For the last number of years, the Sydney market has been hot, with clearance rates into the 80% and most buyers having high stress levels in the fear of missing out ( otherwise known as FOMO)
And as we are now well into a market that has softened with regular clearance rates in the low 60%, I have been seeing a new phenomenon - FOOP - Fear Of Over Paying ( first coined at a Real Estate conference in San Francisco May 2016)
Over the last number of months I have been getting quite a few enquiries from potential buyers who have found their perfect property but are rendered incapable of moving forward and purchasing the property as they have a real fear of over paying. Gone are the days of throwing too much money at ( in my opinion) sometimes questionable properties and with agents upping and lowering price guides left right and centre, it is no wonder buyers are left scratching their heads as to where to find true value when it comes to buying.
A lack of recent sales ( due to overall lack of supply) adds to insecurity about value and prices as there are no recent sales to compare the property to, and so the average buyer out there has no idea what the property is really worth and how much they should pay.
The final nail in the coffin of buyer confidence appears to be the lack of other buyer approval, with whom they can confirm they are doing the right thing. Picture this- you are interested in buying a property, and where last year there would be 20 people registering at auctions, now you may only be competing with one other buyer, if there is even anyone else there at all. The lack of social proof scares some buyers off and leaves them not purchasing at all.
After the heady years we have had behind us, I think it is a good thing that buyers are using their heads rather than their hearts to make property decisions. In my time I have had to push back on many clients wanting to throw way too much money at properties that were simply not worth it…
So, if you are in the market to buy now, make sure that your FOOP isn’t causing you to miss out on great property because of the above factors. A good buyer’s agent will be able to help you put pricing into perspective and give you confidence that the price you are about to pay, is the right one!