Early Pep & Price
by Gina Kantzas and Mal James
Price is not determined by "the market"
What is Price? C’mon what really is Price?
Price is the exchange number.
People are emotional before Price, emotional as they consummate Price and emotional after Price – but it’s just a number.
2 people’s emotion determine that number not “the market” – the market influences their opinion and therefore emotion and therefore Price, but it does not solely determine Price.
How do we get a Price?
A buyer has an opinion, and a seller has an opinion, and for a transaction to take place their opinions of value may be vastly different and affected by a range of other opinions, such as a bankers, the media, another buyer pushing the price up or down, Aunt Mary or even us agents/advocates to name but a few…. BUT at a time when pen, paper and usually an agent are handy, if the buyers’ and sellers’ emotional opinions are reflected at the same number, then we have a Price.
This is what a Price is – a coming together of two emotions at a number.
But today in Melbourne, this is NOT what many think a Price is and it’s not how many buyers and sellers think a Price for a home is arrived at.
In reality, this is how many buyers and sellers see a home price occurring in a strong market, say Cup Day 2019 to Cup Day 2021. They think “the market” determines price.
And this is how those same buyers and sellers see a home price in 2022.
But over 22 years with a 1000+ buy sell transactions AND coming off a record year ½ in lockdown and ½ in downturn this is what we at JAMES BUY SELL see:
There are three Market taps, not one all-encompassing Macro Market tap that influences a buyer’s and seller’s emotion, that ultimately determines a Price.
Yes, the Macro Market influences Price – but so do Micro PPP Markets and most importantly so do Individual Markets.
These 3 Markets influence Price because these 3 Markets influence emotions.
Your buy or sell Price is NOT a number pre-determined by the Macro Market – it does not have some magical sticker price ordained from above. It is one determined by 2 people’s/family’s emotions – which are influenced by 3 Markets, not just 1 Macro Market.
The 3 Markets that influence a Price
- MACRO – Melbourne or Australian Market – what you read about in the media.
- MICRO – what is happening in your buy or sell PPP’s – your home type – in other words the fundamentals of your Positional land, your Property (does it need a reno, has it got Heritage, is the façade a turn on or a turn off and ……..), your Price point ($2m to $3m is a harder market than $8m to $10m for A-graders right now – in say 2018 that was the complete opposite). How your home compares with similar PPPs.
- INDIVIDUAL – the specific buyer and seller circumstances.
There is 1 MARKET you have a real influence over – the INDIVIDUAL MARKET (buy or sell).
When buying or selling in any market, but particularly in this one, we at JAMES BUY SELL like to secure a proven process. No not a standard 4-week wham-bam auction campaign with little prep, poor presentation, inappropriate or untested ASK and just any ‘ol agent. That is about as smart and likely of success as I would be at brain surgery on my first go, having simply watched a YouTube video and spoken to a mate.
There are many ways you can influence Price and it’s not around aggressive tactics. Tactics are for the TV shows, the story books. It’s not tactics – it’s process with a plan, proven strategies and people, that individually alter a Price outcome the most positively or negatively. To some this sounds really boring – it’s not – but if boring gives me a $1million, then I am happy to be bored for a while.
Shore up your processes – follow good processes at any time when selling or buying, but particularly now in 2022/2023!
Those diggers in the graphic are shoring up good processes for selling and below for buying.
- We talk about 3 TAPS; why not turn on some more TAPS and have MULTI-LIST TAPS.
- When you buy or sell with a single agent – you by logic get a single agency’s buyers and opinions. Your advice and offer (if you have one) has come from a fraction of the market and to the exclusion of all others.
- But when you go no-rules-open-slather it tends towards chaos. Multi-list whether buying or selling or buy selling is a controlled and logical answer that has worked for over 1000 Top End transactions, in GFC’s, lockdowns and raging bull markets.
Understand the Price Taps and turn on more in this market, turn on more in any market.
Buying a Price. Different Strategies.
BANG. 5 Bidders @ 13 Macartney Avenue Kew (Richard Winneke).
Quote $4.1m to $4.3m.
Dated 5 bedroom, 3 bathroom, family home – north rear – no Heritage – 796 sqm
Crowd 100 people
Feels strong
4m open vendor bid
4.05 2nd vb
4.1 bidder 1
4.15
4.2 bidder 2
4.25
4.3
4.325m on market
4.35
4.4 bidder 3
4.425
4.45
4.475 volcano bidder 4
4.5
4.52
4.55
4.56
4.57 bidder 5
4.58
4.6
4.605
4.61
4.615
4.62m hammer bidder 3
Auction Report: Mal
Mal & Gina around the grounds August 6
Price, Markets and a Collingwood Premiership are seemingly the only things on property buyers’ and sellers’ minds this weekend and boy what a positive post-Winter start!
The Market felt like it was out of the blocks early (admittedly on very low stock). It felt like the Feb Pep we didn’t get – it felt like a market of promise!
Today, many agents were upbeat (cautious optimism) more so than they were late into M4 (Christmas 2021) and all through M1 & M2 (Opening and May Major Markets 2022).
It’s early days (very early) but if today was an indication, then 2022M3 (Spring Market) could surprise many and go a lot differently from the current media talk.
- It could go up! It actually could. If it did, then likely a split market between A, B & C’s.
- If it goes up early, then it could ease back as stock numbers lift later in Spring
- Alternatively, today may be a sign of steadying. All have already had a 0%-10%+ fall in buyer expectations over the last 3 Markets (2021M4 and 2022M1/2022M2) and therefore Spring 2022M3 may be a time of levelling. See our Markets section.
