Highlights from this week:
- The facts about supply and demand – exclusive reports
- The difference between ‘off market’ and pre-market property
- Overcoming the huge expense of marketing a property for sale
- First timers vs CUBB’s – who wins?
- DIY research and get the bargains
The facts about supply and demand – exclusive reports – Andrew Wilson
Kevin: We’ve certainly had a surge in development right around Australia in recent times, and a lot of talk, of course, about over-supply. Dr. Andrew Wilson from My Housing Market has done a brilliant analysis of what’s happened and what’s likely to happen with supply coming through. We have a number of graphs below that we’d like you to follow through – if you want – as I talk to Dr. Andrew Wilson.
Andrew, thank you very much for doing this. I know there’s been a lot of work put into this. Let’s firstly have a look at our first graph, which is just a bit of a summary of the unit developments over the last five months.
Andrew: That’s right, Kevin. We’ve certainly had a lot of debate about the nature of supply in our capital city markets. With lower interest rates and higher demand, we’ve had a surge – as you mentioned – in particularly inner-city high-rise development. There were perhaps concerns of supply moving ahead of demand.
Of course, this is a natural outcome. Developers always move ahead of the curve; that’s all about the risk-and-reward scenario they work under. But we have seen – following record surges in large capital city markets – an easing in development as demand soaked up that supply.
And a lot of it, of course, was with that higher interest-rate policy introduced by APRA over the last couple of years that targeted investors. That was another factor that pushed down demand in the shorter term, and of course, that’s translated into fewer approvals coming through.
But the latest data is quite interesting, Kevin. We can see that, perhaps predictably, some of the capital city markets have eased when we look at the number of building approvals – and this is ABS data, of course – the number of building approvals for units in the capital city this year so far. That’s the five months to May. And then we look at the same period last year, the five months to May of 2017, just to see what the growth has been.
And we see that Sydney, Brisbane and Perth are down in terms of the number of building approvals for units. Sydney, 6.9% fewer, Brisbane, 5.4%, and Perth, 24.4%. But quite interestingly, we see perhaps some surprising results with Melbourne surging ahead, up 24%. More units have been approved in that Melbourne market over the five months of this year compared to the same period last year.
And Canberra is surging ahead, 54% more units in that Canberra market this year so far compared to last. Now, Canberra is a smaller market in terms of volumes than the large capital cities, of course, and that Canberra number has been affected by what’s been a very large development by the Geocon group this year, which has skewed those numbers upwards. Over a thousand apartments, I believe, were approved in that single development.
But it’s still interesting to see that Adelaide, and particularly Melbourne, have surged ahead this year. So that really puts paid to any sense that there’s not enough demand for supply, particularly in that Melbourne market. But other markets: as we’ve seen, Sydney and Brisbane and Perth are down.
Kevin: We’ll have a look at the cap cities themselves. We’ll start with Sydney, which is the second graph down. Interesting, Ryde and the Hills Shire, but I guess, Ryde still very close to the city.
Andrew: I think it is interesting, Kevin, because it shows that development is spreading outwards in the Sydney suburban strata, but Ryde is, I guess, a middle ring suburb to the northwest of the city. And of course, the Hills is the next cab off the rank from Ryde. So, that northwestern surge is continuing; lots of new infrastructure going there.
And of course, it does reflect that buyers are not necessarily looking for inner-suburban or inner-city locations in terms of apartment living. Bayside, of course, is the southern section of Sydney, a merging of councils there. That’s been a very rigorous area for development.
Of course, Sydney city itself is still quite active in terms of development, and midwest areas such as Fairfield and Auburn in Cumberland, quite a lot of development going on.
But it’s interesting that the leading development areas in Sydney are out to the middle west and the northwest of the city, particularly Ryde. It’s quite a high number of approvals there.
Kevin: Yes. As we move to Melbourne, we see a totally different situation where the bulk of the development is actually in Melbourne itself, Andrew, in the next slide down.
Andrew: Yes, and I guess that’s no surprise, Kevin, because that CBD area has been the epicenter, really, for development in Melbourne over this surge as you mentioned in apartment approvals for the last three or four years. And continuing on, so plenty of development. That’s a big number, of course, nearly 3000 approvals so far this year, in the five months to May.
