Buyers are unwilling to commit to a home purchase
Much has been said about the effect on the market of overpricing, mainly caused by home sellers failing to react fast enough to market changes, and often underpinned by inexperienced or unscrupulous agents failing to given them the correct information and advice.
However, another major cause of market stagnation at the moment is
the unwillingness of many buyers to commit to a home purchase, in the
mistaken belief that everything is overpriced and that they should thus
a) withdraw from the market until sellers come to their senses
and prices come down or b) make every offer a lowball offer on
The fact is that prices are not coming down, nor likely to do so except perhaps in the case of a huge jump in interest rates. The fundamentals of the market in most areas remain strong and prices are still showing annual growth, albeit at a slower rate. So chances are that those who opt out of the market today will actually just have to pay more next year.
What is more, while sellers have in general become more willing to look at offers they might have laughed off just 18 months ago, they are hardly in a state of panic. Indeed, most are quite likely to dig in their heels and stay put before agreeing to sell at a giveaway price.
So what buyers should be doing now is focusing on finding those properties (and there are many) that are correctly priced instead of just throwing low offers at everything they like and seeing if anything will stick. Making a stingy offer now on a quality property that is actually well-priced might easily come off as predatory - and cost them a home they really wanted as the seller refuses to have anything more to do with them.
In short, buyers need to become more discerning. And once again, this is where the choice of estate agent comes in - although in this instance it is the buyer that needs to become more choosy, and elect perhaps to look only at those properties advertised and shown by real estate companies known to provide their clients with proper market information and price counselling services.
Article By: Dave Rogers, MD of Homenet - www.homenet.co.za