{"id":20401,"date":"2018-02-23T01:00:56","date_gmt":"2018-02-22T14:00:56","guid":{"rendered":"https:\/\/www.realestatetalk.com.au\/?p=20401"},"modified":"2018-02-23T01:00:56","modified_gmt":"2018-02-22T14:00:56","slug":"leave-emotion-at-the-door-the-question-most-agents-dread-what-happens-when-a-boom-ends","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/leave-emotion-at-the-door-the-question-most-agents-dread-what-happens-when-a-boom-ends\/","title":{"rendered":"Leave emotion at the door + The question most agents dread + What happens when a boom ends?"},"content":{"rendered":"<p><strong><em><u>Highlights from this week: <\/u><\/em><\/strong><\/p>\n<ul>\n<li>How to look at your investment as a business<\/li>\n<li>How to get into property with little or no cash<\/li>\n<li>Do women make better property investment decisions?<\/li>\n<li>What will happen to property after the boom?<\/li>\n<li>How do real estate agents set values?<\/li>\n<\/ul>\n<h4><\/h4>\n<h5>Transcripts:<\/h5>\n<h2>Leave your emotions at the front door &#8211;\u00a0Cate Bakos<\/h2>\n<p><strong>Kevin:<\/strong>\u00a0 Buying property is all about, well, I guess it\u2019s a lot about emotion. It\u2019s also, if you\u2019re an investor, you need to look at it as a business, which in some cases, means taking out the emotion of investing. But how much of a trap is it if you do get caught up in that, especially first-time investors, I guess?<br \/>\nJoining me to talk about this, Cate Bakos, who is a buyer\u2019s agent out of Melbourne from CateBakos.com.au.<br \/>\nGood morning, Cate. Thanks for your time.<br \/>\n<strong>Cate:<\/strong>\u00a0 Good morning, Kevin. It\u2019s lovely to be on the show.<br \/>\n<strong>Kevin:<\/strong>\u00a0 Have you seen that as problem, particularly for first-time investors?<br \/>\n<strong>Cate:<\/strong>\u00a0 Every day. Every time I talk to someone, there\u2019s been usually a little bit of a need to reprogram them at the start if there\u2019s emotion slipping into the picture.<br \/>\n<strong>Kevin:<\/strong>\u00a0 How do they demonstrate that? What do they say to you for the alarm bells to go off?<br \/>\n<strong>Cate:<\/strong>\u00a0 As soon as they start overlaying criteria that\u2019s not financial-related. For example, they might tell me where they want to be or what sort of attributes they want the property to have. I need to ask them whether this is purely an investment decision or if there\u2019s a potential for dual purpose? So, in other words, that difficult project where someone says \u201cI want an investment but I might want to live in it.\u201d<br \/>\nFrom there, we really have to work out whether there\u2019s a short-term need for them to live in it and whether it does need to suit them personally in their lifestyle, or whether they\u2019re just hedging their bets, which is what a lot of people do. Whether they\u2019re deliberate about it or whether it\u2019s just in the background, they want to think that there\u2019s some logic and some sense to what\u2019s otherwise an investment.<br \/>\n<strong>Kevin:<\/strong>\u00a0 Yes, they apply those personal standards to it. I guess this also happens a lot with renovators where they try to renovate a property to suit their lifestyle as opposed to what the market should be dictating.<br \/>\n<strong>Cate:<\/strong>\u00a0 Absolutely. You always have to look at what the target buyer or the target tenant will value in a particular area for a particular dwelling type. And as soon as you get that wrong, you can devalue the property or you can make a bad decision or buy a property that will under-perform what you could have targeted if you got it right.<br \/>\n<strong>Kevin:<\/strong>\u00a0 What are some of the things that a buyer or an investor should be looking at to determine the type of property that\u2019s going to appeal in a particular marketplace? What are some of those trends, Cate?<br \/>\n<strong>Cate:<\/strong>\u00a0 The first thing that everyone wants to go for is capital growth, and that should be right up there. But I think the criteria that\u2019s even more important than capital growth is making sure the cash flows will suit you, because if you take on a property that is too cash flow negative for your own budget, you will find that you can\u2019t afford to hold it, so there\u2019s no sense in doing it.