The Elephant in the Room Property Podcast | Australian real estate
The Elephant In The Room Property Podcast with Veronica Morgan & Chris Bates

Episodes

Epidode 64 | Inside intel on what’s happening in Sydney’s blue chip suburbs | Peter Gordon, Cobden & Hayson

IMG_0321 (1).JPG

Why “A” grade properties continue to sell despite market conditions

We pick the brains of Peter Gordon, one of Balmain’s most active sales agents, ranked in the top 100 agents nationally for the last four years. Peter has been with Cobden & Hayson since it launched in 2005, and has experienced both hot and cold market conditions over the years.

Here’s a snapshot of what we discussed:

  • Why “A” grade properties continue to sell well in Blue Chip suburbs, despite market conditions.

  • Why letting a sales agent bid for you at auction is likely to cost you a lot more.

  • What things buyers are getting picky on now vs in a ‘hot’ market.

  • What happens to a property when an agent ‘buys’ a listing.

  • How elite agents operate & earn the trust of vendors.

WEBSITE LINKS:

Cobden & Hayson Balmain

Peter Gordon - CHRE

Work with Veronica? info@gooddeeds.com.au

Work with Chris? hello@wealthful.com.au

INTERVIEW TRANSCRIPT:

Veronica Morgan: You're listening to The Elephant in the Room Property Podcast, where the big things that never get talked about, actually get talked about. I'm Veronica Morgan, real estate agent, buyer's agent, and cohost of Location, Location, Location, Australia.

Chris Bates: I'm Chris Bates, financial planner, mortgage broker, and wealth coach.

Veronica Morgan: And together, we're going to uncover who is really making the decisions when you buy a property.

Chris Bates: Veronica will introduce our guest in a moment, and I can tell you, you'll want to listen on to hear what one of Sydney's top agents has to say about the whole real estate process, where agents can go wrong with helping buyers. The problems with commissions and agents over-promising listing. It's one episode, where we go into the conflict that some agents have when giving advice.

Peter Gordon: It's embarrassing for them, but it's great for us. Because quite often what'll happen is there will be a real buyer in the room, and the real buyer won't recognize the alpha male puffing his chest up, and what have you. They'll come up to us and say, listen, I think that guy is going to make an offer, isn't he? And you'll say, that's what he said. Quite often, he'll create some urgency around a sale with some real buyers, but it's just being a peacock.

Chris Bates: Please stick around for this week's Elephant Rider bootcamp, and we have a cracking Dumbo of the week coming up.

Chris Bates: Before we get started, everything we talk about on this podcast is general in nature and should never be considered to be personal financial advice. If you are looking to get advice, please seek the help of a licensed financial advisor or buyer's agent. They will tailor and document their advice to your personal circumstances. Now, let's get cracking.

Veronica Morgan: In this episode, we pick the brains of Peter Gordon, who has been one of the Balmain area's most active sales agents for the past 10 or so years, and ranked in the top 100 agents nationally for the last four years. Peter has been with Cobden & Hayson since it launched in 2005, and originally started his career in the middle of a boom in 2001. He's experienced both hot and cold market conditions over the years.

Veronica Morgan: In this interview, we'd love to get some on-the-ground intel into what's happening in blue chip Sydney suburbs at the moment, as well as discussing a bit of a bug bear of mine, why sales agents are increasingly offering to advise buyers on other agents' listings.

Veronica Morgan: Now, thanks for joining us, Peter, and for being brave enough to tackle this elephant.

Chris Bates: Hi, Peter. How are you doing?

Peter Gordon: Yeah. Look, guys. I'm going great. Thank you. Thanks very much for inviting me to be part of your show, and I've listened to plenty of episodes, it's really great stuff, and yeah.

Chris Bates: Thanks, Peter. We're glad you're here.

Chris Bates: I guess, we are noticing it a bit, right? Real estate agents are starting to help buyers, more and more, because there's only so many buyers on the ground, and they've got properties they want to sell. And sometimes, when the buyer is thinking, actually I don't mind that one on Smith Street, what do you think about that? How does a real estate agent play their role there, I guess, to be a trusted advisor, but also maybe step over the mark a little bit?

