Part 1. Case Study: Home buyers are seeing signs of a Buyers Market and doing it for themselves...

As 2022 comes to a close, savvy home buyers are seeing signs of a Buyer's Market and doing it for themselves...

Last month, a friend bought a waterfront apartment in Sydney. I'll call her Karen because that's her name. She and her husband were downsizing. The kids had grown up and moved on. Today in the twilight zone of life, location and quality of life are the most important things to this pair of social butterflies. They wanted to be in the thick of it, flitting about and enjoying all the city offers. I asked Karen if she'd use a Buyer's Agent. "Nah," she said, "... don't need it."

Fair point.

Karen has bought three investment properties in the past five years. Together with her husband, they purchased a residential home decades ago. Karen works in commercial property finance as a data analyst, has a double degree in commerce and is an absolute cracker on the stock market. Karen is hungry for knowledge and regularly subscribes to the leading property platforms. She has no issue throwing $29.00 a month at the?Australian Financial Review?to ingest her updates directly from her inbox. But that's not all...through a mixture of luck, stealth, and success, the couple had enough cash to contribute to the cost of the new property. The budget was $3 million.

Who am I to say Karen needs a Buyer's Agent?

Four weeks after we spoke, Karen found an online listing for the dream property—a sumptuous 3-bedroom apartment with partial harbour views. She scheduled the Saturday morning inspection.

The only problem was the apartment was snapped up before Karen even got out of bed.?

She ended up buying her second favourite apartment.

Hmmm. Time for the Spanish Inquisition.?

I asked Karen how many places she'd looked at. She said six in total.

I was taken aback.

Only six?

Wow! Why so few??

Karen mumbled something about not much stock available in the art deco style they lusted after. She assured me they'd looked at everything out there. Eventually, they settled on one, but another bidder also loved the property, which went a little higher at auction than expected.

It ended up being $330k over their budget.

Again. Wow!

At the time of writing this, a quick search on realestate.com recorded 66 results for three-bedroom apartments in the Elizabeth Bay, Potts Point area.

I couldn't get my head around it. I pressed Karen for more information. Again, why did she inspect so few?

It turns out there was not enough time. A member of Karen's family ran into some personal issues, and Karen had to turn her attention full-time to the family. The quest for her dream home took a back seat.??

Karen admits the auction outcome was a "bit of a shock."?

Erm, Karen...

Did you just overpay in a market where everyone else is holding back?

Just like many discerning buyers looking for bargains...Karen went in with a cool head, thinking it was a buyer's market.?And who can blame her??

We all agree the bargains are out there.?The media headlines can't help themselves. They've had a field day screeching about properties sitting on the market for longer than usual. They've banged on about the rising interest rates and disproportionate impact on first-home buyers. Those who bought at the top of the market now need to sell because their cash flow has dwindled—and where in some cases—the mortgage amount exceeds the home's value!?

We've all read about the decline in dwelling values that fell by 7 per cent since the first interest rate rise in May, overtaking the 2008 to 2009 downturn as the steepest national decline on record, and yes, that happened, sure, but reputable industry source Core Logic assures us that was the market correcting itself. Also, it didn't necessarily impact premium properties in particular pockets. The Sydney market comprises many different segments and 'micro-markets'—what goes for one area doesn't necessarily go for another.?

Even then, it's not as bad as it seems: listed properties were harder to find as overall residential property listings fell with a resounding national drop in October but increased in November, up 2.4% monthly and 3.4% yearly. Also by the end of November, when the sun finally started shining, listings greater than 180 days old had fallen by 3.9%.

These early signs of a market in transition was the exact opposite of what Karen was reading about. This was no buyer's market, this was an even market between buyers and sellers. Yes there were bargains to be found—the problem was that Karen couldn't even get a price guide let alone a bargain!

There are bargains out there, but good luck with negotiating your way to owning one!

Likewise, we heard about the rise in distressed sales activity when Karen started looking back in October when it rose 5.7% with 6,697 and granted; it seemed like if she was lucky, she could have nabbed a bargain but within weeks that figure had dropped according to SQM Research and was down to 6,549 in December. A subtle shift but significant.

We saw properties become more affordable because they took longer to sell, and market supply was increasing, which helped put buyers in the front seat.

But then…something happened,

Enter Scarcity

Karen found that despite all the positive signs for buyers, stock was low, and demand was high in the waterside spot she wanted to call home.?

Falling house prices and pointing out that property market prices have steadied.

When Karen started looking in October, she was encouraged by positive signs. The competition felt a world away from the heady days of the lockdown-induced FOMO. That's the thing about today's buyers; the picture changes dramatically depending on their loan or refinancing situation. And dramatically again if they're cash buyers.?

Karen was quick to point out that we've seen declines since prices peaked in January 2022, with CoreLogic figures showing?

house values in Sydney are down by 10%. She acknowledged there was less competition due to the fear factor from the rapid-fire?interest rates. And she's right; there was an across-the-board reluctance to pay top dollar.

Naturally, she had an opinion on inclement weather dogging Sydney and much of NSW since early 2022. Still, she believed we could expect the upswing of the summer sales spike to be verified in the coming months

Karen knows a lot!?

But sometimes, it's not what you know. It's Who You Know!

Part 2: The Power of The Listing Agent.

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