Discounting creeps into property market amid coronavirus, but some vendors hold firm

Bold property buyers are already able to secure a 5 to 10 per cent discount on select homes as the coronavirus weighs on the economic outlook, buyer’s agents say.

Vendors who need to sell quickly are more open to negotiating on price however, perhaps because they have already bought, have some other financial commitment or need to move due to their family situation.

Meanwhile owners who do not have to sell are unwilling to entertain bargain hunters and will hold onto their property instead if they do not achieve the price they want.

Melbourne high-end buyer’s agent Mal James said the discounting trend began about three weeks ago, with some A-grade properties off by up to 5 per cent and B-grade properties by 5 to 10 per cent.

“There was one property we were involved in was a $200,000 discount, there was another that was a $100,000 discount, within the space of two weeks,” he said.

“There’s not that many buyers. There weren’t going to be that many buyers in April anyway, because of Easter and Anzac Day.”

He shared an email he received offering a new four-bedroom townhouse, reduced to $1.49 million from $1.58 million, with the agent writing of their “clear instructions to sell this home ASAP”.

In Sydney, buyer’s agent Rich Harvey has transacted three properties at a discount to asking price or his appraised price over the last three weeks, for owner-occupier clients.

One five-bedroom home in Killarney Heights was asking $2.4 million, but bought pre-auction for $2.2 million. Another home in Pennant Hills he had appraised at $1.55 million was secured for $1.4 million and exchanged within 48 hours of coming on the market, while a Frenchs Forest four-bedder in a quiet cul-de-sac he had appraised at up to $1.45 million sold for $1.37 million to a first-home buyer who had been looking at property on a main road a month ago.

Agents are using phrases such as “the vendor’s expectations are realistic,” said the chief executive of propertybuyer.com.au.

“There’s definitely some really good buying opportunities,” he said, adding that he is currently trying to buy himself.

Henny Stier of OH Property Group has seen prices in some pockets of Sydney drop 10 per cent in the last month, but is cautious the trend is not evident everywhere.

“They were probably vendors who had purchased and then COVID happened, and they didn’t want to be saddled with two mortgages, so they just had to sell and be a price taker,” she said.

“[The agents] would call and say, ‘Initially my vendor was at this price, and now willing to take a certain price.”

She has in some cases made offers, been knocked back at first, and then been entertained a few weeks later.

But for vendors who can wait, many are offering their properties off-market rather than accept a lower price, she said.

Melbourne top-end buyer’s agent David Morrell cites a recent discounted purchase where the vendor was willing to accept a lower offer for better terms.

“There was somebody at a higher offer than ours, but because we were [offering] no cooling off period, they took ours,” he said.

“We’re getting letters every day from agents,” he added. “‘This was at $2.7 million, we’re now at $2.55 million, make an offer.’”

He is starting to see savvy buyers taking the opportunity to get in for the long term.

“People are saying, ‘Go and buy us three single-fronted [terraces], we think it’s a good time to invest for the kids,’” he said. “We’ve got a lot of briefs at the moment, people wanting to land bank Toorak.”

Real Estate Buyers Agents Association of Australia president Cate Bakos says the discounting is largely driven by vendors, not by agents, and particularly by vendors who have already bought or have another financial responsibility and need to sell soon.

“We’re getting emails saying, ‘the vendor is really motivated’,” she said.

“I haven’t seen greater than 10 per cent, but I have seen 10 per cent for all of the super-motivated vendors.”

Discounts are more likely over the $2 million price point, while competition is stronger sub-$1.5 million, she said.

Owners who don’t have to sell right now are willing to wait, let their agents create competition, and are achieving prices broadly in line with recent comparable sales, she said.

And she warns potential buyers to present themselves in the best light to agents, who may refuse to take unqualified buyers through a home in a bid to minimise the health risks of social interaction in a pandemic.

Nicole Jacobs of the eponymous buyer’s agency is starting to see a few instances of discounts, amid many cases of vendors unwilling to lower their hopes.

In one case, an outer suburban development site was asking for more than $1 million but revised it to just below six figures.

On the other hand, she spoke to a property stylist removing furniture after a six-week campaign from a property that had not sold – one of three properties sitting unsold on the same street.

“Vendors are trying to stay firm with their prices,” she said.

“We’ve got a market that’s still working itself out.”

Buyer’s and vendor’s advocate Wendy Chamberlain, who is currently trying to buy herself, is fielding calls from selling agents offering off-market stock.

She cites one home marketed at $1 to $1.1 million, cut to $1 million, now with a best offer of $930,000. Another agent offered a free-standing house, a deceased estate, in inner-northern Brunswick for just $740,000 to $780,000 – an improbable price guide two months ago.

Often the discounting is driven by the buyer too, she said.

“They’re going, ‘COVID-19, I can negotiate,’” she said.

“Sometimes it works, sometimes it doesn’t.”