There’s a saying in real estate, ‘buy a bargain, sell a bargain’.
It’s true. (Sales) history tends to repeat itself. With a few exceptions, a great property will be in demand each successive time it sells, and a compromised property will struggle each time it sells – independent of the current selling conditions.
A property that ‘ticks all the boxes’ for most buyers will always see competition, unless it’s well and truly over priced.
These are the “A Graders” – good street, good location, good floor plan, good orientation, good natural light, good privacy, off street parking, Victorian or Edwardian, etc.
Then you have the “C Graders” – which have crosses in one or more boxes for most buyers – main road, next to a train line, south facing, dark, no parking, next to commission housing or a potential development site. These are hard to sell in any market.
Yes, you may pick up a double fronted Victorian on 700sqm on a main road for 30% less than the same house one street back, but when it comes time to sell, you will be selling for a 30% discount too.
We don’t take on many “C Graders” because unless the vendor is very realistic on price they can be very hard to sell. And they aren’t great for our brand.
But even some “B” graders, which we do sell, can struggle in a strong market.
Don’t get me wrong, there is nothing wrong with B and C grade properties. I bought one myself in Elwood because I couldn’t afford an A grader. And I love it! It’s the best I could afford without compromising on location (200m from the beach).
For example, the market for most apartments, modern townhouses, main road properties, etc, is very patchy right now.
Clearance rates dipped to 80% on Saturday, back from the high 80s we were seeing in March.
There could be a few explanations for this…
Firstly, the market is calming down a little bit.
Secondly, there is more B and C grade stock on the market and buyers are becoming more discerning.
Thirdly, vendors expectations (reserves) have increased and we will see more stock passing in.
80% clearance is still a very strong market. And things always calm down in May/June as we hit the colder weather and many of the A Grade listings lie dormant until Spring.
As a very active team with great selling momentum Carla and I will continue to list great houses and carry strong volume throughout late autumn and winter – particularly with those vendors that are willing to buck the trend and get in before the spring rush.
We always have some of our best results in June, July and August, when the number of competing properties are low and we have the only A Graders on the market.
Either way, the next few months could be a good time to secure a home at a fair price.
Not everything is flying.
But just remember, if you buy a bargain, don’t expect to sell it for a premium in a few years’ time.