Was it overpriced? [Huin] No. I think it was a realistic price. Both for buyer and vendor. [Almeida] I don’t believe it was overpriced.
What did you think it would go for? [Huin] Between $1.9 million and $2 million. But $2 million would have to be a very good market.
[Almeida] We believe that had it gone to auction, it would have sold for between $2.05 million and $2.1 million. $2.05 million was my call on the property at the time. Our owner wanted to put up to $2. 1 million, but we figured let’s throw the hook in – we knew the motivation of the vendor wasn’t purely on price but more on security of a sale.
What was surprising about it? [Huin] When I talked to the vendor about a month ago it was still a really hot market. It took a month to get ready.
The first week was pretty good – 16 people came, and we got five contracts out. It was a pretty good response. But then, on the Tuesday, the RBA raised rates. That really, really changed the market. In the second week, 10 people came. Nobody took the contract.
When we rang up all the buyers from the first and second weeks – most are younger couples because of the price range in our area and they are the group affected by interest rates the most – they said: “I want to buy later, when the market drops further.”
They didn’t want to make a commitment.
The high end is still doing all right. Those buyers don’t need to borrow that much. Young families are most affected by rising rates. Six months ago, lots of buyers would have bought this house for a little more. Or much more.
I think the vendor realised that. They had to wake up to the fact that they had to be realistic with price.
[Almeida] Vendors are more motivated by security of sale. There are a lot of offers, a lot of sales transactions all around Sydney that are falling over in post-auction campaigns under private treaty, where buyers have a chance to get a cooling-off period and bank valuations are not coming in at the offers they’re making.
[Huin] I’m so happy we got a perfect buyer. He’s from Bondi Junction. He doesn’t need to borrow that much money. He doesn’t want to downsize to a unit on which he needs to pay strata fees. He wanted to downsize to a smaller house with flat land and the upper north shore is affordable for him.
Do you reckon we’ll see another result like this: a] next week b] next year c] next cycle d] never?
[Almeida] a] Next week. The bargains and deals are there to be made, more on vendors’ motivation than on price expectations.
[Huin] At the moment, people are scared. However, [the market is] not on the bottom yet; it’s still on the cliff. Maybe [prices will fall] 10 per cent. But it was really high anyway. To drop 10 per cent is OK.