While changes in house prices, interest rates and inspection traffic may seem like threats to your business this year, it’s actually the creep in days on market that’s the silent killer to your performance.Â
As an industry we can’t take our eye off the ball that our success is founded in market volume over market prices.
Prices going up make our job easier but it’s not the reason we are employed.
We are employed to bridge the gap between sellers and buyers and create equilibrium in a sale, that is market value.
In theory, if a buyer and seller could agree on price on their own there’s no reason days on market shouldn’t be, well, one…
How effective we are in this time and at limiting this time without negatively impacting the result defines our value.
Properties are taking slightly longer to sell at the national level, as new listings volumes rise.
In the three months to February, the median number of days on market was recorded at 30, up from a recent low of 21 days in the three months to December.
As the market tightens, vendors feel more pressure on prices and buyers feel less urgency to act – a simple formula for rising days on market.
So what’s the true impact of rising days on the market?
The answer is a crippling tightening on capacity. Consider a scenario of a business transacting a deal a week, 52 per annum.
An increase of days on market as small as 10 days is compounded by 52, think an extra 10 days of vendor calls, reports, buyer follow-ups, inspections, negotiations; and that’s without considering the increase in withdrawn properties and decreasing commission values.Â
The true cost of just 10 extra days on the market can easily represent a decrease of output by 30 per cent or more.
Avoiding this outcome really starts with the acceptance that days on market are truly a reflection of a business process rather than a reflection of the market – the skill and structure required to provide your sellers with tangible market evidence while driving urgency and competition with buyers in a timely fashion to craft a deal.
The irony, of course, is as market conditions tighten we see agents run from process rather than towards it.Â
In NSW we are already seeing a sharp incline of auctions selling prior, cancelled or postponed.
While other states currently are still holding firm, it’s an interesting indicator to watch for agents’ confidence in their markets.
We see the agents who flocked to the auction process in the flurry of 2021 revert back to the path of least resistance in the living room and let time do the work on educating their vendors rather than process.
The good news is, however, any experienced agent will tell you the gap between good and great in this industry is about to broaden and the return on effort for investing into your process will soon pay dividends.
