We discuss with buyers agent Cate Bakos, the contrast for buyers when buying in a seller’s market vs a buyer’s market, how tactics need to be different, how agents and vendors behave and understanding the differences in the data and auction clearance rates.
Kevin: Joining me now is my guest Cate Bakos, a buyer’s agent from Cate Bakos Buyer’s Agents.
Good day, Cate. How are you?
Cate: I’m good, Kevin. How are you going?
Kevin: Fantastic, thank you. Nice to be into 2017. I want to ask you a question that I’m sure you’ve faced from time to time and I get asked quite often. We talk about buyers’ and sellers’ markets, but how should buyers and sellers – buyers in particular – be reacting in those different markets? Should they act differently, Cate?
Cate: They sure should. We have some very noticeable traits for each of the sellers’ and buyers’ markets, and it can really determine how patient or what sort of move is required for a buyer, whether it’s taking your time to analyze the appropriateness of the property over a longer period of time, how you might commence negotiations, how you’ll deal with the agent versus having a fair bit of time pressure and needing to make a quicker decision on the basis of all of the information at hand, because the two markets can certainly make a big difference for any buyer.
Kevin: Yes, I can understand that agents would certainly act differently in buyers’ and sellers’ markets, just dependent I guess on how much control they have, and if they’re in a sellers’ market and when they work specifically for the seller, I guess they’re going to feel like they are in a lot more control, Cate.
Cate: They’re certainly spoilt with strong buyer numbers and some really unprecedented strong sales results. An agent in a sellers’ market will be finding that they need to have listings on hand for the buyer demand. So you tend to find the agent’s energy is spent chasing listings in that sort of market.
It doesn’t mean that they don’t service the buyers well, but they have more time in a buyers’ market and need to change their focus to be there for the buyers and to try and get the sales across the line. The difference in agent energy is really noticeable, because in a sellers’ market they have to find the properties. They have to get a listing.
Kevin: Yes. It would also vary a lot, I would imagine, as to how you negotiate with an agent in that environment as well because they have a lot more control in a sellers’ market, don’t they?
Cate: They do. They won’t be quite as negotiable. They’ll most likely run an auction property all the way through to auction, particularly if they feel comfortable and confident with how the campaign’s going. And they won’t be so excited about presenting a low or a moderate offer to a vendor in a sellers’ market. They’ll expect to present a strong and competitive offer.
So the way that you pitch your first offer or the way that you negotiate has to really take into account what sort of market you’re in, because you don’t get an opportunity to get cute or to toy around with lower offers in a sellers’ market. The property will be sold to the next person.
Kevin: I guess you have to bear in mind, too, as a buyer’s agent you’re representing the buyer. You’re then having to negotiate through an agent to get to the seller.
Cate: Very much so.
Kevin: Your tactics would vary, as well, I would imagine. It would be very different in those two markets, Cate.
Cate: They will. In a buyers’ market, you have a bit more of a luxury to try and see where the vendor’s acceptance point might be, as low as it can be. And in a sellers’ market, if you risk doing that, you risk losing the property altogether because there are other buyers lining up around you and it’s a fast-moving pace.
In particular, you have to face auctions a lot more in a sellers’ market. So being able to negotiate prior to auction is not even an option in a sellers’ market sometimes. So I have to take into account not just whether it’s a buyers’ or a sellers’ market, but the popularity of that campaign, as well. Sometimes there are mini gluts of properties or you have mini droughts. Even in a sellers’ market, you might have a buying opportunity and vice versa.
Kevin: Do you look at data differently in those two different markets, as well? There is a lot of data that’s available; we promote it in this show here. But do you look at different data dependent on the market?
Cate: We certainly do. You have to understand how to segment some of that data, because an auction clearance rate is a valuable piece of information but when you can break it down to dwelling type, as well, and understand exactly how apartments or townhouses or villa units are fairing in that market, and keeping an ear to the ground and staying in touch with local agents and seeing what other competing sales are going on at the same time are all micro pieces of information that are really important.
Kevin: Cate, always great talking to you. Thank you so much for your time. All the best, and look forward to talking to you during the year.
Cate: Same here, Kevin. Thank you.