Andrew: But interestingly, we’re also seeing the inner northern suburbs of Melbourne – Maribyrnong and Moreland, of course, just to the north of the Melbourne metropolitan area –are quite active there. And remember, these are four-story-or-above approvals, so this is a high-rise approval model.
And Yarra, of course, is the inner eastern suburbs of Melbourne and Port Phillip the southern suburbs. But I think, interestingly enough, Melbourne is still taking the bulk of new approvals – significantly the bulk – but the northern suburbs certainly contributing to more high-rise.
Melbourne is a bit tougher for developers to get a planning permit for high-rise in the suburban fringe in Melbourne or the outer suburbs, but they’re still certainly gung-ho in terms of development in the inner city.
Kevin: Yes. And before we take it to the Brisbane one, Andrew wants to have a focus on Queensland itself. Interesting figures there, even out of Brisbane where we thought the development approvals may have been slowing down, Andrew.
Andrew: That’s right. Numbers are lower as we saw on the first graphic, Kevin, this year compared to last year. And we would expect that, because there’s been just remarkable growth in that Brisbane apartment market. Down by just over 5%, but we can still see quite healthy numbers there. And these are local government area figures.
The Gold Coast, of course, is up and about. I think that’s quite an impressive number there, and also Cairns with351 high-rise approvals over the five months. Even the Sunshine Coast is up there, although I’d suggest that would be the southern and middle part of the coast that’s providing most of the development, likely Caloundra particularly.
But yes, that’s the LGA breakdown for Queensland. Still a lot of high-rise development going there. Gold Coast is attracting developer interest with those numbers, but Brisbane, although it’s down, is still providing quite hefty numbers of approvals for high-rise apartments.
Kevin: And looking closer at the Brisbane LGAs, not surprising once again that a lot of it is fairly close into the city, around Woolloongabba, Fortitude Valley, all the normal ones where you’d expect, Andrew.
Andrew: That’s right, Kevin. And some good numbers there. Quite an even spread if you look at that. There’s not a lot of difference between Kangaroo Point and Woolloongabba, and mostly adjacent, I guess we could say, those areas. There’s still plenty of activity there from developers.
I think the Woolloongabba area is quite interesting in terms of it being a leading marketplace. Of course, Kangaroo Point typically has higher priced developments in that area, but I think if we look at Kangaroo Point versus the valley, we see a different profile in terms of the types of units that are being built there.
So, I think the developers are providing a spread of bedroom numbers and styles in that area. But still quite a lot of activity, which is good news for the economy, of course, in Brisbane, and good news for increasing population growth, which is driving that market at the moment.
Kevin: Those numbers around Eagle Farm and Pinkenba as well, suggesting that there’s a lot of development happening around that airport precinct out that way. And we are seeing that down by the river and out around the airport, Andrew.
Andrew: Yes. It’s sort of a shift downwards – isn’t it, Kevin – moving from the inner city down through Hamilton, New Farm, and these areas, which have been really a significant focus for development, and I think it’d be interesting to see how the Eagle Farm / Pinkenba area develops in terms of its suburban profile and the types of units that are coming through, the number of bedrooms and the size of the units overall.
But certainly, there’s still quite reasonable activity in that Brisbane apartment market. Developers are still obviously quite keen to be engaged, and I think that they’re realizing that any sense of an over-supply trough has now passed that market. And we know that there’ll be fewer properties coming into the market completed because we passed the peak of the cycle.
But growing population, we’re seeing vacancy rates falling quite sharply now in Brisbane, even for units. So, plenty of demand there from tenants, which will be good news for investors.
Kevin: Indeed. Let’s have a quick look at Adelaide, Canberra, and Perth, just to round this report out, Andrew.
Andrew: Well, smaller markets. I guess we tend to ignore Adelaide as being a high-rise destination, but there’s been plenty of development there – particularly in Adelaide city – of high-rise apartments. That’s continuing on. And I guess a much smaller proportion of activity in surrounding suburbs.
But certainly the Adelaide city area, the Adelaide LGA area is taking the bulk of new development, which is continuing on. Again, good news for that local economy to see development being maintained.
Kevin: Indeed. All right, mate, we’ll leave it there. All those graphs are below for you to have a look at. Dr. Andrew Wilson has given us that update.
Andrew, thank you very much for putting in so much time and effort. It’s a great report and a really good insight as to what’s happening. So, thanks very much for your time.
Andrew: Thank you, Kevin.
