John McGrath - How Real Estate Operates Through COVID-19
Current as of 30 March 2020
Good old fashioned one-on-one buyer appointments are a very effective way of selling property.
The pivot to private appointments due to Coronavirus reminds me of my early days in the 1980s as a sales agent in Sydney’s Eastern Suburbs. There were no opens or auctions. In those days agents took buyers in their car to look at properties. They had a price on them, they’d negotiate and put a deal together.
Good old fashioned one-on-one buyer appointments are a very effective way of selling property, so I don’t expect this requirement under new social distancing rules to make it harder for agents to sell real estate. In fact, it will give us a chance to provide a much more personalised service to buyers.
There isn’t going to be any great change to the way agents do business due to the ban on open inspections and on-site or in-rooms auctions. We are simply shifting from open homes to private appointments and our on-site auctions will become online auctions.
Virtual tours and inspections conducted via Livestream will be the first step for most buyers before scheduling an appointment. I anticipate that virtual tours will increase in popularity as more of us are at home surfing the net. Agents have been using this technology with overseas buyers for years and in many cases buyers transact without ever physically inspecting the property.
With regards to auctions, some sellers have decided to delay selling until this is over, whilst many others are happy to continue as planned. How it works is the auctioneer conducts the auction from the property and buyers watch and bid online from the comfort of their own homes.
Over the weekend we saw the livestreaming of auctions prove popular with our clients, with multiple bidding activity through the platform. There were in many cases large numbers of digital onlookers observing how it worked, with over 130 viewing the successful auction of a Hunters Hill property that sold under the hammer for $3,375,000 by one of our top agents, Tracey Dixon.
Genuine buyers will still want to buy, just as genuine sellers will still want to sell during the next few months as the Coronavirus pandemic plays out. There is still very healthy buyer demand and with a reduced number of listings, many vendors are still comfortable proceeding to market.
The residential sales industry will carry on and at our company, we feel very well placed to continue providing a great service within the new guidelines.
I am fully supportive of the government’s efforts to slow the spread of Coronavirus. We will make whatever further shifts are required to comply with legislation and maintain safety for our team and our customers.
In the event of a total lockdown, our industry has the technology to allow agents to work remotely with access to everything they need. Customers will still be able to connect with agents via mobile, email and Facetime in these circumstances.
In terms of the impact on the market, CoreLogic tells us that nationwide auction clearance rates began edging lower in mid-March but for now, Coronavirus has not affected prices.
It is likely to result in fewer sales though, as inevitably some people will choose to wait this out.
In a special report on Coronavirus released March 17, CoreLogic said if stimulus could adequately support business and household income, then dwelling values might not necessarily be impacted.
Macroeconomic shifts tend to immediately effect share prices but there’s a lag with property, so a lot depends on how long Coronavirus lasts.
In the past, housing has performed pretty well up against significant shocks. On ‘Black Monday’ in 1987, the Australian share market lost approximately 23% of its value in a single day but housing values were largely unaffected. In the 1990s recession, property values declined only -4.4%.
This will pass, just like SARS and other viruses have done before. It’s scarier this time due to the scale and comparatively rapid spread but there will be an end point. I can’t stress enough not to make any rash decisions. Always keep in mind property investment should be a long term proposition.
See you next week. JM
This article originally appeared in The Real Estate Conversation (March 30, 2020)