<br \/>\nWe still want to target something that will deliver capital growth but it needs to deliver the right kind of rent, and we need to make sure that the rental vacancy rate in the area is attractive to an investor. There\u2019s no point going for a dwelling that will be difficult to rent and will have extended vacancy periods.<br \/>\nThen the second-last criteria is understanding the target tenant and the demographic in the area and making sure that you\u2019re happy and comfortable with that demographic. And then the final one is taking into account any other property that you have in your portfolio and trying to be a little bit diverse with your decisions so that you\u2019re not planting all of your eggs in one basket.<br \/>\n<strong>Kevin:<\/strong>\u00a0 Is it a mistake for buyers, particularly when they\u2019re working with a buyer\u2019s agent, to become too defined in the type of property they\u2019re looking for? The first couple of standards you gave us there were all about the marketplace, its performance, and the finance. So, if you went armed with those two steps and then worked with a buyer\u2019s agent to help you identify the type of property, Cate?<br \/>\n<strong>Cate:<\/strong>\u00a0 Yes, that\u2019s absolutely right. Once I\u2019ve defined the type of property and the areas that offer that, it does become a bit of a black-and-white approach, and a good buyer\u2019s agent will challenge a buyer that has some firm ideas in their mind that aren\u2019t linked to any financial logic.<br \/>\nFor example, if I have someone who\u2019s telling me they want to stick to a particular set of suburbs because it\u2019s close to their home and they know them, I will challenge them on that. And in a lot of cases, that could be the wrong suburb for them.<br \/>\nThe same goes for particular elements of a property that they think are appealing to them. There\u2019s no point going through something with a large garden or something with an elaborate dining area if the target tenant doesn\u2019t want to look after a garden or dines out all the time.<br \/>\n<strong>Kevin:<\/strong>\u00a0 When you take on those sort of responsibilities, those large gardens, you actually add a whole new layer of expense to your investment property, as well, Cate, don\u2019t you?<br \/>\n<strong>Cate:<\/strong>\u00a0 Absolutely. That\u2019s so true.<br \/>\n<strong>Kevin:<\/strong>\u00a0 I guess it could be highlighted, if you were to go into a marketplace, say near a university as an example, the style of property that\u2019s going to appeal to a university student is not one that\u2019s going to appeal to a family.<br \/>\n<strong>Cate:<\/strong>\u00a0 Absolutely, and you also have to recognize when you\u2019re going to areas where the families are the dominant tenant type, because if you\u2019re an area that\u2019s just young professionals or couples, then you need to reflect that.<br \/>\n<strong>Kevin:<\/strong>\u00a0 Yes, wonderful stuff. Cate Bakos always makes a lot of sense, a buyer\u2019s agent from Melbourne. Her website is CateBakos.com.au.<br \/>\nThanks for your time, Cate.<br \/>\n<strong>Cate:<\/strong>\u00a0 Thank you, Kevin.<\/p>\n<h2><\/h2>\n<h2>No cash &#8211; no problem! &#8211;\u00a0Nhan Nguyen<\/h2>\n<p><strong>Kevin:<\/strong>\u00a0 So, you\u2019d like to get into property, but the problem is you don\u2019t have the money to do it. Well, how do you go about doing that? There could be an answer for you. Nhan Nguyen from AdvancedPropertyStrategies.com has spoken to us on a number of occasions about getting into the market, how you get in, what are the opportunities?<br \/>\nNhan, I know you\u2019ve done a number of seminars and you\u2019ve trained a lot of people all around Australia about getting into the market when they have a shortfall of cash. Hello, and welcome to the show.<br \/>\n<strong>Nhan:<\/strong>\u00a0 Thanks, Kevin. Thanks for having me.<br \/>\n<strong>Kevin:<\/strong>\u00a0 Now, tell me about some of these strategies. How can we do it?<br \/>\n<strong>Nhan:<\/strong>\u00a0 When I started out, I bought my first property and I ran out of money, so I had to figure out a strategy on how to buy more property. This was back in the early 2000s. I had $4000 saved, I maxed out my credit card, and bought a property for under $100,000 when you could do that in early 2000. And the strategies I came up with, there were two actually.