The past year or so has been turbulent for real estate sales agents. The spectre of the pandemic loomed over our lives, especially in Victoria. Most real estate sales agents I know were predicting gloom and doom.
Then came the success of the vaccine trials, the lifting of restrictions and we saw an onslaught of pent-up demand. The property market, far from going into freefall as predicted in March 2020, has shown spectacular results across the nation.
However, this has brought problems in that listings are lagging demand. In some areas of the country, agents have struggled for months to gain listings. Homes in liveable areas where there’s scarcity and where homes have attractive land values are being snapped up by buyers eager to spend savings accumulated during Covid-19, and to take advantage of government stimulus and historically low interest rates. The latter seem set to remain low for some time yet in Australia.
Fierce competition for listings
As of June 2021, pre-listing activity and mortgage activity were both down period on period and month on month. While it’s fair to say that real estate sales agents are always competing for listings, especially in high-demand areas, in periods of low listings, they might be tempted to compromise to secure a listing.
This could mean substantially lowering fees and commission in a race to the bottom. Not only is this unsustainable, but also, it is bad for the real estate industry in general.
Buyers’ agents shine in a tight market
It is in these types of market cycles where buyers’ agents can shine. As buyers become more frustrated by their inability to secure a property either through private treaty (or more usually at auction), they will turn to an a reputable buyer’s agent to help them navigate the process of identifying suitable properties, organising due diligence including pest and building inspections, and sourcing off-market properties through their network of agents.
As I’ve mentioned in previous posts, eager buyers can often be persuaded to buy less-than-ideal properties just to ‘get on the property ladder’. As a buyer’s agent, your role is to ensure that you protect your client’s interests and steer them towards properties with enduring value. A lemon is a lemon, and clients who buy badly will have difficulty selling that property in more ‘normal’ times. Our skills – to help clients and protect their best interests – are in demand and we have no need to compromise on fees or service.
Unsustainable growth in property prices and sales
Think of the current property market as like a bottle of Champagne shaken and opened. At first there’s an explosion but then, as the gas dissipates in a rush, the rest of the wine is flat. Now restrictions have mostly eased regarding interstate travel, the restlessness that drove many to regional areas that appeared safer and cheaper will dissipate, too. And while we’ve seen a ‘flight to quality’, this has been in part driven by investors seeking long- and short-term capital growth. With the stock market booming, many investors have realised real assets and diverted funds to where they can achieve higher returns.
However, because it is still so cheap to borrow money, we expect to see demand continuing for a year or so yet.
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With a real estate licence and a few years of real estate sales experience, you can step into a turnkey business, with ongoing lead generation, training and mentoring from an industry active buyer’s agent. No fuss; hit the ground running – it’s all upside.