Six reasons even experienced professionals find a falling market tougher

Many assume that a buyers agent’s life becomes easier in a softer market.

Softer prices, limited competition and happy clients nabbing a bargain.

These are the assumptions that seem to float to the top of their mind, however, it couldn’t be more different. A bear market is harder work for everyone, buyers included.

Firstly, they are tough on vendors, particularly those who have a burning need to sell. They may have committed financially to another property, or perhaps a business, and they don’t like the idea of taking a loss.

They also don’t like the idea of achieving a lesser price than what their neighbours achieved in the preceding months. There are plenty of vendors who have experienced losses with their sales over the last few months, and such an experience can be shattering for some. It’s a tough ego blow for any vendor too.

First home buyers are nervous to buy. They are the most vulnerable buying cohort, and most likely to be rattled by negative news. First home buyers are also more likely to fall prey to social proof; if nobody else is fighting for a property, then something must be wrong with it.

They lack courage at the best of times, and if they have a nervous parent in their ear, then taking action is going to be low on their list.

Agents are managing much more challenging campaigns.

When a vendor’s property is losing value in front of their eyes, the weekly conversations can be quite fatiguing. No vendor wants to hear that their agent is now telling them that their home is 5 per cent, or even 10 per cent, lower in value since they signed up the sale authority.

Agents can work for weeks or months and then lose a listing when a vendor is distraught or disenfranchised with their agent’s efforts. All of that work is in vain, and an agent who loses a listing will likely watch a local opposition agent replace the sale board with their branded board.

Agents are not only having to tackle the tough conversations with vendors while appeasing them, but they are also working hard to keep the limited number of buyers they have engaged in their listing.

With buyer jitters running higher, agents are also wasting a lot of their time with nervous nellies who talk themselves out of buying. It’s a tough round for agents right now, and while most won’t spare them too much sympathy, it’s important to note that these bear market conditions challenge the best of them.

Fear factor

Upgraders are terrified about selling for a bargain price and buying in a recovering market, yet they are equally scared about buying first, only to watch the market deteriorate even further.

Agents are having to navigate this dual-step process with ultra-care and finesse, because some of their vendors are in a delicate position. No vendor wants to buy first and find that they can’t sell for the price tag they were reliant on.

Good agents will have the carefully considered conversation, and they will be prepared to model uber-conservative selling estimates with their clients to ensure they don’t get caught out in a moving market.

Those upgraders and downsizers who have a team around them, (including, but not limited to buyers agents, vendor advocates, mortgage brokers, accountants and financial planners) are well-advised to keep their team in communication with each other when tackling these stormy seas.

Buyers agents often find that their demand cycle occurs when buyers are finding it tough.

This typically equates to a hot market, where FOMO (fear of missing out) is rife, and prices are soaring. Many buyers agents will find their client enquiry is lower, and their client book is diminished.

For those who aren’t experiencing this, they will still have their challenges associated with a bear market.

Buyers who are committed to working with a buyers agent will often be looking for a very sharp buy. This is a reasonable expectation, unless they have a 20 per cent-plus discount in mind. For the buyers who are realistic and motivated to buy, even these buyers will have a niggling feeling of “what if I buy and the market drops further?”

Agents need to be nurturing, patient and completely familiar with the segments of the market that are exhibiting strength, weakness and varying competition levels.

Lastly, and least impacted, are the opportunistic buyers who are keen to be contrarian, and are offering low-ball prices.

Some will get lucky, but those who take it too far may find themselves alienating vendors altogether, and potentially missing the best buying conditions that we’ve had in years.

Maybe they are reading the headlines and believing a 30 per cent discount is fitting, or maybe they are just keen to nab a great deal. Either way, it pays to tread respectfully when it comes to dealing with agents and vendors in a tough market.

Like all market cycles, things will turn for the better. As they say, “this too shall pass”. But for those buyers who are hoping for a great buy, now may just be that time.