Play It Safe.

Talk to any agent in this market (that’s not pitching for your business) and they will likely tell you that it’s all over the place.

Some properties are achieving big results whilst others are hitting the market with a thud and attracting very little interest. On Saturday our team had an auction on Cremorne Point that looked like it could go either way, thankfully it went the way we wanted…you can’t pick it.

Despite media reports about record high auction clearance rates the current market is volatile. What a lot of people don’t know about clearance rates as a metric is that they don’t include properties that are withdrawn from auction…if they did then the non-adjusted clearance rate would probably sit around 50% (as opposed to the reported 78%).

The other problem with real estate articles is the data they rely on historical data, this means that there is a lag from what they are saying and what is actually happening on the ground. It is true that when the RBA paused the market picked up, but following the subsequent rate rise the market in most categories has since cooled.

The reason I’m writing about this is that we are seeing more and more people buy before they sell basing their numbers on appraisals and/or misleading market reports and some are getting caught.

Spoiler alert, free market appraisals provided by listing hungry agents are almost always unrealistic however the problem here is that human beings regularly fall foul to what psychologists refer to as ‘confirmation bias.’ This is a tendency to favour information that confirms or supports your prior beliefs and second spoiler….we all believe our homes are worth more than they are!

This week I looked at a house and the owner asked me for an honest view of what his house was worth…he didn’t like the answer. The other agent (who has no listings) said it was worth more, unsurprisingly the owner preferred his quote. This raises an interesting question, if you are trying to assess the market do you ask an agent who has listings or do you ask an agent who has none? Hmmm.

It’s definitely not all doom and gloom out there but all I am saying is in a volatile market place it makes sense to be a touch more careful.

Don’t worry folks, not so serious David will be back.

Until next week,

David Murphy