The difference between ‘off market’ and pre-market property – Cate Bakos
Kevin: We’ve spoken in the past about off-market opportunities. It sounds really interesting, and it probably is in genuine cases where you can achieve getting to someone before an agent does, looking at securing a private sale, or even someone who doesn’t want to market a property.
So, what is an off-market opportunity? One buyer’s agent, Cate Bakos – who will be my guest – talks in this interview about the difference between a genuine off-market opportunity and a pre-market offering.
Hi, Cate. How are you doing?
Cate: Hi, Kevin. It’s great to be here.
Kevin: Yes, nice to be connected again. Cate, of course, is a buyer’s agent. Would it be fair to say that there are more opportunities like this in some of our cap cities, in Sydney and Melbourne, Cate, from your experience?
Cate: That’s a good question. I think that off-market opportunities exist in any market, and it really is a sign of an agent’s relationship with the dominant byers, but obviously in capital cities, there are more buyer’s agents and it’s certainly a common theme between agents and buyer’s agents because we often have a pool of buyers who are buy-ready – they know exactly what they’re after and are able to articulate it.
Kevin: What makes an off-market opportunity? This is something that I’m interested in. Is it driven by the seller not wanting to market a property, or is it driven by a buyer who wants to seek a property without any competition?
Cate: It’s actually driven by a seller who needs to sell the property and may not have the convenience of lots of time to have a traditional campaign. So, for any off-market property, I always find that the majority of vendors who are selling off-market are selling because they have a particular date they need to meet or they have a short timeframe and it isn’t long enough for a good auction campaign.
Sometimes, you’ll find that vendors want a quiet sale or a private sale, or they’re just wanting to avoid having people traipsing through their home. They might be a public personality or something like that.
Other times, you find that vendor motivation for going off-market is not ideal for the buyer, and that’s when we determine whether it’s actually good off-market or a waste of our time.
Kevin: Yes, let me deal with that in just a moment. Can I ask you another question about off-market sales? From a seller’s perspective, isn’t there a danger if they don’t expose it to an open market that they could actually undersell it, Cate?
Cate: There is a danger, and if they’re in a position where they haven’t enough time to really negotiate hard and maybe have a couple of buyers fighting it out, that is a danger. But on the flipside of that, if a buyer really wants property and this particular property matches their needs and they know that they’ve got a window of time to put in a bid for it that’s competitive enough to have the vendor agree to shut it down and sell it, the buyer knows that they might have to match the vendor’s asking price or even give them an offer that tempts them to take it and restrict marketing it to others.
But every now and then, a vendor can get a really impressive price on an off-market property, and that’s the skill of the agent and their ability to match the house to the buyer. And obviously, a buyer’s agent doesn’t want to pay a premium, but every now and then, a vendor will get lucky with an off-market property.
Kevin: It’s a fairly common occurrence where an agent will do a pre-marketing campaign, that is say to a seller “Look, I understand you want to sell it, let’s get it listed, but in the meantime, I’m going to expose this to some buyers or buyer’s agents who may be interested.” That’s a difference between a pre-market offering and an off-market sale.
Cate: Very much so, Kevin. These pre-markets that are bundled up under the guise of being called an off-market can be quite infuriating for us. There are usually a couple of reasons why agents will do this, and both of them aren’t good reasons for the buyer, so they have to be very careful about what they say in situations like this.
The first risk is that it’s actually just a pre-market and the agent is floating it out there to see if there’s anyone who is prepared to pay a premium or any under-bidders who are prepared to pay a price that’s over and above what the property is actually worth, and obviously, then they’ll secure a great sale result without having to put any effort into the campaign.
That’s a bad off-market, because it’s a pre-market where the opportunity to buy it prior is only if you give the vendor an offer that blows them off their chair, and that’s not what we want to do.
The other reason why some agents will have a pre-market is maybe they’re trying to secure an exclusive listing, and at this stage, they only have got a foot in the door. So, they might be saying to the vendor “Let’s get some buyer’s agents through and demonstrate to you that we have these fantastic networks.”
And that’s a waste of my time if I’m going along to a property under the guise of it being an off-market and it’s really just an agent trying to list it.
Kevin: The danger there for the agent of course is that’s a breach of the Act. They can’t represent a seller unless they have a signed agency agreement, Cate.
