How to get the most out of selling in a hot market
When the market is hot, it seems like it's a seller's paradise.
Buyers are snapping up properties quicker than new stock can be listed, competition is fierce and prices are on the up.
Things aren't always as straightforward as they may appear, though, and hot market conditions present a number of opportunities and pitfalls for sellers to navigate.
We spoke to two top agents and a leading interior styling business to answer some key questions around how to maximise your result and give yourself the best chance of coming out on top.
Property styling: is it still necessary in a hot market?
When the market is surging and properties are being sold at such a fast clip, there may be a temptation to save on marketing tools like property styling. But is that wise?
Tristan Tomasino, director of Biggins & Scott in the Melbourne suburb of Yarraville, believes making the investment in property styling is "absolutely crucial" regardless of market conditions.
"In a hot market that could be the difference between getting $20,000 above your reserve, or getting those extra two or three buyers that love your home that maybe wouldn't have looked at it if it wasn't styled, and next thing you know you've got $200,000 above reserve."
Max Klimenko, partner at Ray White Touma in inner-Sydney, says around 90 per cent of properties he's bringing to market are being styled.
"It gives a good sense of space, but most importantly it gives you a really strong online presence," he says.
"You want to make sure when the buyer scrolls through the portals—Real Estate or Domain or what have you—your property stands out from the competition."
Both agents have seen revamped homes return huge results for vendors.
Mr Klimenko recently sold 1/16 Cooper St in Redfern, a two-bedroom apartment in need of a spruce up.
With a valuation originally set at the $700,000 to $750,000 mark, the owner spent around $30,000 on upgrades to the kitchen, bathroom and flooring, along with another $3,500-odd on styling.
By auction day the reserve was set for $800,000 and, with six registered bidders duking it out, it ended up selling for $913,000.
Mr Tomasino also saw success with 2 Kerr St in Kingsville, a three-bed, two-bath property where some cosmetic work had been done internally but the exterior needed work.
His expectations were around the $1 million to $1.1 million range, but after the vendors spent $20,000 repainting the house, landscaping the property and installing a new deck out back, buyer interest surged.
In the end, with five active bidders at the auction, it sold for $1.4 million. "It just blew everyone away," he says.
What's important when it comes to presenting your property?
"One of the main benefits of property styling when selling is that it creates an emotional connection with potential buyers," says Lauren Lewis, Creative Director at leading Sydney interiors brand BOWERBIRD Interiors.
"Creating that emotional connection is really key in converting a browser to a buyer because it helps them to visualise themselves living in the house."
Optimising and maximising a space is crucial when looking to appeal to the broadest base of buyers, she says, adding that a little money can go a long way.
"When it comes to renovating for sale, if you don't have a massive budget to work with, one thing we say is you don't need to completely redo your kitchen or redo your bathroom. Sometimes something as simple as repainting the walls can really change up the space quite quickly."
Exteriors and outdoor spaces also shouldn't be neglected—"even if it's putting an outdoor setting on the front porch or in the backyard, that will make the property feel more like a home."
Ultimately, the extra effort you put into presenting your property the right way tends to pay dividends.
"Based on research, we've found that, compared to a non-styled property, sellers can see between 5 to 10 per cent increase on final sale price," she says. "And when you're talking hundreds of thousands or millions of dollars, that's a significant return on investment."
When is the right time to list?
Every seller's personal circumstances are different, and factors like whether you're upsizing or downsizing, your financial situation or any other constraints need to be considered.
With that in mind, Mr Klimenko thinks that, rather than trying to time the market, "the best time to list is when you're ready to list."
Mr Tomasino has a similar line of thinking, saying "my advice to clients since the start of the year has been: if you are ready to go and the home is ready, sell straight away. Just go to market, because the market is red hot."
Both agents, however, see winter as a prime opportunity to sell.
“I think it is one of, if not the best, time of year to sell, because there's not a lot for sale,” Mr Tomasino says.
"There will be buyers regardless of whether we're going into winter or not."
Mr Klimenko agrees, saying "I love selling in the winter market because there's less competition, you're more in isolation. Because buyers aren't seasonal."
What needs to be prepared before listing?
When the market is moving at such a fast pace, it's critical as a seller to have everything in order prior to listing to ensure you don't miss any opportunities that may come right out of the gate.
"We almost make it a company policy that we get a building inspection done before we go to market," says Mr Tomasino.
"If a buyer comes through and they want to buy on day two into the campaign, and they're going to make an offer that's well above all expectations, we've got everything ready.
"I think that is a real detriment to a lot of agents that aren't firm enough with vendors around that."