<br \/>\nOne was the typical joint venture strategy. I like to call this the money partner strategy. You basically find someone to put up all the cash and all the funding. So, you might find a deal. Let\u2019s say you\u2019re out there, you\u2019re talking about agents, doing market research, going to open homes, putting in offers, and you may not have enough cash or enough borrowing to do a project. This is one way you can do it. You find a money partner who funds everything.<br \/>\nOne of my first money partners was a guy named Simon. He worked for an airline, and he earned about $65,000 a year. Back in 2000, that was a substantial amount, and he could borrow significantly. Another partner I had for the last few years was a guy named Dr. Lee. He\u2019s a cosmetic doctor, owns medical centers, has substantial income, substantial serviceability, substantial cash, and he funded approximately $2 million of my projects back in the early 2000s. That\u2019s really one way you can do it.<br \/>\nAnother way you can do it, and this really depends on if you can borrow or not. I call this getting the cash partner only whereby if you can borrow\u2026 Let\u2019s say a property is $500,000, you can borrow $400,000 from the bank. You have that serviceability, you have that capability, but you may not have all the cash.<br \/>\nSo, the other opportunity is to find a partner who just tips in the cash for, let\u2019s say, the deposit, stamp duty if you\u2019re doing a development, if you\u2019re doing a renovation, those particular costs. Effectively, the bank is putting up 80% of the purchase price, the investor puts up the balance of the purchase price, and the investor puts up the rest of the required funds as well.<br \/>\n<strong>Kevin:<\/strong>\u00a0 I imagine with all of these things, you have fairly solid agreements that you go into with these people. Because it\u2019s a joint venture, it could quite easily go wrong, Nhan.<br \/>\n<strong>Nhan:<\/strong>\u00a0 Yes, absolutely. Look, I\u2019m giving you just the broad strokes and the bigger picture, that 30-second summary of how you can do it. There are many sophisticated instruments you can use, whether it\u2019s unit trusts, joint venture agreements, shareholders agreements. And I do suggest definitely talk to your accountant, definitely talk to your solicitors and finance brokers, actually.<br \/>\nThose three key parties are very, very important just because each has their own requirements, and there is an overlap. Sometimes the advice you get from your accountant might conflict or not address some of the issues that are required by your finance broker.<br \/>\nSo, definitely talk to some professionals about that, but that\u2019s just a concept on how to do that. I know it\u2019s very easy, especially in this APRA environment, you can run out of deposit very quickly. After two or three loans, you can run out of servicing very quickly. You have to prepare yourself for the future, especially if you want to ongoingly do deals.<br \/>\n<strong>Kevin:<\/strong>\u00a0 That first strategy you mentioned to us in this chat where you obviously had the expertise and you wanted to find people who were probably too busy to do it themselves but wanted to get involved in it, that\u2019s a matter of what you bring to the table and what they bring to the table, isn\u2019t it?<br \/>\n<strong>Nhan:<\/strong>\u00a0 Yes, absolutely. For some of you, you might be starting out and you might think \u201cGee, I don\u2019t have much skill or much knowledge,\u201d but what you do have is you may have time. You may have to be able to fulfill on doing market research for a particular investor, and the investor may not have the time or the interest or the geographical location. He or she might be close to town. He or she might want to be looking at a property out of town in a particular suburb, in a particular zoning, with a particular development opportunity or development factor.<br \/>\nSo, you really want to talk to other potential time-poor, cash-rich with a lot of disposable income so that you can create opportunities for yourself, as well.<br \/>\n<strong>Kevin:<\/strong>\u00a0 There are always opportunities out there, that\u2019s for sure, just if you need to go looking for them.<br \/>\nNhan Nguyen has been my guest. Nhan is from AdvancedPropertyStrategies.com and a very clever man. Nhan, thanks very much for your time.<br \/>\n<strong>Nhan:<\/strong>\u00a0 Thanks, Kevin. I really appreciate it.