What lessons can we learn from the Australian real estate market?
There are so many faults and criticisms for the UK property market; the way we do things, the processes and legislation we must follow, and change seems unattainable. What can we learn from the home-moving process in other countries? This article looks at the process in Australia and how we could learn from them to improve the experience in the UK
So many of us are fascinated with the property market, watching endless TV shows about buying and selling homes. In recent years, TV producers have turned the camera on to the agents, with shows like Million Dollar Listing and Selling Sunset captivating our attention. These shows tell the glamorous tale of high-end real estate agents selling multi-million dollar mansions or luxurious penthouse apartments. They strut around in their designer dresses and tailored suits, looking gorgeous, and the show details how they conduct the viewing and then close the deal. It seems like such a fantastic job. And in truth, it is - it's an honour to help a homeowner to sell their home, and it is incredibly rewarding. Getting to know each other on an intimate level as you showcase their private residence for the world to see.
But looking at these shows, the real estate agents in the USA and Australia are on a different level. The property selling process is completely different to start with. The fees charged are certainly different. Could we learn anything from these other countries and how they sell luxury homes?
The fees to real estate agents in both countries are significantly higher than we pay in the UK, and with good reason. Real estate agents are required to handle the whole legal transaction for a property sale, with little need for a solicitor. Therefore, the fee percentage is higher to compensate for the additional work and responsibility. As a result, the profession is highly regarded, which we probably couldn't say here in the UK, given that estate agents are often in the top ten most mis-trusted professions.
But perhaps one of the most significant differences between estate agents in the UK and Australia is how the properties are sold. You are undoubtedly familiar with selling a property in the UK; a property is launched to the market, and viewings are arranged as and when prospective buyers request. If a viewer likes the property, they will make an offer. Negotiations will then ensue until an acceptable price is reached and agreed upon. At this point, each solicitor will be instructed to begin the legal transfer process. So, how does Australia, in particular, differ?
They create urgency, increase buyer desire and competition, and ultimately raise the price.
How do they do this?
Open house viewings: Most viewing appointments are conducted as an open house viewing slot, with fixed timings, and all viewers will see the property simultaneously. This ensures the viewers know other buyers' potential interest in the property, which builds competition. These open house viewing slots are often hosted on a Saturday morning when most people can view. A few hours later, an auction will be held at the property in the afternoon. This gives the interested parties time to think before committing to a purchase. But, crucially, this provides a time limit as to when this decision needs to be made. It is a 'snooze-ya-lose' situation. If you dilly-dally over the decision, the chances are that someone else will buy the property.
Auctions: The negotiations are streamlined through an auction, pushing the price up to its actual market value - the price someone is willing to pay. It is also transparent, with no chance for hidden interest or false offers.
So, could auctions be the answer to UK property sellers achieving the very best price for their properties? Or perhaps implementing an open-house viewing process could be the key? The legal transaction will still have to be carried out by a solicitor as the legislation requires but, there are certainly some ways to boost your marketing and ensure that the price that you achieve for your property is the very best price possible.
The way to do this is competition. The demand for a property will increase the perceived market value, meaning that the offerors will be more comfortable offering higher prices when they can see the demand for the property. After all, no one wants to pay a premium price for something that no one else wants, so you must ensure that you've maximised the demand to maximise the value. And do so transparently so that your buyers feel comfortable and trust the negotiation is genuine and not just tactics.
If you are interested in implementing some of these tactics into your sales, get in touch with our team to see how they can help.