Cate: They will have a signed agency agreement, but it might be a short range one, or it might be the vendor giving them a [5:15 inaudible] opportunity to show them what they’ve got. It could be exclusive on just a three-day or seven-day…
Kevin: Yes, I understand.
Cate: That’s a waste of my time.
Kevin: Pre-market offerings are quite normal, provided they’re not pitched as off-market sales, is really what you’re saying.
Cate: I think so. Yes, if an agent is honest with a consumer and says “I can get you through this property, they’ve had the photos done, they really want to put it on the Internet, but if you’d like to buy it prior, you’ll need to give them a price that blows their socks off,” for some buyers, if they have the funds to do so and the house absolutely perfectly matches their requirements and they know that for them, it’s still a good value proposition, the consumer will be happy to go through with it.
But if it’s under the guise of being an off-market and it’s not really, it means that you’ve shown your cards, you got excited, and then you have a four-week auction campaign to sit through while every other person sees it.
Kevin: Interesting. It’s great to look at it from all sides, from the seller’s side, from the agent’s side, and certainly from the buyer’s agent side. And you’ve given us that perspective quite well today.
Cate Bakos is a buyer’s agent, and you’ll find her at CateBakos.com.au. Thanks, Cate, for your time.
Cate: Thanks, Kevin. Great to chat.
Overcoming the huge expense of marketing a property for sale – Jordan Catalano and Tom Hywood
Kevin: Concern continues to grow amongst developers, agents, and property owners about the ever-increasing cost of marketing properties for sale. The online space is dominated by two main players who, between them, have been very successful at developing business models to continually drive marketing costs to almost unsustainable levels.
Advertising a property online in Australia is now the most expensive undertaking anywhere in the world. New players are entering the field offering alternatives, but to date, none have successfully halted the march of RealEstate.com.au and Domain.com.au as they grab more market share between them and, of course, revenue.
Two young prop tech inventors, Jordan Catalano and Tom Hywood, are out to change all of that in at least one sector –they’re involved in more than just one, but we’ll talk about this one sector of the market particularly – with a site that delivers a cost-effective marketing tool for the house-and-land package market, which is a very strong and emerging market.
We’ll firstly say good morning to Jordan. Good morning, Jordan.
Jordan: Good morning. How are you?
Kevin: Well, thank you. And Tom, thank you very much for your time as well.
Tom: Thanks, Kevin.
Kevin: Okay. Gentlemen, our audience might not be necessarily familiar with your surnames, but you have very strong, heavy family connections. Both of you, I guess, would have grown up in the media, marketing, and those property genes must be surging through your veins.
Jordan: Yes, that’s correct. My dad was property editor for a number of years, so Saturdays were usually spent going from auction to auction. Yes, you’re right in saying that.
Kevin: And Tom, your dad, of course, is very heavily involved in the media as well.
Tom: Yes, exactly. I probably haven’t got the same property legacy the Catalanos have, but dad has certainly been involved with Fairfax and the newspapers for a long time. I have that media background.
Kevin: Has that helped shape your vision and your goals for the company? Which I do want to talk about, but I’m just interested to know about your background.
Tom: Yes, definitely. I’ve spent five years or more working for Jordie’s dad, actually, at The Weekly Review and then Domain.com.au, working in the ad sales department under [2:29 inaudible]. And that certainly shaped my perspective of the ad sales industry, especially in the property space, and definitely helped us create a vision for what we want this site to be and how it needs to be, especially to form the right relationships and enter into what, as you said before, is quite a heavily controlled and saturated market by what has been the two main players up until we got involved.
Kevin: The website we’re talking about is called HouseAndLandDevelopments.com.au.
Jordan, I’m wondering if you can tell me how it works.
Jordan: It’s a consumer-facing website that connects property developers and project marketers with those searching for house-and-land developments. For developers and project marketers, we help create awareness and generate leads for them by building campaigns targeting a range of different buyers.
We’re a vertical that caters specifically to the off-the-plan market with apartment developments and house-and-land developments, so we produce content that is relevant to that segment of the market. And [3:45 inaudible], those categories almost remain an afterthought for the major portals because they’re more focused on their bread and butter – being established real estate – so that’s where we carve out our niche.
Kevin: Who is the site aimed at, Tom? Is it aimed at agents and developers, or is it aimed at the consumer?
