Patrick Bright has some thoughts on how tough it really is for first time buyers and he has some hard advice.
Kevin: Patrick Bright joins me. Patrick is an author and also a buyer’s agent with EPS Property Search. I want to talk to Patrick about first-home buyers, because there is a lot of complaining in the market at present about just how unaffordable it is for them. I want to find out if that’s for real. I want to get his take on it, and also he has some great advice, too, on how you can become a property owner as a first-time buyer. He joins me.
Good day, Patrick, how are you going?
Patrick: Good morning, Kevin.
Kevin: Good to be talking to you again, mate. Thank you very much. Patrick, as I said, is from EPS Property Search. Patrick, do you very often have to help first-time buyers get into a property?
Patrick: Yes, these are part of the client base that we help. It’s not the biggest chunk. You have to understand first-home buyers really only represent about 10% to 15% of the marketplace at any time, anyway, and that floats up a little bit. Obviously it fluctuates at different times when governments put incentives on the table, and then when things are taken away, obviously, that drops a little bit.
Kevin: I sometimes wonder, buying a property is a big decision, it’s a big commitment. The fears around that for first-time buyers, what are they and how real are they, Patrick?
Patrick: Well, first off, they’re nervous. The number one thing, like anybody, and definitely first-time buyers as well, is buying something and overpaying. That’s a big concern; people don’t want to overpay.
Kevin: Is that their biggest concern?
Patrick: I find that. A lot of people come to me saying, “I don’t want to overpay, I don’t know how much to pay.” Particularly, dealing with auctions, there’s no price guidance or limited pricing information around that, so that frustrates people a lot. They just don’t know where to start. They’re fearful of being out-negotiated, and they should be, because they’re going to be. You’re not going to beat a seasoned professional.
Kevin: Overpaying being the biggest one, what can they do to overcome that? Obviously do some research, but where do they go to do that, Patrick?
Patrick: Basically, shoe leather is what you have to work through, which is exactly what a buyer’s agent does. Just do what we do. You have to go and inspect properties. You have to be educated – as you said, research. Inform yourself about the market. You can’t just rely on data reports. For instance, you can’t just go and buy one for $50 off the Net or get one handed to you and go, “Oh yeah, that works.”
Kevin: Well, you can, but just how reliable are they?
Patrick: Well, that’s the thing. You can get that – you’re right – but they’re limited. They’re “name, rank, serial number.” Those reports don’t tell you the size of the block, or if it’s a house, for instance, they don’t tell you if the house is at the front or the back of the block. They’ll tell you the size, but they don’t know the shape of the block.
Is it slopey? Does it have an outlook? Is it private in the backyard. What’s the floor plan like? Okay, it’s four-bed, two-bath, but is it renovated, partly unrenovated, fully renovated? The room sizes, what are they like? What’s the floor plan? Does it flow? Can you fix it?
These things aren’t available on those reports, so you have to be physically out there, looking at these properties, and understanding… In the same street, we see properties that are four-bed, two-bath in the same street with a 30% difference in value – because the different side of the street, different aspect, different natural light coming in, different shape of the block, different view and privacy. All these things factor in a little bit, but it adds up to a lot.
Kevin: One of the things that worries me a lot is, one of the major banks currently advertising an app that they have that purports that you can simply go in and just hold it up in front of the real estate agent and get an accurate price indication about a property. Now, I sometimes worry about those, for the very reasons you’ve just outlined there – that it’s a lot more complex than just having an app that just pumps up a figure.
Patrick: Completely. Everybody, they’re just meat. They’re just meeting the need that people out there who want to know everything instantly, everything, and information.
Kevin: But they’re not accurate. That’s the thing that worries me.
Patrick: They’re not accurate at all. It’s not accurate at all. There has even been plenty of research. Look at this: you get three or four sales agents coming in to assess your home, and they’ll be 20% apart – and they’ve looked at it.
Kevin: Yes, but you get valuers in, the same thing will happen.
Patrick: Oh, plenty of times. I’ve had valuers come in on a property… I actually to refinanced a couple of my properties recently, and I had a valuation on it, and I thought, “That’s a big light. That’s a bit mean on the valuation. I know the market.” So, I went back to the bank, and said, “Look, I want a new valuer to come out from a different firm.” He came out and there was a 10% uplift variance in that valuation. And I went with the higher valuation; I was allowed to, which you are. And that was fair. I just thought the guy was being 10% light when he valued it, and I asked for another one.
These professionals are doing it day in and day out. So, at the very least, at the very least, you have to be out there looking at dozens and dozens of properties, over weeks. You can see, easily, a dozen on a Saturday. If you commit to two months, eight weeks, not a long time, you’ll get through the best part of a hundred properties. You’ll be as informed as anybody about the value of the type and style of property that you’re looking to buy. And this goes for not just first-time buyers, for everybody.
Kevin: For everyone, yes.
Patrick: And, particularly if you’re buying in a suburb or an area that you’ve never lived in before because you’ll discover things about it. Go on and have dinner there, go on and eat at the cafés there.
Another thing I say to people is “What’ the traffic like?” if it’s in an area where there’s a bit of traffic. Particularly in Sydney, we have to factor that in. What I’ve said to people is if you’re not sure about an area, you need to drive there for a week, in the morning, as if you would be leaving for work, and do that route to work to know it. Or do the public transport. Do that, and even going home.
If a property doesn’t have parking on it, like you just mentioned before, that’s a huge negative – no parking – and I understand why that’s on the top of the list. People go, “Oh, it’s okay.” because we have three-bed, two-bath, terraces in Paddington that sell for $3 million, $4 million with no parking. So if people say parking is not an issue, I say, “Go and park there when you would normally be trying to parking of an evening coming home, and see how happy you are.”
Kevin: Mate, we’re out of time, Patrick. Got to go, but, thank you very much, mate. Good talking to you.
Patrick: Pleasure, as always.