He recalls an example, saying "we had a property last year where we had a great offer during lockdown. The building inspection wasn't done, the vendors hadn't got the contract of sale done, then unfortunately that buyer went and bought another property.
“They probably would have paid them $100,000 more than what we ended up getting.”
Having things like a building inspection, strata reports, contract of sale and other necessary documentation ready before going to market could mean the difference between snagging that perfect buyer and losing them.
How can you maximise an auction result?
A hot market means hot competition, and often it's auction day when that competition hits its peak. So what's the best way to approach an auction campaign to get top dollar for your property?
Mr Tomasino believes short campaigns and being ready to adapt to buyer movements are key.
"With an auction campaign, sometimes it can be too long and buyers can go and pursue other properties," he says.
“Because they're getting FOMO—they're afraid they're going to miss out and the market's going to keep going up—they will just gravitate towards another property if it means they can secure it sooner.”
That means preparing a 3.5-week campaign and being willing to move an auction forward if there's the right kind of early buyer competition to "capitalise on that momentum."
While Mr Klimenko also looks to run shorter, 4-week campaigns, he tends to take a more patient approach, telling his vendors it's unlikely anything will happen in the first two weeks.
In that time, he says "it's all about letting the property breathe," and that it's a time to analyse what buyers are showing interest.
"Are there any buyers that have been to the property three or four times? Are there any buyers who are measuring fridge spaces or choosing what colour walls they're going to paint? They're the emotional buyers."
After that initial two-week period it will become clearer how an auction could unfold, he says.
"If you've got two or three buyers that are absolutely emotional, or as we call 'must have' buyers—the buyers that are frustrated and just exhausted because they've missed out on two or three properties—those are the buyers you want competing on auction day."
How do you know whether to accept an offer prior to auction?
With buyers looking to get the edge on their competition in a hot market, it's common for vendors to receive multiple offers ahead of an auction.
So when is it best to take an early offer and when does it make more sense to let the campaign run its course?
Mr Tomasino typically sees two scenarios play out. In the first, several buyers are all showing interest around a similar price point, in which case taking things to auction makes the most sense.
"In the event, though, that you've got one offer that's made at the top end and everyone else is at the bottom end, then naturally you'd probably just try to negotiate privately and try to effect the best sale," he says.
Mr Klimenko says it's very common for buyers to ask straight away whether a vendor would be willing to sell prior to auction.
"But in all fairness, the buyer isn't ready to buy the property, they're simply asking the question," he says. "They haven't fallen in love with it yet, they haven't gone through the process."
After that first two week period of open homes and tracking potential buyers, he says for any offer that comes in it's a matter of bouncing between buyers to gauge whether it can be beaten.
If it's looking like the offer is coming from a "unicorn buyer," meaning nobody else is willing to put a comparable or higher offer forward, then it's time to negotiate privately to extract the best deal.
Otherwise, if the competition looks to be more evenly matched, it's game on at the auction.
What's the best approach when selling and buying at the same time?
The hot market conditions that can work in your favour as a seller will also end up being challenges you face if you're looking to purchase at the same time.
Buying first and selling second may not be a possibility, and the circumstances around upsizing or downsizing can be very different.
Mr Tomasino's advice to many clients is to sell first, find out exactly what your budget is, then buy as quickly as possible.
"Have a couple of properties already in mind, and try to pull the pin in two to three weeks, because the longer you wait you're just going to keep missing out on properties," he says.
It's the same approach Mr Klimenko recommends in many cases.
“Given the market's super hot at the moment, yes, there's a good chance you're going to get a really good sale for your property, but you're also going to have to pay for your next upsize,” he explains.
Stipulating a delayed settlement in your sale contract can buy you more time, he adds.
"I always say sell first, with a delayed settlement, because we all know cash is king—you know how much money you've got to play around with.
"It makes your next purchase a bit easier because you can negotiate with an agent. Because if you haven't sold, and you're still looking at buying houses, when you put an offer forward it's not tangible. The agent may not take your offer seriously."
Are there any other pitfalls that need to be avoided in a hot market?
Mr Tomasino makes the point that, while it's easy to get swept up in the frenzy when the market is hot, it's still important to keep a level head when it comes to sale expectations.
"There are a lot of agents now, because the market is red hot, going in and promising the world in terms of pricing," he says.
“And yes, the market's unbelievably good, but I think vendors just have to do their research on what's sold around their area recently that's similar to their property and base their price off that”
With auction clearance rates at such high levels, the properties that don't end up selling run the risk of being stigmatised by buyers.
"If your property passes in at auction and it's still on the market the Monday or Tuesday afterwards, buyers are going 'why didn't that sell?'"
Being realistic and well versed in what's really going on in your market could end up making all the difference.