Why Buyers Lag and Vendors Leap Ahead

Markets are forward-looking. Just as the stock market prices in future earnings, vendors often price in tomorrow’s growth today.

When the property market is improving and the media is buzzing about the next 12 months of predicted price rises, many vendors get excited. They leap ahead of the curve and bake tomorrow’s growth into today’s price expectations.

The problem? Buyers aren’t willing to pay next year’s prices today.

In fact, they usually do the opposite. Buyer sentiment tends to lag the market. Especially in the early stages of a recovery, buyers remain cautious. They want social proof. They wait to see strong auctions, they wait to miss out a few times, and only then does their confidence – and urgency – grow.

That’s why relying on sales from three, six or nine months ago can leave you stranded. In a fast-moving market, that data is already outdated.

Interestingly, the dynamic flips in a downturn. When the market softens, vendors often become more realistic. Surrounded by doom-and-gloom headlines, they accept that conditions are tough and are more likely to consider fair offers below their “happy price.”

In a bull market, though, every seller wants not just their happy price, but a bonus on top.

And here’s the truth: no matter the cycle, every transaction needs two ingredients – a willing buyer and a willing seller. Replace “willing” with “reasonable” and the point becomes even clearer.

A flawless Toorak trophy home can sit unsold for years if the vendor is unrealistic, while a rundown shack between the train line and the freeway will sell in five days if buyers see value and the vendor is realistic. 

Even in a strong market, homes still pass in or don’t sell because reserves or asking prices are set above where the market sits.

There’s no doubt Melbourne’s market is improving. We’ve seen eight months of steady price growth, shorter days on market, and more competition across the board. But that doesn’t mean every property will sell under the hammer with multiple bidders.

And it certainly doesn’t mean every vendor will achieve their dream price – or that every buyer has to cancel the Bali holiday just to stretch for a deposit.

Buying and selling a home is deeply emotional. It’s tied to our identity, our finances, and our future. Which is why good agents and buyer’s advocates exist: to provide guidance, perspective – and sometimes a little emotional support too.