- Properties are selling below automated valuation model (AVM) estimates in all states
- Tasmania was the worst performing location, with 70% below estimates
- Adelaide had the highest portion of sales achieved above the estimated price at 17%
A new report has found that a large portion of properties are being sold for below expectations, highlighting the quick change sentiment we’re experiencing in the current market.
According to Openn Negotiation (ASX: OPN), around 33% of the residential properties sold during February achieved a final sales price within 10% of the predicted price based on an automated valuation model (AVM).
However, in all states that were analysed, a larger portion of properties had sold below the model’s estimated price.
Properties selling below estimates in all states
In NSW, 57% of properties sold below the model’s expected sales price and just 10% above.
Melbourne saw similar numbers with 54% selling below expectation and 10% above, while Queensland had 60% below and 10% above.
Adelaide had the highest portion of sales achieved above the estimated price at 17% but had 47% below.
Western Australia saw 36% of sales below expectations and 14% above, while Tasmania was the worst performed location with 70% below estimates and just 1% above.
The analysis used an expected selling price, determined based on a computer-generated price estimate, which emulates the process a valuer uses.
According to Openn, there are many tools available to agents and sellers to help set prices, however, these tools may not always keep pace with market conditions and buyer demand.
AVM models can lag
Openn’s Managing Director, Peter Gibbons, said digital sale processes can help agents and homeowners navigate the pricing challenges of a shifting property market.
He said, “Unfortunately, many of the free estimate tools used by agents and sellers to help set prices aren’t keeping pace with market conditions and buyer demand. In these circumstances, digital sales processes that allow buyers to compete transparently until true market value is achieved can be really powerful.”
“That’s why Openn is so effective. Buyers submit offers digitally in real-time – providing live feedback of how the market is pricing the property. Agents can then leverage transparency settings to show where their price stands amongst other competing buyers. This social proof encourages buyers to put their highest offers forward and helps the seller extract the best possible price from the market.”