How real estate agents’ activity are influenced by market conditions

“It’s because there are markets within markets within markets within suburbs within states within areas. But even if you’re thinking of Melbourne and Sydney, there are still some agents who are doing pretty good.

“It’s not just in the prestige areas – those might be dipping off a little bit, actually – but also in some of those areas that are less known. Those markets are still doing well, as well as they’ve ever done. Agents entrenched in those markets are still performing well,” he highlighted.

Still, despite the resilience of some real estate agents, current market trends are undeniably influencing the activity of real estate agents across Australia, according to Mr Neary.

Headlines today highlight the so-called ‘cooling markets’, characterised mainly by declining auction clearance rates, fewer listings and longer time on market – trends that are significantly affecting the activity of real estate agents.

While other investors are hesitant to sell their property in a softening market for fear of selling at a loss, those that do sell are more cautious about choosing professionals to work with.

Moreover, real estate agents also have to satisfy the vendor’s needs amid the increase in time on market.

“Agents have to work a lot harder up front to get the listing. When they get the listing, since days on market are starting to push out a little bit, they have to do more work in terms of just keeping the vendor from becoming a little agitated,” Mr Neary said.

Not a ‘hard market’

While the current market conditions do not bode well for vendors, great opportunities remain for property buyers across markets.

The softening markets have been dubbed as ‘buyer’s markets’ as they move in favour of buyers – characterised by improving affordability and a significant number of housing supply to choose from.

Sydney and Melbourne, in particular, capture the majority of attention as they start to get off the peak of the market cycle after an unprecedented property boom.

“Anyone could have been a good agent in Sydney or Melbourne over the last three years. You didn’t need to do anything really special to be able to sell a property. There was more people wanting to buy properties than what there was properties for sale, so you didn’t need to go above and beyond.”

“You didn’t need to give too much sizzle and you would still have shifted a property above the value that it was. That’s completely changed now.”

As a result, there are less real estate agents in these softening markets, according to Mr Neary.

This trend could help investors find the strongest real estate agents in the market because, at the end of the day, it’s business as usual for the best of the best.

Mr Neary said: “I think it was Warren Buffet thing who said, ‘Now you'll know who’s swimming without their trunks on.’ These agents without trunks on, they’re going to find themselves out of the water. Interestingly, the top agents, they only say, ‘This is how real estate really looks.’”

“In the past two to five years, it was just about being good enough to position yourself between a buyer and a seller to pick up the deal. These days, it’s about the business of real estate. These agents are saying, ‘This is not a hard market. This is real estate right now.’”

“Markets go up, markets go down. It’s simply part of the cycle. It’s how you have that relationship with your markets that’s going to determine your success and skills as an investor, a negotiator or a seller of property,” he concluded.

Tune in to Tim Neary's episode on The Smart Property Investment Show to know more about the lessons for investors looking to capitalise on the current market.

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