13 Mar How to know what the property market is doing – Brett Warren
We have discussed Days On Market and Discount Levels but I am keen to know if these two stats are ones that are important to people who buy property all the time – sometimes as many as a few a week. Brett Warren who is a buyers agent says that, while they are important, they are not the most critical stats he uses.
Kevin: I want to get a description now on the meaning and importance of days on market and seller discounting. We’ve spoken about it before – days on market and seller discounting – how it’s an important factor that you should consider when you’re looking at buying a property, but also, as a seller, for you to understand what sort of market we’re in right now.
I’m sure that Brett Warren, who is a buyer’s agent from Metropole Properties, quite often has to look at these things and understands the importance of them. He joins me to talk with me about it.
Good day, Brett. Thanks again for your time.
Brett: No problems, Kevin. How are you going?
Kevin: Good, mate. How often do you refer to these? Is it something that you’re commonly looking at, and what indicators does it give you?
Brett: Good question. It definitely is something we look at. Obviously, we don’t want it to be something we look at all the time and every day, but it’s probably important to keep an eye on these monthly or at least quarterly to understand what’s happening in the markets. Are the numbers getting larger or smaller, and the trends we’re starting to look for, and things like that.
Kevin: Let’s talk about them one at a time. Days on market: how is that determined, and why is it important?
Brett: That’s obviously roughly, the time it takes for a property to sell. I think it was important that at the start of the introduction there, you distinguished that it’s obviously good for investors and people who are looking to buy property, but also good for sellers, as well, not only to understand the marketplace but one of our services is recommending the right agent to sell with.
One of the tools we use is the actual agent’s days on market, which can be found. If you’re looking to sell through an agent who has high or low days on market, that can help you make a decision, which is good.
The other side of things is from an investor, so obviously, if we’re starting to see days on market shorten month to month, quarter to quarter, then there is obviously more demand in that suburb. Prices are probably going to be starting to move again, and that’s really important to understand from an investment perspective.
Kevin: I guess from a seller’s point of view, too, if they can understand how long it’s taking to sell a property in a particular market, it also tells them about how much competition they’re going to have when they do list, isn’t it?
Brett: Yes, absolutely. It gives them some heart, as well. If it doesn’t happen in the first week or two, they’re a bit more comfortable to know it may actually take four or five weeks. That gives them a bit of comfort as well and probably takes a bit of pressure off the whole situation.
Kevin: In a normal market, how long does it take to sell a property? What should a seller expect?
Brett: Good question, Kevin. Last year, just for an example, the statistics last year for the average Brisbane house, the days on market was about 34 days, and for apartments, it was almost double that; it was 61 days. That’s an average from last year, and obviously with the apartment over-supply, it almost took twice as long for an apartment to sell.
Kevin: You raised an interesting point there earlier, and that is the power of the agent. When you are looking at employing an agent, it’s good to ask them “How long is it going to take, do you think, to sell my property? What’s the average selling time in the area? And what is your average selling time?” just to see how astute they are and their understanding of those numbers, as well, Brett.
Brett: Most definitely. Also, there’s actually information now on RealEstate.com. You can click on the “Find an Agent” part, and that’ll actually give you some of that information you are talking about, but very, very important, if you’re selecting an agent, to understand that.
Kevin: Let’s talk about seller discounting. What is it, and how important is it?
Brett: Seller discounting is important. It gives us a good indication if the prices are being met that are being set and things like that. If there’s a big discount in an area or if it’s slowly getting larger and larger, that means that there is quite a gap between what people are asking and what it ends up selling for.
We need to understand that and monitor those trends. If those price discounts are getting shorter and shorter and getting closer to the asking prices and selling for the asking prices, and in some cases, over, then that’s a good sign that that area is starting to improve. Conversely, if there’s been a really hot area and it’s starting to discount further and further, then that may mean that it’s time to move on.
Kevin: One of the important reasons why a seller should understand seller discounting is because every seller wants more than their house is worth, so therefore, they’re going to build a little bit of fat into negotiation. But if you build in too much fat, you’re going to lose the pool of buyers who are in the market right now, Brett.
Brett: Yes, definitely. Also, agents are quite smart and savvy, and they’re trying to get the best prices for their client as well, so when prices do move and they continue moving, it actually gets to a point where they won’t continue moving. But if an agent is not quick enough to re-adjust and they keep setting the price and the bar higher and higher, those discounts become more and more, and it becomes quite a gap.
Kevin: What’s a normal discount level?
Brett: Again from statistics last year, Kevin, the average house price, the discount was about nearly 4%, and for apartments, it was nearly 5%, so again, a bit of a discount there. But on a $600,000 property, it’s almost $25,000.
Kevin: That’s a lot of money, and it’s something that buyers and sellers need to bear in mind. Mate, it’s been great talking to you. Brett Warren is a buyers agent with Metropole Properties in Brisbane, a great font of knowledge, and a good run down there, mate.
Thanks for your time.
Brett: Thanks, Kevin.