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why the real estate market is crashing

September 22, 2018  | Real Estate

What we’re currently seeing in the market right now is more homes are being listed and coming on to the market every single day. However, the buyer activity is really dropping off and there’s one reason for it, and that’s the banks. So the banks’ lending criteria has completely tightened up. What does that mean? Let’s put some context into that.

I do apologize. I haven’t been in the studio as much in the last couple of weeks, but we’ve been massively busy and that is the topic of our podcast today.

So if anyone out there knows somebody that is selling or if you’re on the market yourself, please share this podcast with them. I would really appreciate it because I’m going to really throw down some things that are just going on in the current market. What we’re currently seeing in the market right now is more homes are being listed and coming on to the market every single day. However, the buyer activity is really dropping off and there’s one reason for it, and that’s the banks. So the banks’ lending criteria has completely tightened up. What does that mean? Let’s put some context into that.

What that really basically means is let’s just say you were a buyer and three months ago you had a borrowing capacity of $600,000. You can go back to that same bank right now today and they will tell you that you’ve only got a borrowing capacity of $500,000. However, what the problem is, is the buyers haven’t changed their searching or what they’re looking for. So they’re still expecting to get that $600,000 dollar home. But because they can only borrow $500,000, they still want to buy that home, what they can lend and what they’re getting borrowed. That is the issue. So their expectation, seller’s expectation is still really, really high. Those that are moving with the current market and reducing their price dropping, they’re getting their homes moved. The ones that are not, we’re starting to see they’re sitting on the market for six months plus and that is ludicrous in this market.

So my advice, if you are on the market or if you’re coming to the market, you need to be priced actually below market value to even get buyers through your door. The other thing that needs to be really ramped up is marketing. So when the market really turns up, you actually have to spend more marketing money to get your home exposed to more people. Get it in front of more people and make them come and want to see your property. To put in some context around that in my marketplace just here, there’s over 1,100 properties on the market right now. Imagine that. How are you going to make your home stand out amongst those other 1,100 properties? This is not the time to go cheap. This is not the time to skimp on and getting the agent to take the photos, or taking the smallest ad on the www.realestate.com, or not putting a floor plan, or not doing a video. You actually need to do the complete opposite.

You need to invest thousands of dollars to get your home exposed to as many people as possible. Social media, videos, tours, and every single real estate website you can possibly think of. The only thing I’d totally disagree with is newspapers. I still think they’re a complete waste of money. Don’t spend your money in the newspaper. No one is reading the newspaper. I don’t even get a newspaper delivered to where I live. The other thing is which newspaper is the buyer going to be reading? So that’s the other thing that you need to look at. So make sure you’re online digital presence for your property is massive. This is not the market to skimpy.

So make sure you have a critical conversation with your agent. Hopefully, your agent is actually switched on and knows what’s going on in the current market, that prices are dropping right now and you need to be absolutely bang on in this market. Otherwise, your home will not sell. That is the harsh reality. If you are on the market right now, you’re experiencing this. Leave a comment. I’ll try and help. I’ll try and guide you through it, even though we’re not selling you a home. I will give you any advice that you possibly ask for. I’m here to help anyone and everyone try and get their homes sold. Think outside the box, different marketing strategies, and different pricing strategies. And if you’re one of the lucky ones that have got a contract on your property, you’re also then fighting with that buyer for the time because we’re starting to see banks’ time to lend the money for their finances extending from 14 days with some of our guys are now going up to 28 days, just to try and secure the finance. So you’ve got that nervous wait.

Now some people then go, “No, let’s go to auction.” The problem is auctions’ clearance rates have completely dropped every single week, and they’re still continuing to drop across Australia. The latest report for Brisbane on the weekend, 28%. 28% of every home that’s going to market, selling under auction conditions. So that’s a shitload of homes not selling on Saturday. So I think in this market price, your home, you need to price it very attractive to secure and to get the buyers through the door. Then hopefully, your agent is skilful enough to then produce an offer. When you do get that offer, mull it over, think about it. Take 24 hours. Do all your sums and then look at the biggest scale, the bigger picture. What other offers have you had?

If you’ve had none, this is probably going to be the best offer you’re going to see. So if you need any advice in selling, I am happy to give you as much advice, especially because I’ve been through this market plenty of times. However, I’ve just said to my business partner, I believe this is going to be toughest market we’re going to see for a very long time because of the way that the banks have really timed up their lending criteria. So thanks for tuning in. Really quick podcast. This is for all the sellers out there. So if you know someone that’s selling or they’re on the market, or thinking of selling, share this with them on social. Just get them to have a listen.

If they need any advice, feel free, drop me a line here on Facebook, wherever, and we’ll give you as much advice as possible. Thanks for tuning in, Chris Gilmour. This is another episode of 3 Suits.