Potential homebuyers looking to research their options would be better served by looking at sold prices rather than price guides, even in a declining market, buyer’s agents warn.

Even though fewer properties are now selling for hundreds of thousands of dollars than in reserves since the boom period, some coveted family homes are braving the recession and leaving lower bidders shocked.

Separately, pockets of undercutting persist even when prices fall, as agents offer unrealistically low price guidance to attract interest.

Homebuyers can be left looking at asking prices and thinking they have a shot, only to be eliminated from the first auction bid.

“The sooner buyers stop using guides and stop deceiving themselves, the more successful they will be,” said Michelle May, of the buyers agency of the same name.

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3 Krait Street, Karalee, QLD

3 Krait Stree, Karalee, QLD Domain house for sale property
(Domain)

“Buyer beware – and it really starts from the moment a property is listed.”

Median house prices are down 8.3% from their peak in Sydney, 6% in Melbourne, 4.3% in Brisbane and 1.5% in Perth, according to data from Domain, as l Rising interest rates squeeze homebuyers’ budgets. But the decline is uneven, and buyers may be surprised to learn that not all homes are getting cheaper.

A-grade homes in the inner suburbs still have an audience and can attract six or more bidders at auction, May said, while less-sought-after homes or apartments with unrealistic sellers could end up selling for below their reserve price .

He recommends buyers check the sold section of the property portals and look at recent sales results within their budget and desired location. Sign up for every agent’s database in the area to receive auction results, he said, and when comparing results, look at land size, level of finish and street.

Buyer’s advocate and chief executive of propertybuyer.com.au, Rich Harvey, said the scarcity of listings in the late spring selling season drove up competition for better quality homes.

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468A Bronte Road, Bronte, NSW

468A Bronte Road, Bronte NSW 2024 Sydney Beach Domain property market
(Domain)

Harvey advises a prospective buyer starting the search to attend 10 to 20 auctions over a couple of months, then keep track of the asking price and the selling price on a spreadsheet.

Look at the comparable sales the agent suggested and see if they’re lower, higher, or a fair comparison, keeping in mind the look, construction, floor plan, quality and features, he said.

“The lower end of the market, and what we call Grade B, C and D properties on busy streets, are definitely trading for well below what they were at their peak,” he said. “There is still a strong demand for quality, well-located and well-presented properties.

“Some agents are still underestimating – it’s definitely a problem.”

Cate Bakos, president of the Real Estate Buyers Agents Association of Australia, said if a comparable sale looks inferior, it probably is.

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30 Koorana Road, Picton, New South Wales

30 Koorana Road, Picton NSW 2571 Property For Sale Domain
(Domain)

He recommends prospective buyers research properties sold or look at weekend auction results and consider land size, attributes and selling prices. For undisclosed results, recommend calling your sales representative.

Bakos urged buyers to visit auctions and compare selling prices against price guides, as well as observe buyers’ participation to understand their potential rivals.

“Take a look at who’s bidding, because underbidders are your competition — you’ll be confronting them — and take note of what they’ve bid,” she advised.

“So you have an idea in mind of how much your competition needs to spend.”

He recommended not relying on computer-generated appraisal estimates that appear online, especially since the computer model may not always know whether a property has been extended or subdivided.

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11 Bussell Highway, Margaret River, WA

11 Bussell Highway, Margaret River, WA Domain real estate market for sale
(Domain)

He said competition for the few remodeled family homes for sale pushes prices past their guides, while some of the first-home buyer products sell in the lower or middle end of its price range.

But properties needing work often go to auction, making an adjustment to the asking price and possibly selling for less, Bakos said.

“It’s not a single-speed market. It’s actually a multi-speed market.”

This article first appeared on The age

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