<\/p>\n<h2><\/h2>\n<h2>Women power in property &#8211;\u00a0Vanessa Jones<\/h2>\n<p><strong>Kevin:<\/strong>\u00a0 When it comes to property, men have a higher tendency to gamble and are more easily manipulated while women are usually extra cautious, seeking low-risk, long-term sustainable capital growth. They are not my words \u2013 I\u2019m a male; I guess I agree with that \u2013 but that\u2019s according to Risk-Wise Property Review. Vanessa Jones from Risk-Wise joins me.<br \/>\nYou\u2019re a woman; you\u2019d have to agree with that, Vanessa, wouldn\u2019t you?<br \/>\n<strong>Vanessa:<\/strong>\u00a0 As a woman, I can absolutely say yes.<br \/>\n<strong>Kevin:<\/strong>\u00a0 Yes, good on you.<br \/>\n<strong>Vanessa:<\/strong>\u00a0 Research has shown that men have a significantly higher tendency to gamble and they\u2019re more easily manipulated by marketing ploys. This is also the case with property; it\u2019s no exception. Risk-Wise Property Review has found that property marketers often use enticements by appealing to men\u2019s visual senses.<br \/>\nI\u2019m not sure if many people know this, but there is a common practice of female models being hired to stand at professional salespeople\u2019s booths at property expos. And this actually increases traffic to the booths by about 50% to 100%.<br \/>\n<strong>Kevin:<\/strong>\u00a0 Wow.<br \/>\n<strong>Vanessa:<\/strong>\u00a0 Yes, it\u2019s a lot. With a similar increase in the rate of high quality sales leads, so they convert them, which is really interesting. Examples of such transactions are units and high-rise buildings in Brisbane, for example, that carry a high level of risk and deliver poor and often negative capital growth.<br \/>\n<strong>Kevin:<\/strong>\u00a0 And they use women to sell those. I guess the men are sort of attracted to the attractive women there and they want to impress maybe. I don\u2019t know.<br \/>\n<strong>Vanessa:<\/strong>\u00a0 I think they\u2019re attracted to a pretty face, and they\u2019ve actually found that when the models go away from the booth, that in some cases, the traffic to those booths drops by 100%.<br \/>\n<strong>Kevin:<\/strong>\u00a0 Wow, how shallow are males, hey?<br \/>\nVanessa, how would you characterize women as property investors?<br \/>\n<strong>Vanessa:<\/strong>\u00a0 Women are usually very cautious. They\u2019re seeking low-risk and long-term sustainable capital growth, and there is also a rising trend of young women taking control of their financial futures through real estate. They are much more aware of the risks, and they seek tools to manage them. For example, 58% of our website traffic is generated by women, and the age group of them is usually between 25 to 44.<br \/>\n<strong>Kevin:<\/strong>\u00a0 I know this is a general question, but do you think that women are more suspicious because of the way maybe they\u2019ve been treated by male advisors, agents, and the like?<br \/>\n<strong>Vanessa:<\/strong>\u00a0 I don\u2019t necessarily think so. I don\u2019t think that\u2019s the case. I do think men are just more over-confident and they have a higher tendency to gamble. They\u2019re more likely to look at high-risk ventures, and that, of course, can have devastating consequences.<br \/>\nWhereas women are more likely to look for risk-mitigation strategies, in fact, 38% higher than men. I think probably because they\u2019re moms and they have families, they\u2019re not willing to put all of that at risk. They\u2019re more concerned about gambling on things like the property market.<br \/>\n<strong>Kevin:<\/strong>\u00a0 Yes, it gets back \u2013 doesn\u2019t it \u2013 to that attitude we talked about right at the start about men being more gamblers and more attraction to the get-rich-quick schemes. I guess the bottom line here, does that mean that women are better property investors than men?<br \/>\n<strong>Vanessa:<\/strong>\u00a0 Well, I could be biased, but I would say yes, in general, obviously. I can\u2019t generalize too much, but yes, property investment like any other investment is about effectively undertaking risk management. An investor who invests in low-risk properties that deliver solid returns is obviously a better investor.<br \/>\n<strong>Kevin:<\/strong>\u00a0 Yes, because you can\u2019t beat the double whammy, can you? A good husband and wife combination, with each of them having some input into what the final decision is going to be, makes it a pretty powerful combination, really.