mr Sheargold.
“Some agents will always do better in spring than everyone else in their market and that is because they are well prepared, they’ve laid down the ground work months in advance and they’ve kept up relationships all year around,” he says.
“They don’t just put all their focus on spring.”
According to Mark Kentwell, director of PRDnationwide Newcastle, who placed 33rd in Real Estate Business’ Top 100 Agents list, his most important time of the year isn’t spring, but rather December and January.
“While the lead-up to spring is our busiest time, the really important part of the year is in those traditionally quiet times,” he says.
“I see so many agents ‘check out’ at the end of the year and the start of January, but if you want to start your year charging, you need to be putting in the hard work in December.
“I think there are fewer listings around this time purely because agents aren’t pushing, not because there aren’t buyers.”
Auctioneering expert Jason Andrew, director and founder of auction house Jason Andrew, says the best clearance rates occur around the December to February mark because those that come into the market are determined to sell.
“There is less competition between buyers in the summer months and those vendors who are using auction at that time of year are ready to sell,” he says.
“We’ve been collecting data on weather and season for a long time and it doesn’t affect auction crowd sizes at all – the cold and rainy days can pull bigger crowds than a gorgeous day.
“Every season has its positives, but when there is a buyer and a seller, it doesn’t matter what time of year it is.”
Richard Young, managing director of Caporn Young in Western Australia, who placed seventh in Real Estate Business’ Top 100 Agents list, says in his area, sales numbers actually drop in spring.
“Interestingly, we track our business and our number of actual sales drops at that time of year,” he tells Real Estate Business.
“I think it comes down to basic economics. Such a lot of properties on market means buyers are spoilt for choice, so they are holding off their decision and our sales numbers go down.
“We actually talk to our sellers and tell them to get in early to have a great advantage over the market.”
Mr Young believes the busiest periods to transact real estate depend on different markets. His Cottesloe office is based in a private school belt and thus his busiest periods are dictated by the school year.
“We find with business transfers from big mining towns and kids coming to school, our busiest period is definitely mid-November to December,” he explains.
In October of last year we had yet to see the surge of the spring selling season, according to SQM Research. During September, total stock on market came to 373,374 nationally – down 136 listings month-on-month.
A number of capital cities recorded falls for September, including Canberra (-4.6 per cent), Darwin (-6.6 per cent), Hobart (-0.4 per cent), Perth (-3.3 per cent) and Sydney (-2.9 per cent).
However, regional areas helped pick up the slack from the capital cities, averaging out the levels of stock to produce the minimal national monthly change.
The lack of increased stock at the beginning of spring surprised managing director of SQM Research, Louis Christopher.
“To actually record falls in listings during the opening month of spring is unusual,” he said in 2012.
“Either vendors have been withdrawing their properties at a faster rate than new listings entering into the market, or stock is being sold at a quicker rate. Or a combination of both.”
However, data from the Real Estate Institute of New South Wales (REINSW) indicate the best month to sell a property by auction in New South Wales during 2012 was September.
“Across New South Wales, 2,233 properties were reported as being up for auction in September 2012, with a clearance rate of 62 per cent,” REINSW president Christian Payne says.
“Spring is a time of renewal in the property industry. The warmer weather means people can really show off the positive parts of their homes, and many are ready to pound the pavement to look for a new place to live.
“The government’s decision to cut first home buyer incentives for existing property from 1 October 2012 may also have played a role in the solid clearance rates for September,” he admits.
The data also showed the worst time of year to sell a property was over the Christmas and New Year period.
“It’s no surprise the least popular time of year to sell a property was during the festive season,” Mr Payne continues.
RP Data research shows the number of transactions was considerably higher in spring than any other season in 2012 (see graph 1). There were over 107,489 properties transacted compared to autumn, where there were 102,923. The spring selling season also had the average shortest national time on market figure (see graph 2). According to RP Data, on average a property was on the market for just 51 days during spring in 2012.
While the spring selling season performed strongly, it was the results from autumn and winter that most stood out.
In the nation’s Top End, the heat – with average temperatures of 30 degrees in winter – can be the only determining factor as to why the Northern Territory experienced some of their best results in winter. The average time on market in the Northern Territory (see graph 5) was just 55 days, the shortest all year round.
Meanwhile, South Australia, Victoria (see graph 6) and the nation’s capital saw the most transactions occur during autumn.
Winter was the most competitive time of year when it came to the number of listings on the market (see graph 4). On the east coast of Australia, there were fewer listings in winter than anywhere else.
According to Andrew Wilson, senior economist of Australian Property Monitors, the broader economic environment determines how the seasons affect the property market.
“Obviously, lower interest rates make houses more affordable but one of the key factors about, for instance the Brisbane market, is the unemployment rate – there is no point having a really cheap mortgage if you don’t have the money to pay off the mortgage,” he tells Real Estate Business.
“The unemployment rate is all part of the confidence building in housing markets at the moment; we have a little bit of a cloudy outlook in Victoria.
“The Melbourne unemployment rate is above six per cent, in contrast with Sydney, where the rate is below five per cent, and that is a big part of why Sydney is doing so well at the moment – the local economy and employment rate is positive and that creates confidence.
“We don’t want to see the unemployment figure go beyond six per cent because that will affect the housing market.”
According to our experts, there are particular seasons that trigger a slowdown among agents.
“In our market, January is really slow because the families are off on holidays,” Mr Young says.
