Another day, another lockdown! I guess we can’t have NSW showing us up now, can we? Unfortunately, though, this “hokey-cokey” style of COVID management is running a serious risk of disrupting the real estate market more than we may be realising, writes Andy Reid.
One thing that the industry has relied upon is the slow-turning nature of it. Predictability allows for vendors, buyers and agents to get into a rhythm; whether it’s a vendor’s or buyer’s market, at least the greater industry knows where it stands.
Right now, because of previous uncertainties, we are already seeing buyers turn away from the market or lose patience with it. A lot of agents are seeing buyers switch off from a property for the most minimal reasons because their sensitivities are heightened via the chaotic nature of our state’s conduct.
However, the one certainty we have right now is the uncertainty of our leader’s behaviour. As shown in Lockdown Four, we can’t guarantee that this lockdown is going to last five days. The level of hesitation thus created in both clients and professionals has the potential to cause some serious damage in a number of ways.
Because of the proposed short-term nature of this lockdown, instead of trying to manage the nervy process of moving onsite auctions to online, the vast majority of my booked auctions (12/13) have taken the decision to either postpone to one of the following weekends, or move to a private sale which wastes thousands in marketing that has been paid by either the agent or the vendor.
For all of those properties, the issues that arise include:
- Competing against two weekends’ worth of auctions (more competition = less buyer attention potentially);
- Money wasted via the “anticlimax” of not going to auction;
- Buyer desire potentially dissipates the longer they have to wait;
- Vendor timelines/plans disrupted; and
- If the property switches to a private sale, the natural level of competition that an auction creates will be gone, meaning that the level of “emotional tax” that the vendor was hoping would be paid by buyers will not arrive.
From an operation perspective, for agencies it has never been as tough to run and manage selling campaigns because of the stop-start nature of the game. It’s almost impossible to get any sort of timing together, let alone manage resources to allow for the hose being kinked for a period of time (causing a rush when released). Trying to assist in the emotions of clients as well as their own isn’t easy at the best of times either!
The biggest factor beyond these, though, is that, with each lockdown, our lives are thrown into chaos, and (without trying to sound too dramatic) the human spirit is slowly being smashed into doing... nothing!
Everyone’s core ability to make decisions has been hammered, which can make simple tasks seem difficult, let alone buying or selling a home! Negotiations become unpredictable, and decisions get made with judgement clouded by the pent-up frustration and anxiety that we’re all feeling.
We’d be forgiven for just closing the doors and saying “get stuffed!”, but for many, the financial and emotional ramifications of this COVID rollercoaster is too much to bear both in the home and in the real estate office.
My prediction from all of this is in one word: chaos! Until ink is on paper, anything can happen and potentially big mistakes will be made on both sides of the equation. Vendors will potentially never know if they’re selling for the right price, some buyers will hold off to the point that it becomes impossible for them to buy, and agents (who rely on predictability) will really struggle to offer advice based on any real degree of logic.
For all the bad chaos creates, it also delivers a fairer playing field. For those who have fewer resources, they can potentially end up being winners, as long as they trust their gut instincts and get ahead of those who need logic in order to make decisions.
For vendors, there is no time for regret. They need to make decisions to move forward if what is in front of them allows them to do so. Speculating relies on consistent market trends, which is not available at present.
For buyers, if you can afford to buy property, you should. I’d suggest aiming for the right to negotiate at auction; in other words, be the highest bidder if a property passes in. That sole attention of both the agent and the vendor will potentially save you thousands of dollars, because what all three parties have in common is a desire to bring some certainty into their lives via a signed contract.
The one thing that we all need right now, though, whether you’re a vendor, buyer, agent or auctioneer, is empathy. We’re all in a crappy situation. It is the same for all of us here in Melbourne and increasingly parts of regional Victoria. So, put your egos back in the box, save each headaches by trying to be arrogant or clever. Let’s give each other a break by being open to greater levels of collaboration for the greater good of all of us.
Andy Reid is an auctioneer, business coach and the head of training for Century 21 and Better Homes & Gardens Real Estate.