<br \/>\n<strong>Vanessa:<\/strong>\u00a0 Yes, hopefully. You would think men would think with their heads and women would think with their hearts, but I think when it comes to property investment, perhaps it\u2019s the other way around. The combination of the two is obviously going to be the better outcome, but we just stress that research is essential.<br \/>\n<strong>Kevin:<\/strong>\u00a0 Indeed. Off topic just for a moment, but in real estate, it\u2019s fairly common that women are the ones who will decide on the agent and the male is the one who will decide on the method of marketing, and mainly because women are a little bit more intuitive. They pick up on the signals given out by agents.<br \/>\n<strong>Vanessa:<\/strong>\u00a0 I would agree with that. Yes, absolutely. I think men don\u2019t dig beneath the surface sometimes. It sounds terribly sexist, doesn\u2019t it?<br \/>\n<strong>Kevin:<\/strong>\u00a0 You know, the interesting thing is my wife, Carol, and I have talked about this on a number of occasions. I\u2019ll go ahead and have coffee with someone, and then I\u2019ll come home and Carol will ask me a question about the person or the family that I didn\u2019t even think to ask. I think women just ask more questions related to the person whereas me, as a male, I just really want to know what the bottom line is. And \u201cHow you\u2019re going?\u201d If they answer me with a whole lot of problems, I probably really don\u2019t want to know.<br \/>\n<strong>Vanessa:<\/strong>\u00a0 Yes, for sure. I might say my husband actually thinks I\u2019m nosey, so I do ask a lot of questions. And perhaps that goes the other way into delving into doing your research and getting as much information as you possibly can before you sign that contract.<br \/>\n<strong>Kevin:<\/strong>\u00a0 Bottom line here is I guess if men want to become better investors, maybe they have to get a bit more in touch with their feminine side, so we\u2019ll leave it at that.<br \/>\n<strong>Vanessa:<\/strong>\u00a0 All right. Thanks, Kevin.<br \/>\n<strong>Kevin:<\/strong>\u00a0 Good on you, Vanessa. Great talking to you. Vanessa Jones, my guest there from Risk-Wise.<br \/>\n&nbsp;<\/p>\n<h2>What will happen to property prices at the end of the boom? &#8211; John Lindeman<\/h2>\n<p><strong>Kevin:<\/strong>\u00a0 A lot of talk around right now \u2013 isn\u2019t it? \u2013 about the boom ending. The good times may be over. The Sydney market is starting to slow a little bit. Indicators are that Melbourne might do the same thing. Have you ever wondered, as I have, what happens when this does come to an end? What\u2019s the end result?<br \/>\nJohn Lindeman from Property Power Partners has been doing a bit of research on this and came up with some interesting figures, which he\u2019s going to share with us now.<br \/>\nGood morning, John, and thanks for your time.<br \/>\n<strong>John:<\/strong>\u00a0 Good morning, Kevin, and hello, everybody.<br \/>\n<strong>Kevin:<\/strong>\u00a0 John, tell us what happens when these great times, specifically Sydney and Melbourne, will come to an end?<br \/>\n<strong>John:<\/strong>\u00a0 It depends to a large degree on the nature of the demand when you look at who\u2019s been buying properties and where the demand for accommodation is coming from. So, what I did is I looked at every capital city and the number of rental properties and the demand for them, because what I\u2019ve realized is that even though most of the people who make housing market predictions are looking at the buyer and seller market, and they tend to ignore the rental market, it\u2019s actually really quite important because renters move a lot more frequently than owner-occupiers \u2013 on average, according to the Bureau of Statistics, about every four years.<br \/>\nIt means that even though they\u2019re only one-third of the total, because they move so much more frequently, it means that two-thirds of all the households moving every year are actually renters, and as listeners would know, most units are occupied by renters and owned by investors.<br \/>\nWhen you look at what\u2019s happened, say, in Perth and Brisbane to some extent, where there have been low house prices, a lot of aspiring first-home buyers have moved out of rental accommodation and bought properties, and so what that\u2019s meant is that the demand for rental units, particularly in Perth, has just collapsed. And it\u2019s also a place where I suggest not the best form of investment right now would be a unit in Brisbane. So that\u2019s increasing the demand for houses to buy.