Preparing to sell with realistic expectations

CoreLogic chief property economist Kelvin Davidson says it’s important for home sellers to face up to the fact that they’ll not get the price they would have six months ago. Standard forecasts are that prices will fall 10% in this time of correction and with inflation perhaps a bit more. “It’s down around 5% already and we’re maybe halfway through,” says Kelvin.

In the Global Financial Crisis (GFC) prices fell 10% and it’s not often acknowledged that it was five years til the market was back to the previous peak, he adds.

“Some might look at that as losing money but are you really?” asks Kelvin. Think what you paid for your house ( a few years ago) and it’s still worth a lot more than that, he says. And if you’re going on to buy, then you’re getting a better house for cheaper money, he argues.

It’s all about managing your expectations. Ed McKnight, resident economist at Opes Partners, says price growth has been up to 45% from January 2020 until the end of 2021. If you put it in that context, and you’ve owned for five to seven years, you’ve done well.

He offers a few silver linings on the current market. One of the things about selling in a hot market is you don’t know when it’s going to stop. When the market is rising, you can kick yourself for not holding out until prices went higher. When you’re coming down from the peak it doesn’t matter, you’ve had the full upswing of the market, says Ed.

“And if you go and buy in the same market then you’ve not lost anything,” he says. But you should be prepared for your sale to take longer. There are a lot more listings than six months ago so more options for buyers, meaning they can take a bit more time until they find a house that meets more of their criteria.

“If you’re selling, not to buy another house but for instance selling your parents’ house, I’d probably put it on now,” he advises. It might be a bit slow but there’s going to be a continued decline until the end of the year, he forecasts.

In a market like this, Ed says home staging is non-negotiable, you want someone to fall in love with the house, and staging tends to mean selling more quickly and at a premium price. And he recommends twilight photography so people can imagine driving home to the house.

Meanwhile, if you’re getting to the stage where you’re choosing your first or second agent, Ed suggests you “mystery shop” ones you have your eye on.

“See them at work in an open home, see what their follow up is like, do they leave you to yourself at the open home or do they ask what you’re looking for?”

Auckland Ray White agent John Covich is still seeing plenty of listings coming through because there are always reasons to sell, he says.

Some want to be closer to family in the South Island, some want to downsize or upsize.

In this market, if there’s anything glitchy about a house, if there’s any reason not to buy, it’s very hard. You have to make it like there’s a real opportunity, says John.

People need to stop having these expectations of capital gain every year, says the agent. Look for some straight talking from your agent, advises the Bayleys agent. From the very beginning of the appraisal, she’s honest with sellers about what they’re dealing with, the facts and the statistics in the current market.

“I’ll be really crystal clear about the market and how it’s impacted their property,” she says.

“We’ve had it so good and now it’s coming back,” is her message at the moment.

“If you’ve bought in the last 18 months, you’re likely not to make capital gain on that, if you bought before that, you’ll have made very good capital gain and that gain has dropped back a bit but you’re still selling for good capital gain.”