THE DISCONNECT BETWEEN BUYERS’ AND SELLERS’ EXPECTATIONS

  • June 18, 2018

 

It’s well documented that Sydney property prices have declined recently and dissecting buyer and seller behaviour in a falling market is an interesting exercise. There are a number of factors that define today’s market. Buyers are more hesitant and cautious, with an increased expectation of value. They’re more patient, less willing to compromise and are making less emotional decisions. Sellers, on the other hand, vary between mildly optimistic and slightly unrealistic. It appears we may all be a little guilty of wearing rose coloured glasses.

When you weigh up these expectations, you can see why there is some disconnect and why auction results have hit a seven year low. Digging deeper into sellers’ motivation, there seems to be a common theme. The conversation sits somewhere around “we understand that the market has softened but our property has features that buyers always want” and “we heard prices have declined but that surely doesn’t mean in our area”.

Despite the market rising and falling like the tide, many of us remain optimistic when assessing our own property but when it comes to buying, the rose coloured glasses come off and we are quick to identify shortcomings.

Why is it so difficult for us to accept that our property may not be worth what we thought? Is it because we’re emotionally connected to all the work and love we’ve put in? Do we forget what we don’t like about it, which may be the very reason we’re selling? Is it that we just don’t want to hear reality? Whatever the reason, we’re all guilty of adding a little to the value of our home while dismissing the perceived benefits of other properties.

That said, the current climate is actually the ideal environment in which to buy and sell. There is less buyer competition, better value on offer, sellers are willing to negotiate favourable terms and more time is generally available to make sound decisions. The disconnect occurs when sellers hold on a little too tight to a value beyond what the buying market has assessed. Sellers’ expectations are just that – expectations – and it’s never been a truer statement that a home is worth what the market is willing to pay. When the market was hot and banks were lending freely, buyers were prepared to borrow big and take risks. In today’s more cautious climate, sellers must listen to the market or risk disappointment.

 

 

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