Tom: The site really is aimed at the consumer, putting mostly local buyers in touch with the right house-and-land stock. But from a client perspective, we find ourselves dealing with mainly project marketers, house-and-land developers, and sometimes even home-builders, the likes of Simmons Homes, Metricon, Creation Homes, those guys who are building this house-and-land stock regularly across Victoria.
Kevin: Working with all those developers, you must be seeing those challenges they’re facing at present. What are they? What sort of challenges are house-and-land package developers facing right now?
Tom: I’d say probably finance and lending conditions are the biggest challenges facing the category at the moment. This is a problem across all housing categories. The cost of advertising is also extremely expensive. One main publisher has control and basically dictates the pricing. From the conversations we’ve had with clients, that’s the main pain point for them.
There are plenty of developers who are almost being priced out of the market just by advertising costs, like you said earlier. We have exorbitant costs for advertising, so that’s what we’re trying to bring down.
I don’t think some of the rates that are being charged are justifiable, and I think also, developers and project marketers need to future-proof and plan for a downturn in the market. It’s certainly on their mind. And it’s a reality for all agents and developers in this space, so having a portal that’s specifically for that portion of the market is a valuable resource for them.
Kevin: I mentioned at the start of the interview about other sites and areas that you’re looking at. Can you tell me about the other sectors of the market that you’re looking to enter or maybe that you’ve already entered and are developing?
Tom: Apartment developments was our first cab off the rank, and that was essentially what House and Land Developments is now, but it was purely in the off-the-plan space and purely apartment-driven. That was launched in 2014, and it’s now grown nationally over the last five years, with Victoria being our biggest market, closely followed by New South Wales.
And then off the success of apartment developments, we were then able to dip our fingers into other pies, one being the house-and-land space, but the second being a business that we’ve called Development ID, which is a network connections business towards third party agents and network agents, who commonly in Victoria are master agents or agents who have exclusive rights over projects are then using these network agents to help them sell more stock to local buyers or even offshore buyers.
And so that’s one of the points of the business, which also has the ability to be a stock allocation and stock management system for those developers and project marketers.
Kevin: I mentioned at the outset that advertising a property in Australia is the most expensive in the world. Given that that’s the case – I don’t know whether you agree with that, but the stats certainly tell us that – what do you think is the future of online marketing? I know you guys are moving towards making it more affordable. Do you see a time when developers and property owners, through a site like yours, will connect directly with consumers?
Tom: I think that’s certainly a potential. There’s still going to definitely be a role for agents in the picture, but people are pretty savvy online now. I imagine that once more and more information is available to them, they will be able to make that communication directly, but I don’t see them being completely cut out any time in the near future.
Kevin: Gentlemen, thank you very much for joining us and for the work that you’re doing. The website again is HouseAndLandDevelopments.com.au, and we’ll make sure there’s a link to that site in the commentary that goes with this as well.
Jordan Catalano and Tom Hywood, thank you very much for your time.
Jordan: Thank you, Kevin.
Tom: Thanks, Kevin. Appreciate it.
First timers vs CUBB’s – who wins? – Miriam Sandkuhler
Kevin: Nothing like a discussion about the housing market, affordability, and how difficult it can be for first-time buyers to get into the market. We’ve heard lots of reports from, say, auctioneers who continually tell us that first-home buyers are being outbid not only by overseas buyers but by cashed-up baby boomers, who are now known as CUBBs. I’d never heard that word before, but anyway, Miriam Sandkuhler from Property Mavens joins me.
Good morning. How are you, Miriam?
Miriam: I’m fine, thank you, Kevin.
Kevin: Yes, good to be connected. Did you invent that term, CUBBs?
Miriam: I did.
Kevin: Well done. That’s why I hadn’t heard of it before.
Miriam: There you go.
Kevin: Cashed up-baby boomers.
I’m just wondering if this is just another excuse for people who are saying “We can’t get into the market; it’s too tough.”
Miriam: It’s not so much an excuse; it’s actually a reality of where the market is at. Certainly, with all the APRA changes, we’ve seen a reduction in the number of investors, but we’ve seen an increase in the number of first-home buyers qualifying for money. And that has the contrast of competing with the CUBBs in the marketplace, a lot of whom are heading towards retirement and they’re wanting to downsize and buy things that are smaller and more manageable.
Kevin: That was going to be my next question: what are baby boomers buying? Are they buying a principal place of residence, or are they investing in a property as an investment?