- Of course, today may be a false dawn (a misguided Mal and Gina) and we see a gaggle of surprisingly poor results on good homes late August and “The Overall Market” could fall some more.
The current market is not about to fall or even starting to fall, it’s already been falling since December AND apart from the ‘90s, most falls are short-lived and they are rarely consistent across A, B and C-graders, so a change could be the right read.
Expectations (prior to today) had already fallen 0-5% on most A-Graders and 10%+ on B&C Graders (Poor Positions, Renos, Townhouses, Apartments)
Mal & Gina, you are hedging! Yes ok!
Here’s one sure thing – “The Overall Market” really could go any which way – there is no certainty of further down across the board, as there was with the last 3 markets, 2021M4 (Xmas) and M1 (Opening) & M2 (May) 2022.
Big call we hear you scream! No, it’s just what we saw today. The media report changes with an up to 6-month lag. Media/Economists don’t leave their offices; they rely on press releases and data that is often BS (next year predictions) or not current – so on steady rises and falls they look ok – but when a market is changing, when it turns, they are out of date.
This out-of-date info, if relied upon, disadvantages buyers and sellers who could then be $250,000 to $500,000 off the pace on a $5m home. Agents (there are honest experienced ones if you want to listen) are a more accurate source of information – especially on the 3 Market Taps (see Price article below) and especially when a market may be changing.
Agreed us agents/advocates can be slower to the truth in the downturns.
Stock levels are the real key in Spring 2022M3. Currently, they are lower than the local Liberal vote. If good family home stock raises to Teal numbers, then the market may ease some more.
Clarification: townhouses, apartments, renos are still in the cellar and getting colder. Below is agent current commentary (today) across our major Top End markets on well-priced, well-positioned, ready-to-move-in-family homes – our lifeblood – the A-Graders.
In conclusion, we are not saying the market is changing – just it has a chance to be. Let’s confirm or not over the next two months and via the 100 Auction Test, Aug 27 – Sep 10.
One absolute truth though: today was super positive and the biggest overall upbeat day we’ve felt since November 2021.
Malvern East
Peter Lloyd
In a word – discerning!
In a sentence – There’s sensible active buyers with limited stock
Toorak
Maddie James interviewing Jack Nicol
Spring market outlook: I expect different price points will perform at different speeds. The sub $4m market will be more susceptible to the the interest rate hikes and see days on market lengthen whilst vendors adjust to lower bidder levels The $4m+ will still maintain momentum as those households will be less affected but stock levels will remain low. $10m+ will continue to perform strongly, with a shift towards more off-market transactions.
Brighton
Nick Johnstone and Natasha Greene
A lot of stock has come on in last couple of weeks but Bayside is a 2 tiered market with apartments tougher to sell due to oversupply but 4 bed family homes are seeing very strong enquiry
Toorak
Marcus Chiminello
Split market in Spring – with the borrowing market sensitive say below $5m. The changeover market between $5m and $10m will be good or bad depending on volume and north of $10m little seems to have changed – still need to find the right buyer – but when you do great.
Armadale
Antoinette Nido
There are quality buyers at the top end but there are more buyers than stock; and capital is coming into the market from places such as Russia & China because we’re seen as a safe haven.
Kew
Richard Winneke
Volume down and A-grade well located still selling well if you get the pricing right
Kew
Isabella Lu
This is a good Chinese market – still very strong while not a lot of stock
Camberwell
Richard, Jonathon & Monique
Richard Earle – The gear change has been and gone
Monique Peeters – the market has started surprisingly well today
Jonathan O’Donoghue – market is good for good homes
Hawthorn
Rebecca Scanlon
I feel like there is some momentum on low stock – I know it’s hard to believe but market is looking ok
Kew
Walter Dodich and John Bradbury
Shortage of Property – most over 4 are pretty competitive, if accurate on quote range
Toorak
Rob Fletcher
Spring is undersupplied but there is still stable buyer interest. Come October, people would have adjusted to the climate; we tend to adjust quicker to change than we did a decade ago as we have a sense that we always get through it.
Brighton
Jamie Driver & Alex Schiavo
Alex – $4m plus market has real signs of life
Jamie – Rising positivity or maybe even stability
Brighton
Jamie Mi
Wherever we have inspections – we may not have the quantity but we have the quality of buyers
Armadale
Anthony Grimwade
There seems to be so little property that seems to be coming through and Hawksburn Rd result today is a classic example of a runaway auction with multiple bidders showing that buyers out there for good property.
Black Rock
Matthew Pillios
Feel the adjustment has happened and things are looking up
Brighton
Joel Fredman
There’s a sense of confidence uplift for Spring, we are feeling a slight buoyancy coming back post holidays as stock levels are low still but there’s enough numbers looking.
Numbers were good at all A-grade Opens we attended today
Queuing at 344 Beach Road Black Rock – potential A-Grader, beautiful home (if you’re into 60s/70s).
Clendon Learnings – is about clients we met in 2012 looking at a $4m Hawthorn home and who the media reported as having just completed a $50m plus buy sell transaction and interstate move.
Along our journey together things have doubled – all whilst the Toorak market has gone up and down and up and down. Thank you for an incredible ride and some wonderful learnings. more….
Timeless Advice Matters – One couple we met and transacted with prior to the GFC – the value was in the $1m’s and the other we sold at $2m’s and bought at $5m’s in a 2014 buy sell.
Last year in a once-a-century pandemic we sold both the bought homes and bought new ones for a combined $37m in Brighton. All in the medical field of sorts and great company at a memorable dinner! more…
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