By Anthony Webb
Across Melbourne, property sales are coming back with force, and so too are prices. As we see the market continue to build strength, there will always be bidders who miss out and are left deflated. So, it remains extremely important for real estate agents and vendors to settle on a reserve price and estimated selling range for the property that is representative of the market.
So, how do we determine these two key indicators of property value?
PhilipWebb Real Estate has a tried-and-true process for setting accurate selling guidelines, which focuses on extensive market research. Initially, we sit down with the vendor to come up with an estimated selling range – the price range that we think that the house will fall in. To do this, we look at 20-30 comparable properties that have recently sold in the suburb. Then, we narrow it down to three properties that are the most similar to the vendor’s property, from lowest to highest.
These three comparable properties are displayed on the statement of information for buyers, in addition to the median house or unit price of the area. This information is displayed on the property’s online listing, so that anyone can have access to it.
Then, as buyers come through the property for open for inspections and give the sales agents a bit of insight into what they are willing to spend, the reserve price is adjusted based on this new information.
During the auction, the auctioneer will ensure that the lowest selling price has been reached before they declare the property officially ‘on the market’. Some real estate agents will wait to declare the property on the market past this point, but we believe that it is important to be clear with the buyers when the lowest selling price has been reached, to reassure them that the reserve price was where it should have been.
But despite sales agent’s best efforts to set a representative estimated selling range and reserve price, we are still seeing a few properties soar above reserve. One factor contributing to this is that buyers are keeping their cards close to their chest about how much money they have to spend, with changes to lending criteria making it easy for buyers to secure large loans at present, and outbid others at auction far above the reserve price.
Despite these challenges, PhilipWebb Real Estate is watching Melbourne’s hot market closely to ensure that buyers are informed and have a fair chance at auction, whilst also delivering fantastic results for vendors.