Miriam: Some of them are doing a combination. With the downsizers, they’re often doing a combo, so they might do a CBD and sea change, or they might do a CBD and tree change, or they might do their own suburb and stay within that suburb and then buy a second property, which is either an investment or a bit of a holiday home.
Having said that, in both instances, they’re looking to buy something smaller, low maintenance, secure, set and forget.
Kevin: Is that the sort of property, then, that first-home buyers would be buying? Because my impression is that they’re going to some of the newer areas where they can start a family.
Miriam: Certainly, first-home buyers who are going into those outer areas where they might have a longer commute time but they have a bigger property where they can have a bigger block of land and a family home, they’re not necessarily competing directly with down-sizers, because a lot of these are new housing-and-land estates.
Where the toughest competition is is within proximity to the CBD. Anyone who wants that 15-kilometer or less lifestyle and close to the amenities that the CBD offers, that’s where there’s a really strong push, particularly in the Melbourne market at the moment.
Kevin: They may have to adjust to that reality and go where they can buy. Rentvesting is another opportunity for them – rent where they want to live and invest somewhere in a property. Surely, that’s a solution for them, too.
Miriam: Absolutely, that’s still a solution, but a lot of them are still in that first-home buyer price bracket even if they’re rentvesting. So, while it’s a different strategy on what they can do with their money, if they can’t buy the home they want in the area they want, if they’re still under that $750,000 price point, we have bottom-up pressure with first-home buyers up to $750,000 and we have top-down pressure from down-sizers and CUBBs under that $1 million mark. And that’s where the two are clashing in the middle.
Kevin: What about baby boomers who are actually helping their kids get into property? If they’re so cashed-up, are they able to do that?
Miriam: Some are, if they have the capacity to, but again, with the lending side of things, banks are looking quite sternly at borrowers who’ve been gifted money and don’t necessarily have a steady evidence of saving.
Kevin: It’s more about a savings record, isn’t it?
Miriam: Yes, that’s right. If they don’t have a steady savings record, then they’re not necessarily open to the fact that mom and dad are just going to hand over some money. It could be that mom and dad have to take the loan out and put their name on the loan, as well.
Kevin: What are the tips for young buyers wanting to get into the market if they want to compete? If they find they’re going to an auction and they’re bidding against a CUBB, what do they do?
Miriam: They really do need to understand and be able to price property and know what the property values are.
The first thing I’d say before they even get to that is don’t procrastinate and hope the market is going to slow down, because it probably won’t. First and foremost, get your loan approval in place because cash is king. If you can’t get a loan approval, you’re wasting your time even looking at the market.
Make sure you’re clear on your buying strategy, what you want to buy where and what your negotiables and non-negotiables are, and where you’re flexible to get the outcome and the property that you want, which is going to serve your needs for maybe the next 10 or 15 years from a home perspective or a family perspective.
And most importantly, develop a really clear buying and bidding strategy. That includes knowing who your competition is at auction, getting a sense of whether or not the property is being under-quoted or whether or not it’s a fair market value. And in reality, this is very complex. The average person, if they’re buying a property for the first time, seriously doesn’t know how to do this.
So, the best thing is to engage a professional – like a licensed buyer’s agent – to help you. It might just be the bidding side of it, it might be helping you find the property and everything in-between. People lose and waste a lot of time missing out on properties time and time again, and often it would have been cheaper if they had just engaged a professional buyer’s agent to help them.
Kevin: Always good talking to you. Miriam Sandkulher is from Property Mavens. Thank you very much for your time.
Miriam: Thanks, Kevin.
DIY research and get the bargains – Paul Wilcox and Robert Skeen
Kevin: You’ve probably heard me in the past talk about how every buyer wants to pay less than what a property is worth and every seller wants more than what it’s worth. That’s always a bit of a problem. But I guess it would be fair to say that everyone who buys a property wants to actually buy at or below, because one of the greatest fears that every buyer has is they’re going to pay too much for a property.
Well, that’s where buyer’s agents come in. I’m talking to a couple of buyer’s agents now from a company called Oasis Skeen Property Buyers Agents. Paul Wilcox and Robert Skeen join me.
Paul, firstly, welcome to the show.
Paul: Thank you, Kevin.
Kevin: And Robert, you as well. Thank you for joining us.
You heard my intro there; that’s what most buyers want to do. how many of them actually achieve it? How do they go about doing it, Paul?
