Star of Selling Houses Australia, Andrew Winter, is frustrated about the many and varied rules that are applied to buying and selling real estate in Australia and he says they are treating you and I like idiots.
Transcript:
Kevin:  A man I love having him on the show because he is always so much fun, Andrew Winter. Love his show, too, Selling Houses Australia.
Andrew:  Good morning, Kevin, how are you?
Kevin:  Good, nice to be talking to you, and you’ve done it again. How many series are you into now with Selling Houses Australia?
Andrew:  We will start hopefully filming season ten later this year.
Kevin:  That’s brilliant. Now let’s talk about the weird rules in real estate. I know you’re a bit fired up about some of these.
Andrew:  I do get fired up.
Kevin:  I saw another one created in New South Wales making real estate agents now have to record any building inspections and make them then available to any purchaser. Have you heard about that one?
Andrew:  Yes, I’ve heard about that one. Of course, down there they can’t use the word “Offers over,” either. It does make me tear my hair out – luckily enough I still have some – but this is the whole sort of craziness.
I do think we have to have legislation relation to real estate, of course. That’s one of the reasons so many overseas investors love buying in Australia, because of our solid title legislation, because everything is protected, which is great. You need due diligence periods, you need cooling off, you need deposits, you need trust accounts.
All of that is absolutely vital to a successful real estate market, but then I think what we’re seeing now is that we just want to make rules for the sake of it, and I think part of the problem with a lot of these rules is that we’re giving the public absolutely no credibility for having an ounce of a brain, and we’re also making things so litigious that it’s almost… How some of these rules could ever be policed, and when somebody actually does something wrong, what really happens? Which, to me, is a pointless law. Does that make sense?
Kevin:  I have to talk about a very pointless one in just a moment, but can you give me a couple of examples of what you’re talking about?
Andrew:  One of my absolute beasts is this stupid Queensland-only Queensland rule about not being able to discuss price when you decide to take your property to auction.
Kevin:  We’re going to disagree on this one, but that’s okay, that’s very good.
Andrew:  I’ll tell you exactly why it is. I have no problem with whether you choose to disclose the price or not. If that’s the way you want to go, fine. Sometimes it works, sometimes it doesn’t. However, that’s the point for me: it’s choice. There should be nobody who says…
If I’m a seller, if I want to price guide my property at auction, I should be allowed to. If I want $1 million and I want to say, “Price guide is $500,000,” guess what, everyone is going to turn up and give me $600,000. The market will sort it out.
I throw my arms up in despair, because the other problem is it makes Queensland look stupid.
Kevin:  I take your point and I don’t totally disagree with what you’ve just said, but let me put it back to you in another way. With price guiding like that, a lot of that is done by agents who want to simply lowball, to suck people in, to get buyers in, to say, “Look, you’re going to buy it for $500,000.” They go, they do their building inspections, all their planning, then they turn up on the day of the auction to find that the reserve is $1 million. That is not fair.
Andrew:  No, it’s not fair, but it’s free market. I don’t think you should be legislating against things like that. I think that’s why you’re thinking that everybody is that stupid, that they don’t know that that house at $500,000 offers is really going to be worth $800,000 or $900,000. I genuinely don’t believe that, and I think that this is all a sort of kneejerk reaction, mollycoddling a market that doesn’t need it. I think this is the point to me. We can agree or disagree about the principle of it, but I still think a seller has a choice.
When their agent chooses to list at a lowball figure, surely the seller is going to have an opinion on that, and the seller should have control over where they pitch it. Sometimes, if you lowball it, the seller can do well from it. Other times, the seller will do disastrously from it and the agent will look very silly.
When I tell anybody interstate or overseas that rule, they look at you as if I lost my mind. My concern is that Queensland is supposed to be an international player in the property market and right now we look like someone from kindy. It’s such a joke policy, because it actually is just saying that everybody who buys and sells property is so stupid they can’t discuss…
Imagine going to buy your family sedan, which is an expensive item. You go to the dealer, “I like that one, how much is it?” “I can’t discuss prices with you.” “Well, can you give me a guide?” “No.” “What if I offered $500?” “I’ll put the offer, but I can’t sell you that’s going to be close.” Then, you see, you start to chuckle. You have to admit it’s absolutely insane.