Additionally, Mr Sheargold believes agents seem to lose motivation when the colder months set in. “I think in winter we see agents start to lose motivation,” he says. “However, I teach that when the market slows, it is important the agent speeds up. It will make all the difference to the ultimate performance.”
Mr Andrew says it is important for principals to be keeping agents motivated at least three months ahead of the spring selling season.
“If you want to see results in spring, you should be working on your listing, prospecting and working on relationships in June or July,” he explains.
“Working hard in February means you will see the results after Easter.
Mr Young motivates his workers by ensuring they each have a good work-life balance.
“As we work to the school calendar year, we take our holidays in that time too,” he says. “There is a real tendency for sales people to work long hours concurrently and then they get overworked. We mirror our work calendar to the school year, so we have work period blocks of nine to 10 weeks.
“When it is school holidays, our clients are in holiday mood, so we give them a break. They are juggling kids at home and they don’t have time for open for inspections. It means our sales guys can also spend time with their families. We won’t launch new properties in those weeks, or send out marketing.
“Both our clients and my staff really appreciate the break. It might not work for everyone but it works for us.”
Mr Sheargold motivates his agencies through competitions and incentives: “A listing race can really drive performance when agents might have less motivation,” he explains. “The competition should target a certain KPI or focus of your business at that stage in the year. It could be a selling drive, an upgraded marketing program, or those who have two auctions in a month win a prize.”
Similarly, Mr Andrew says an agent’s KPIs and targets should change in the quiet months. “Agents need to up their KPIs in the tougher periods,” he says. “Reach high and really push for better results, otherwise agents can lose motivation.”
Australian Property Monitors
“I BELIEVE the federal election will not have a significant effect on the housing market, except for the Canberra market.
Canberra has been in a bit of a stall mode for the last 12 months and that has to do with job shedding in the public sector.
There is still a lot of nervousness in Canberra over the local economy, in terms of fiscal consolidation and public service job shedding, because of the deterioration in the Budget. I think most other markets have factored in the likelihood, according to the polls, that there will be a change in leadership.
The election will come before the spring season is really in full swing, which typically happens after the football grand finals. I don’t think it will have a significant impact.”
Winter is all about staying warm indoors, but the most vigilant buyers and sellers will brave any condition to ensure their real estate dreams.
SELLING POINT: Nationally, the percentage of stock on the market is at its lowest in winter, putting your vendor at a competitive advantage.
DATA TIP: In the Northern Territory, the average time on market falls considerably in winter to just 55 days.
ENGAGING A BUYER: Mark Kentwell, of PRDnationwide Newcastle, suggests running more lunch time open for inspections during the colder months, as people are less willing to go out after hours.
PRESENTING THE HOME: Turn the oven on during open home inspections, says Jason Andrew of auction house Jason Andrew. Winter is a great time to show how homely the house is, and you can achieve this by having a winter casserole or stew cooking.
AUCTION: Rain, hail or shine, Jason Andrew believes the weather won’t affect your auction. That said, this time of year is a great chance to try out indoor, offsite auctions.
The temperature begins to heat up and those who have hidden from the cold are ready to get back out into the property market. Traditionally the property market surges in spring.
SELLING POINT: Open home inspection data shows buyers flock to open inspections in spring.
DATA TIP: Nationally, the average time on market during spring is just 51 days, with New South Wales recording the shortest time at just 44 days.
ENGAGING A BUYER: Don’t be fooled into thinking the buyers will come to you in spring, says Mark Kentwell of PRDnationwide Newcastle. Entice them with regular email contact.
PRESENTING THE HOME: The house needs to be looking and smelling fresh, says Jason Andrew. Put vases of flowers around the home, just to brighten up the property.
DEALING WITH THE VENDOR: According to Mr Kentwell, the peak selling time in spring is between the first two to four weeks, so vendors should not hold out in hope for a better price past this point.
AUCTION: Spring is all about being fresh and new. This is a great time for onsite auctions, but ensure the garden is looking its best.
For many Aussie families, when summer rolls around it means holidays and long weekends at the beach. Traditionally, the property market eases up, but there is still great activity in certain marketplaces, according to the experts.
SELLING POINT: The most expensive property sold in Adelaide in 2012 sold on Boxing Day for $4.6 million, nine times the area’s median house price.
DATA TIP: Listings soar in summer nationally. In 2012 there were 624,965 properties listed throughout summer.
ENGAGING A BUYER: In holiday destinations – especially coastal areas – agents should attempt to engage the tourists, as they may have just got a taste of what life could be like.
PRESENTING THE HOME: Michael Sheargold from RERN suggests finding a scent or perfume that creates a summer feel.
AUCTION: Jason Andrew says he achieves the best clearance rates at this time of year because the vendors that come into the market over this period are determined to sell, sell, sell.
Autumn almost appears to be the forgotten season when it comes to real estate activity. However, according to data, autumn performs the most consistently compared to any other season.
SELLING POINT: According to RP Data, autumn comes a close second to spring with the amount of properties that are transacted. Could it be the new spring selling season?
DATA TIP: Last year, Victorians saw over 25,000 properties transacted in autumn – more than any other time of the year.
ENGAGING A BUYER: The property market surges around the Easter long weekend, so make sure your buyer gets in first, says Richard Young of Caporn Young.
PRESENTING THE HOME: With daylight savings still running, late afternoon and twilight open for inspections are the best time to capture the property’s homely appeal, says Michael Sheargold from RERN.
AUCTION: To ensure the property looks the best when auction day rolls around, ensure the home is warm and reflects the season with neutral colours.