Paul: As a long-time buyer’s agent, I’d like to think anyone who engages a good, qualified buyer’s agent can and does buy under market value. That’s what we’re all about, Kevin.
Kevin: Yes, of course you are, because you work for the buyer, so you have to make sure the buyer doesn’t over-pay. But how does someone know they’re working with a buyer’s agent who has those skills? And what skills do you need? Robert, maybe you’d like to answer that question.
Robert: Yes, sure. I’m going to help the consumers out and tell them how they can do it. And the best way to go about that is to really research the market. What I mean by that is if they’re buying in a particular area, get out to every auction that you can and see what’s going on in the marketplace. That way, you can get a feel for values quite quickly. And also jump on RealEstate.com or Domain.com, look at the “Sold” tabs to see what’s sold in and around the area if you can’t make the auctions.
I think through attending auctions and looking at the “Sold”… And the good thing about the “Sold” is you can click on those links and it takes you through to the photographs and floorplans and you can really compare apples with apples. In a short period of time, maybe in the space of five to six weeks, you’re going to have a good grasp on what that property is worth.
Now, once you know that, once again, it’s research as well. If you see the home that you love, questioning the agent. How long has it been on the market? Why are they selling? Where are they going to? All these sorts of questions, so that you can determine what the owner’s motivation is.
If you have someone who’s in a situation that they have bought elsewhere and they need to sell quickly, then obviously, you might be able to get a better deal there. You know what the market value is through your research and you can set up your offers appropriately to try and buy the property under market value.
Kevin: You’ve given us a great insight there as to what a buyer can do to make sure they don’t over-pay. But if someone does all that research, why would they need a buyer’s agent?
Paul: Good question. I’ll give you an example. We’ve just negotiated one this week that had an asking price of $2.6 million. Our client liked the home, and he was probably prepared to pay that. After we viewed it, I said to him “It’s just not worth it compared to what we’re seeing in the marketplace.”
I said, “If you can be a little bit patient in terms of our negotiation, you might be able to get this at a better deal.” We saved him $500,000. We actually exchanged on it yesterday for $2.1 million.
Now, I know there are probably people out there going “$500,000? Are you joking? Is this for real?” It is, because it wasn’t worth $2.6 million to start with. When we viewed the property, we said “Look, here’s how we’re going to do it. We let the property languish on the market for over eight weeks. Every week, we will place some low offers.”
Yesterday when we put the contract in, it was with a Section 66W, 10% deposit, so it’s unconditional; we’ve done all our due diligence prior. We had the terms favorable to the vendor. They needed a bit of a longer settlement, so we were able to meet that. We put that in, and guess what? They took the offer.
Kevin: Yes. It’s interesting you should say that. I’ve always held the view that a property is worth what someone’s prepared to pay for it, and you said there that the client was actually prepared to pay the $2.6 million but actually secured it for a lot less. Congratulations on that, and I’m sure the buyer was very happy.
Robert: Can I say, too, he might have been able to negotiate that a little bit less, Kevin. Normal buyers might put in a few offers, and who knows, they might have ended up at $2.55 million. I think the beauty of us is that we can save them a lot more through the tactics and our skills over the years that we’ve been able to harness.
Paul: If I can butt in there…
Kevin: Yes, certainly, Paul.
Paul: One thing that’s probably good for everyone is we’re unemotional. Obviously, we’re buying for our clients, so it’s not an emotional purchase. We will give the clients the good, the bad, and the ugly, and a lot of the times, clients will say “Hey, Paul or Robert, can you buy this house?” And we’ll say “Have you considered that that second bedroom is quite small and facing south?”
A lot of buyers fall in love with the polished floors, the high ceilings, stylish furniture, and a lot of time, it’s us putting the handbrake on the transaction at times. So, as much as we’d like to [5:01 inaudible], we also save clients from making big mistakes.
Kevin: Yes. I always thought that buyer’s agents will bring that to the table, the fact that they’re not emotionally involved and also that you’re good negotiators. It’s very hard for someone when they’re buying a home to actually remove themselves from the emotion, “I really have to have this house.”
Paul: Correct. That’s true.
Kevin: Guys, thank you very much for spending some time with us. Paul Wilcox and Robert Skeen are from Oasis Skeen Property Buyers Agents. Thanks, gentlemen, for your time.
Paul: Thank you, Kevin.
Robert: Thank you, Kevin.