<br \/>\nBut when we look at Sydney and Melbourne, it\u2019s a totally different dynamic. You see, Melbourne\u2019s intake of overseas arrivals is about 85,000 people a year, and nearly all of these are renters, and they have to rent for a number of years before they can buy properties. I looked at Sydney and three-quarters of the city\u2019s annual population growth, which is 90,000 people, are overseas arrivals. And all of these people have to rent.<br \/>\nSo, what I can see in Sydney and Melbourne, in particular, even though prices will stabilize and stop going up, we can see massive asking rent rises over the next few years, and that will probably lead, once again, to more investor interest. But at this stage, I can see that Sydney and Melbourne are likely to become the cash flow capitals of Australia in the next few years.<br \/>\n<strong>Kevin:<\/strong>\u00a0 Great opportunities here for investors \u2013 isn\u2019t there \u2013 to switch from capital growth to a good rental return with that demand, John.<br \/>\n<strong>John:<\/strong>\u00a0 I think that\u2019s what these numbers are telling us, that it\u2019s going to be cash flow rather than capital growth. Whereas in the other cities, if you\u2019re after capital growth, then you\u2019ll be looking at cities like Brisbane, Adelaide, and Perth, all of which have been lagging behind and have got a lot of catching up to do as far as price growth goes.<br \/>\n<strong>Kevin:<\/strong>\u00a0 John, just before I let you go, the event coming up in Melbourne on the 27<sup>th<\/sup>, just a matter of days away. The event in Brisbane, and the event in Sydney, both sold out, great success, so we look forward to Melbourne.<br \/>\nIf you want to get details on how you can meet John and get a good feel about what\u2019s happening in the Australian property market in Melbourne on the 27<sup>th<\/sup> of February, go to the website 7Steps2Success.com.au.<br \/>\nThey\u2019ve been great successes, John, and no wonder because a lot of people are really interested in what\u2019s happening with the Australian property market right now, too.<br \/>\n<strong>John:<\/strong>\u00a0 Yes, they are. I think the wonderful thing about property investment is there\u2019s always opportunities somewhere, and as I said, if you can\u2019t get capital growth, you can certainly see the cash flow increase. There are always opportunities; it\u2019s a matter of being well-informed.<br \/>\n<strong>Kevin:<\/strong>\u00a0 That\u2019s coming up on the 27<sup>th<\/sup> of February in Melbourne. Don\u2019t miss it. The website again, 7Steps2Success.com.au, with John Lindeman from Property Power Partners.<br \/>\nJohn, thanks again for your time. We\u2019ll talk soon, mate.<br \/>\n<strong>John:<\/strong>\u00a0 Thank you very much, Kevin, and I look to seeing your listeners at the event.<br \/>\n&nbsp;<\/p>\n<h2>How agents set values &#8211;\u00a0Chris Blakeley<\/h2>\n<p><strong>Kevin:<\/strong>\u00a0 My guest is Chris Blakeley. Chris is the regional manager for Raine &amp; Horne.<br \/>\nTell me, how do agents go about setting a value on a property, because that\u2019s the one thing that someone wants to know when they call an agent up, what my place is worth?<br \/>\n<strong>Chris:<\/strong>\u00a0 And I think it\u2019s important just to note before we go into that that agents aren\u2019t registered valuers. What an agent does is we look at the comparable sales for the area, so we try to find a home that\u2019s very similar to yours with fixtures and fittings, block size, bedrooms, bath, car, and we try and compare that to yours. But then we also try and predict what\u2019s happening in the market in the future for the next three months, what\u2019s going to be happening with the buyers.<br \/>\nSo, quite often, we will have an optimistic view about what\u2019s going on compared to the valuer who\u2019s just looking purely at historical data.<br \/>\n<strong>Kevin:<\/strong>\u00a0 One of the things that most agents\u2026 Well, I\u2019ll talk personally now. One of the things that really scared me was going to do an appraisal and that expectation of the owner wanting to know the price. It almost becomes like a competition, because my experience is that most sellers want more than their house is worth. Everyone has an over-inflated opinion of value. They have a right to expect that, but they judge the agent based on the price they give.