It’s not that I disagree or agree with non-pricing strategy. It’s quite a unique thing; it’s very Australian. Virtually no one else does it anywhere else in the modern market, only Australia, but sometimes it can work.
Kevin:  Auction of property is very strange in America. They simply don’t understand it.
Andrew:  No, and in the UK, they only do it for certain types of property, but what I love – and I’m going to be very UK biased – is they put a price guide on there really low and sometimes it goes for 50 or 60% more than the price guide and the buyers go, “Well, I thought it might go for more.”
That’s what free market is. If you want to start controlling the market, we won’t have the property market we have. I’m worried that we’ll start taking more steps along those lines, banning offers over, banning certain wording. “You can’t do this, you can’t do this,” you think “Well, really?” It’s just getting a little bit crazy for me.
Kevin:  One of the other things that I’m really concerned about is this exaggeration of what can happen when you list with a certain agent. Let me give you an example. I don’t know how you feel about this because we haven’t discussed it yet, but I’m talking about websites like – and I’m going to mention them – OpenAgent, where they actually freely advertise that “If you come with us, we’ll put you in touch with the best agent in your area, and look what you can do; you can actually get $100,000 over your reserve.” I think that is really bad.
Andrew:  I actually don’t know how…Usually when you advertise any product and you make any claim, that claim has to be backed up with evidence. Unless they very cleverly have found a property… Let’s be honest, you could have found a Sydney seller in the last 12 months who possibly had used that service, that their reserve or price guide was $1.1 million and they got $1.2 million.
Kevin:  I actually put it to them when I had them on the show, “Look, in that particular case, would you accept the fact that it probably had nothing to do with the agent, but it had everything to do with the fact that you had a low reserve?”
Andrew:  Yes, exactly.
Kevin:  They denied that. But the other thing that really annoys me is they say they’re going to put you in touch with the best agents in your area, but they don’t; they actually put you in touch with the agent who has agreed to pay them a 20% referral fee.
Andrew:  Okay, there you go. We’re going to be singing from the same hymn sheet on this one. My problem with any service that directs you to people… And I’m going to use a name now. Let’s say for example Trip Advisor because it’s so huge. When I look at reviews on there, the people who have reviewed get no kickback, no benefit whatsoever, just because they want to share their good or bad experience.
The problem with any of these sorts of sites or their component element is what’s actually happening is that if there are ten agents in your town and only eight of them have agreed to sign up with this company, the other two agents might be the ones for you. You’re not going to hear from them. It’s not unbiased.
I know that it obviously doesn’t cost the customer anything, but somebody has to make money. That’s how they’re making money. To me, if you ever want to buy advice, you really should be buying advice and paying yourself.
This is the trouble with buildings and pest inspection. I kind of really want to buy one myself so that I can speak to the inspector, possibly be around when they go and have a look, and make sure that I’m happy with that inspector, that he or she seems to be looking at it from my point of view. Perhaps for example I’m planning to knock down one half of the house and extend it, they’ll say “Look, this part of the house is terrible” “Don’t worry, just can you focus on that bit we’re keeping?” Or something along those lines.
I know it’s not always preferable or you think it isn’t preferable… It’s like using a proper, licensed buyer’s agent. You know how they get their fee, therefore the houses or properties that they’re going to show you, there’s no bias.
Kevin:  That’s right, exactly.
Andrew:  It doesn’t matter whether you buy that one, that one, or that one. They hope to sell you one of them, but they’ll only get a fee from the one that works best for you, so the system works for the customer. But when you’re not actually paying for a service, I don’t know how it can quite work for you.
Kevin:  Good on you, Andrew. Andrew Winter from Selling Houses Australia, a great show. Make sure you check it out.