Selling in a Declining Market: Strategic Plan

Chasing the market occurs when a seller reduces their asking price in small increments behind falling market values. Because the reductions lag behind market movements, the property remains overpriced, staling the listing on search portals.

To avoid this, sellers must price their properties based on recent 3-month sold records, rather than outdated peak pricing. Setting a realistic price from day one is the most effective way to secure a buyer and protect equity.

During corrections, public auctions are highly risky. Clearance rates drop significantly, and up to 45% of properties are passed in.

A passed-in auction creates a public record of failure, which buyers leverage to demand steep discounts. A direct private sale to an off-market buyer like ROAME Australia provides a secure contract exchange without public listing failures.

Sellers in declining markets must calculate their net proceeds after transaction costs. Bypassing real estate agent commissions (2% to 3% plus GST) and advertising packages ($5,000 to $10,000) preserves capital. Selling directly to an off-market buyer eliminates these costs, offsetting minor market price drops and keeping more money in your bank account.

When markets decline, average Days on Market (DOM) expand. A property that would sell in 30 days during a boom can take 90 to 120 days during a correction.

During this extended period, the owner must continue to service mortgage interest, pay council rates, water rates, strata levies, and building insurance. For a standard Sydney home, these carrying costs exceed $6,000 monthly, eroding net proceeds.

In correcting markets, banks tighten credit controls, leading to a rise in buyer finance defaults. A seller who exchanges contracts subject to finance risks the transaction collapsing after weeks of delay. To manage this, sellers should target cash-capable purchasers or corporate buyers who provide unconditional contracts with Section 66W certificates, securing the sale from credit market volatility.

Relying on agent appraisals or automatic online estimates in a declining market is highly dangerous. These models rely on historical sales that occurred during peak periods. Homeowners must source independent registered valuations from CPV (Certified Practising Valuer) members, who adjust values based on current demand levels and banking credit volumes, providing a realistic pricing baseline.

Sydney's residential property market is highly sensitive to Reserve Bank of Australia (RBA) cash rate decisions and Australian Prudential Regulation Authority (APRA) serviceability buffers. When the RBA raises rates, borrowing capacity declines, as lenders assess interest rates plus a 3% serviceability buffer. Over a cycle, this reduces the pool of active buyers and puts downward pressure on clearance rates.

Sellers must monitor these cycles to time their exit. During rate-hiking cycles, listing a property publicly can result in extended days on market and forced price reductions. Bypassing public campaigns in favor of direct off-market treaty sales protects sellers from market corrections.

Direct buyers evaluate properties based on long-term value, allowing you to lock in a price today and secure your equity before rate hikes further contract buyer demand.

Every month a property stays unsold during a market downturn, holding costs accumulate. These expenses include mortgage interest (often $5,000+ monthly on a standard Sydney mortgage), council rates, water rates, building insurance, land tax, and garden maintenance. On a vacant home, these out-of-pocket costs represent capital erosion.

Executing a voluntary off-market sale halts these ongoing liabilities. Sourcing a quick exit is the most effective way to prevent equity erosion during market corrections.

Rather than waiting months for an auction campaign to resolve, a private direct buyer can exchange contracts in days and settle quickly, terminating holding costs and preserving your cash equity.