<br \/>\n<strong>Chris:<\/strong>\u00a0 And I think it\u2019s at that point that you go back to the agent and test their knowledge and get them to justify why they\u2019ve come up with that price. If they have the facts and figures there, I guess you cannot argue with that.<br \/>\n<strong>Kevin:<\/strong>\u00a0 It\u2019s difficult to change a seller\u2019s mind, though, if they have an over-inflated opinion of value. The value of the property is not the only reason you should appoint an agent.<br \/>\n<strong>Chris:<\/strong>\u00a0 No, definitely not. It has to be the skills. It has to be the plan of attack that they have around the property of how they\u2019re going to market it to find the best buyer for your home. Price is just a small part of it. At the end of the day, it\u2019s not the agent that\u2019s buying. You\u2019re not buying it. It\u2019s the buyer who\u2019s out there.<br \/>\n<strong>Kevin:<\/strong>\u00a0 Let\u2019s talk about auction and marketing for a moment. With the Internet nowadays, most agents, most smart agents who have a fairly good database, they collect lots of data on buyers, people they meet who come to open homes and so on, is it reasonable to expect that an agent may do a little bit of soft marketing before spending any money? That is going to the database and saying \u201cWell, let\u2019s just see if I can find a buyer for you?\u201d<br \/>\n<strong>Chris:<\/strong>\u00a0 I think it\u2019s really important to do that before you hit the market full noise. You invite that database of buyers in for maybe a VIP inspection prior to the open market coming to it. But a good agent will hold anyone who\u2019s interested in that little group of buyers over until it is released, and that\u2019s just to create that competition. We all know that competition drives price. Let\u2019s get those people through, get the interested ones, and then take it to the first open home and then put them in competition with the rest of the public.<br \/>\n<strong>Kevin:<\/strong>\u00a0 Is it a misconception to think that the agents who get the most marketing \u2013 these are the ones who are most dominant, in either the Internet or on press \u2013 are the ones who sell the most properties?<br \/>\n<strong>Chris:<\/strong>\u00a0 Nine times out of ten, they probably are selling the most property because they\u2019re meeting the most amount of buyers out there and getting them through your property. I guess they\u2019re just covering all bases to make sure that they know they have you the best price possible.<br \/>\n<strong>Kevin:<\/strong>\u00a0 So, shouldn\u2019t the agent be paying for the marketing?<br \/>\n<strong>Chris:<\/strong>\u00a0 Well, it\u2019s like when you go to the mechanic, I guess. Do you ask them to pay for all the tools and oil and everything to service your car? All the agent is doing is asking you to give them the tools to do their job properly.<br \/>\n<strong>Kevin:<\/strong>\u00a0 How much should someone spend on marketing their property?<br \/>\n<strong>Chris:<\/strong>\u00a0 There\u2019s no hard and fast rule. I guess it comes down to your situation, and I think the agent needs to acknowledge your situation, too, So, if you are very budget-conscious and they need to work with what you can give them, they should know every tool available to them in the market to make sure that they can hit as many people as possible.<br \/>\n<strong>Kevin:<\/strong>\u00a0 Is it reasonable for a seller to want to take the cost of the advertising out of the sale proceeds when it\u2019s settled?<br \/>\n<strong>Chris:<\/strong>\u00a0 The commission and the marketing are two different things. The commission is a service fee. You are paying the agent for the work that they\u2019ve done. The marketing is the tool. So, I think you have to keep those two things separate.<br \/>\n<strong>Kevin:<\/strong>\u00a0 There\u2019s been a lot of criticism of open homes. Neil Jenman, as an example, has come out and said you shouldn\u2019t do open homes on your property because it\u2019s a major security risk. Is it a security risk? And if it is, how can someone protect themselves?<br \/>\n<strong>Chris:<\/strong>\u00a0 It\u2019s always important to make sure you do remove all your valuables from the property before you have an open home. But I don\u2019t believe it is a security risk. Agents these days are asking for your name, e-mail address, phone number before you\u2019re allowed to enter an open home. It\u2019s purely a security thing. If anything does happen during that open home or afterwards and the police need to be notified, we can say \u201cThese are the people who attended the property.