Within the space of hours, months of auction planning was thrown to the wayside, as it became clear Melbourne was once again returning to lockdown.
More than 1,450 auctions were scheduled – with vendors, buyers and agents forced to hastily adjust plans.
COVID-19 is likely to be an ongoing threat for a while to come – at least until vaccination numbers increase, which means snap lockdowns remain an unwelcome potential in the months to come.
Therefore the potential disruptions that they can cause must be a key part of a buyer and seller’s mindset. Plans regarding property investment decisions must remain flexible, agile and responsive to sudden changes.
A sudden lockdown announcement brings forth a matrix of potential considerations that need to be taken into account, and judged on a case by case basis.
Selling
The timing of a vendor’s campaign compared to the predicted length of a lockdown is a key factor in deciding whether to proceed, postpone or pivot.
Campaigns that have built up strong momentum and market exposure are best to proceed with.
At least two Saturday open for inspections should have taken place in the preceding weeks, with strong buyer engagement and feedback.
It’s important to ensure prospective buyers are comfortable with the online auction process, which can depend on the home’s buyer profile.
For instance, if you’re dealing with downsizers, who might not be comfortable in the online setting, then perhaps another option may be more fitting.
Another important consideration is whether buyers have had enough time to carry out their due diligence. Have they been able to review the contract and speak to their solicitor?
Have they been given sufficient opportunity to carry out a building inspection? This can be a key factor in a purchasing decision, particularly if the property needs work or is a period home.
Once the decision has been made to proceed, the vendor and agent must have a clear plan and message, to ensure buyers are made aware of the changes.
If the revised format is clear and transparent, then buyers are far more likely to feel comfortable to proceed under the new conditions.
The second option is to postpone the auction.
This might be because the property hasn’t had a long enough period to gain sufficient market exposure, or buyers haven’t been given enough time to carry out their due diligence.
If this is the case, it might be wise to push the auction back a week or two. It might even pay to postpone the auction for a longer period and start fresh with a new uninterrupted campaign once property access restrictions have been lifted.
The third option from a seller’s perspective is to pivot.
This is particularly relevant if there is a strong imperative to sell. Perhaps a vendor has already purchased another property, and needs to sell within a specific time frame to free up the required capital.
Some options here include selling before the auction date or the conclusion of an expression of interest campaign.
Another alternative is transitioning to a private sale, which allows the vendor and agent to have tighter control over the negotiation process.
This is a particularly wise choice if there is only one strong prospective buyer, who may end up facing limited competition at an online auction and purchase the property at a reduced rate.
Buying
Preparation and organisation are always key when buying a property, but especially while we are at risk of a lockdown.
It’s vital to keep communication lines open with the service providers that you’re relying on, and understand their level of availability.
In regards to dealings with a mortgage broker, is the finance ready to go? Is the pre-approval coming to an end?
Does the broker need any further information in order to keep the buyer available to purchase during a lockdown period? Has there been any changes to a buyer’s financial circumstances and if so do they need to speak to their financial planner or accountant?
The availability of solicitors and conveyancers to check contracts also needs to be confirmed, which shouldn’t be too difficult given the majority is now done online.
While building inspections are impacted by lockdowns, it might be prudent to organise one shortly after restrictions are eased to capitalise on a buying opportunity that the less prepared may miss.
The benefits of strong preparation also come into play ahead of a lockdown.
While lockdowns are by nature sudden and unpredictable, if a buyer has already inspected the property before restrictions are enacted, they’ll be well placed to make an informed offer, compared to those who have only viewed it online.
With sudden lockdowns remaining a threat for the months ahead, it pays to go through a property at the earliest opportunity to ensure a snap lockdown doesn’t prevent a physical inspection.
Once a suitable property has been identified, the necessary due diligence should be initiated immediately. Again, this is especially relevant in regards to building inspections.
While some buyers are reluctant, it pays to keep in close communication with the selling agent.
This does not mean giving up price sensitive information. However, it is important to register interest to ensure the agent can make contact if there are changes or new developments regarding the campaign.
In unpredictable situations, such as lockdowns, vendors can become anxious to secure a sale, even if it’s below their initial expectation.
As a result, a prospective buyer in good contact with the agent may be able to swoop in and purchase the property at a reduced rate – beating out those who have failed to maintain close communication.
In times of uncertainty, sound reconnaissance pays dividends.
Buyers need to be prepared to probe both agents and service providers to ensure they have the optimal information available to them.
Melbourne’s market resilience
Over the last 12 months, the Melbourne property market has proven its ability to overcome the pandemic related challenges, quickly migrating auctions and opening for inspections online.
While last year’s lockdowns did result in a drop in listings, auctions and market activity more broadly, since their easing Melbourne’s market has rebounded strongly.
While the latest lockdowns are definitely an unwanted incursion, the Melbourne property market’s agility and resilience ensures it will remain robust throughout COVID-19 and beyond.
Like always, uncertainty can offer opportunities, so ensure you’re informed with the latest information and know-how to capitalise on them when and if they present themselves.