Patient prestige vendors offer long settlements, plan long campaigns during coronavirus

Patient vendors of high-end properties are preparing longer sale campaigns and offering long settlements in a bid to reassure buyers during the uncertainty of the coronavirus outbreak.

Parties on both sides of deals are more willing to be flexible on terms compared to a few months ago, agents report, in an understanding of the pandemic’s effect on people around the country.

So far there are few reports of distressed sales, given the major banks’ early move to freeze mortgage repayments for as long as six months for home owners who have lost work as the economy goes into hibernation to slow the spread of COVID-19.

But with concerns that some home owners may delay listing their homes for sale, others who hope to sell but are in no rush are seizing the moment to make sure their properties are the ones getting in front of potential buyers.

“If you give the market the opportunity of time, that will be your friend,” said Kay & Burton’s Rob Fletcher.

“And that will open up more opportunities for you.”

He has noticed a rise in sellers of prestige Melbourne homes agreeing to a longer than usual authority, of about six months instead of four.

Longer settlements of beyond six months are also on offer more often now, he says, and a slightly larger deposit may be required – not an issue for well-heeled clients in this segment of the market.

He has listed with Mike Gibson a half-floor in South Yarra’s Capitol Grand building quietly off-market, which will not go to a full campaign until later in the year unless a buyer is found in the interim.

Jellis Craig director Andrew McCann is noticing a similar trend, citing an empty block in Toorak currently in negotiations with a 12-month settlement on offer.

“It will provide the vendors the comfort they have transacted, which is what they’re looking for,” he said.

“But they’re aware the purchaser will want time to finance and fund and plan for what they can build.”

Practical issues are also a consideration, with four-week campaigns being moved to six weeks to accommodate for the time it might take to schedule several private inspections in place of now-banned open homes. Lenders are taking longer to process loans while banks are “up to their elbows in supporting government”, he said.

Marshall White director John Bongiorno said longer settlement times were giving buyers the chance to secure a sale of their own property.

“We sold a property the other day on a 15-month settlement. I think the owners there were just happy to see the property sold,” he said.

“It was sold at a good price but the buyer wanted comfort to sell their own property.

“Everyone’s just more flexible now than what they were, say, six months ago.”

He cited another deal where an owner didn’t want to sell because they had not yet bought, but a buyer wanted to buy their house at the price they wanted.

“We sourced another house for the vendor in order to sell their house to the buyer,” he said.

“[Agents are] being more creative in how they’re handling transactions at the moment.”

Such “chain” transactions are more common in the United Kingdom but now starting to pop up here, says Christie’s International Real Estate’s Darren Curtis, who is based in Sydney but previously worked in London.

In a chain, an owner agrees to purchase another property, but also seeks to find a buyer for their own property, and both transactions exchange simultaneously.

Mr Curtis said this scenario was less common in Australia but had started to increase over the past eight weeks, as all parties stayed flexible to secure deals and inquiry remained healthy.

He is also seeing requests for extended settlements, an option which he says had its foundations laid when mainland Chinese buyers arrived from 2012 and needed longer settlements to get their money into the country.

“I have several cases at the moment where confidence isn’t as high as it has been and so some of my purchasers have indeed requested a lengthy settlement, six months or more, to really ensure that they have time to sell their own property during these times of economic uncertainty,” he said.

“We say, ‘a six-month settlement or before by agreement’, so if that purchaser does sell their house quicker than they anticipate, with the appropriate notice, we can bring that settlement forward.”

LJ Hooker Avnu’s Michael Coombs said marketing campaigns for his properties had “pretty much doubled” as his clients were in no rush to sell or settle.

“They are open to extending everything. I think everyone’s being a bit more patient,” he said.

“Eighty per cent of my clients are in a position where if they haven’t purchased already or need to sell, they’re going to wait it out.”

A lot of clients have had photos taken already and were open to off-market offers, but were willing to wait out the current situation before listing their home later in the year, he said.

Ray White Double Bay’s Craig Pontey said time was a point of negotiation between parties, as he has noticed the regular six-to-eight-week settlement period start to lengthen in some cases.

“If people get the price they’re expecting in the current environment, then time’s just a point of negotiation,” he said.

“If it suits people for a longer settlement, it gives them time to get their own house in order and be able to move on.”

He has also been extending campaigns to allow for the extra time it takes to follow the government’s two-person social distancing rule and do one-on-one tours. “The last thing we want to do is create any trouble.”

In Brisbane, flexibility of all types is on the rise, Ray White New Farm’s Matt Lancashire said.

“I’ve seen extended settlements, I’ve seen flexible deposits, I’ve seen released deposits,” he said, citing one example of a 14-day settlement because the owner needed a deal done fast.

“The longest I’ve seen is a five-month settlement … people are just willing to be more creative at the moment.”

Released deposits allow the owner to have the deposit released to them immediately, with the balance settled later – discouraging the buyer from walking away from the deal, and allowing the buyer to offer “a really good bargaining tool” to the seller.

“Right now everyone is all ears on any creative ways to do deals,” he said. “Time sometimes can fix things.”