\u201d<br \/>\n<strong>Kevin:<\/strong>\u00a0 I think most people are reluctant to give all that information for fear that the agent is going to follow them up, but really, there\u2019s nothing wrong with that; that is the agent\u2019s job.<br \/>\n<strong>Chris:<\/strong>\u00a0 That is the agent\u2019s job, and most of those buyers are going to be sellers one day and they\u2019ll want to know that the agent is going to do their job.<br \/>\n<strong>Kevin:<\/strong>\u00a0 That\u2019s a good point you make, because that\u2019s actually how you can pick a good agent as one who follows you up well as a buyer.<br \/>\n<strong>Chris:<\/strong>\u00a0 Absolutely. I would expect a good agent would have at least touched base with that buyer that afternoon and probably again early that week just to gauge their interest. And it\u2019s just because they\u2019re doing their job. They want to give that feedback to the seller and say \u201cThis is what the marketplace thinks of your home.\u201d<br \/>\n<strong>Kevin:<\/strong>\u00a0 As an industry, we know that all agents should follow-up. You should follow-up every buyer that you do. But you only have to go to an open house, as I do, from time to time. I don\u2019t necessarily do it to test people out. I generally want to know what\u2019s happening in the market. But it is surprising how many agents don\u2019t follow you up.<br \/>\n<strong>Chris:<\/strong>\u00a0 It\u2019s appalling.<br \/>\n<strong>Kevin:<\/strong>\u00a0 Why is that, if we know, as agents, that\u2019s that is how we build a database?<br \/>\n<strong>Chris:<\/strong>\u00a0 I always say if you going out to select an agent, you secret shop them first, anyway. You go to their open homes and if they\u2019re not following you up, they shouldn\u2019t be on the shopping list.<br \/>\n<strong>Kevin:<\/strong>\u00a0 That\u2019s a very good way to pick an agent.<br \/>\n<strong>Chris:<\/strong>\u00a0 Absolutely. That\u2019s the first step that I would do when I was picking an agent.<br \/>\nAs an industry, I think we need to acknowledge that this is what people are expecting these days. They\u2019re expecting the follow-up. They want to know what\u2019s going on with their homes once it\u2019s listed. We really need to get better at that. We need to be doing our weekly reports and saying \u201cThis is the activity that I\u2019ve done, this is what it\u2019s created, and this is the feedback from it.\u201d<br \/>\n<strong>Kevin:<\/strong>\u00a0 Yes. There you go. Great advice and if you\u2019re looking to employ an agent, make sure that you secret shop them. The best way to do it is to go and check out a few of their open homes, maybe even go to a couple of their auctions and see how they perform at the auction, as well. Lots of things you can do, but don\u2019t just judge it purely on the price they give you or how you perceive them to be in terms of their own marketing in the area. Test them out.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Highlights from this week: How to look at your investment as a business How to get into property with little or no cash Do women make better property investment decisions? What will happen to property after the boom? How do real estate agents set values?&#8230;<\/p>\n","protected":false},"author":176692471,"featured_media":20402,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,11,13,24],"tags":[101],"class_list":["post-20401","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-shows","tag-podcast"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Leave emotion at the door + The question most agents dread + What happens when a boom ends? - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/leave-emotion-at-the-door-the-question-most-agents-dread-what-happens-when-a-boom-ends\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Leave emotion at the door + The question most agents dread + What happens when a boom ends? - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"Highlights from this week: How to look at your investment as a business How to get into property with little or no cash Do women make better property investment decisions? 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