Peter Gordon: Yeah. It's definitely something that we've seen as a trend in the last five years or so in our area, working in the west of Sydney in Balmain. It's very much a blue chip area. Our average sale price is close to $2 million. It's an area that traditionally has been very competitive it's also an area, where there's a lot of agents, and there's a lot of really hungry agents out there, trying to compete for business. There's only a very finite amount of business, obviously.

Peter Gordon: When I started 10 years ago, the C&H phone would ring to go through to reception, "Hey, there's someone who wants to talk about selling a house," but the directors would delegate it to a sales agent. They'd go out and talk to them. That just doesn't happen anymore. It's all about the agents now heading off the lead really early in the piece.

Peter Gordon: Generally, you need to find the potential sellers. A lot of that happens through buyer work. If we're meeting buyers that are out there at open homes, chances are that there is someone who has got a property to sell, and then it becomes a way of trying to make sure that you're on their list of agents that they'll talk to when they get a seller-owned property.

Peter Gordon: A big part of that is then try to ingratiate yourself with a client and offer services above and beyond, or before they need the selling agent service.

Chris Bates: But are you as an agent, really are you kinda act- Because you're there as a selling agent. But then, buyers are coming through the doors. You're kind of helping them with their decisions. Are you now kind of stepping into kind of buyers' agent now a little bit, kinda helping guide them to a better decision? Even if they don't want to buy one of your properties, would they want to buy one of your competitors'?

Peter Gordon: Yeah. I think there really is a fine line. I think as agents, we are to be very careful. Obviously, we're perceived to be experts by the general public. As selling agents, our expertise really isn't selling though, and it's not in helping people buy properties.

Peter Gordon: We can obviously have an informed decision about the pros and cons of a property. But when you start to advise people strategically on how to go about buying a property or potentially bidding or getting yourselves involved in the offer process on behalf of a buyer, I think that's a really rocky road. I think the skillset between a selling agent and a buying agent are very different. They probably should be kept that way.

Chris Bates: Yeah. There's one argument that if you, in a negotiation, you're using all your tactics to negotiate on how to push the price up, you should be able to reverse engineer that and reuse those tactics to bring the price down, but I don't believe it works that way, does it?

Peter Gordon: No. That's right. I think Veronica has always said that they look at things critically, whereas we look at things in a different light. We're always looking for the good, and they're trying to add value and increase the value of a property. Whereas, a buyer's agent will look at a property much more critically and analytically, and provide a different point to a prospective buyer.

Chris Bates: Do you think that as an agent, every property is a good property, or do you think that when you sometimes get a listing, where it's not a good property, that you don't want to take it on?

Peter Gordon: No, I love the challenge of selling a property that is not a great property. Every property is a good property at a price. And in a booming market, any property will sell. But in a current market, what we're seeing is your A grade properties are still selling really well, but it's the B and C grade properties that are really struggling, and they're the ones that need a professional selling agent to really be on their game, and to engage with the buyers, and to get deals across the line.

Veronica Morgan: That's the theme that we hear, and I've seen it myself, obviously, out there, but we've heard that exact same thing from other agents that we've been talking to, and I've seen it out there. You can go to an auction of an A grade property now, and you can still see nine. I've seen up to nine people register in the current market. And then, you go to another auction that's got nothing.

Veronica Morgan: Now, what sort of things do buyers get picky on now that they are not ... Where they're prepared to overlook in a hot market?

Peter Gordon: I think it's the old adage of location, location, location. You can have the best house in the world, but if it's on a B grade street, buyers will still they'll pass on it. Things like parking in our area, probably eight out of 10 houses don't have car parking. In a really hot market, buyers will talk themselves out of the fact that they need parking. But in a market that's probably more balanced, I'll say, no, we'll hold out for the property that does need the parking space. There might be five properties on the market. One of them has got parking, and four of them don't, then they'll all pin their ears back, and have a crack at the one with the car parking.

Chris Bates: Street parking. What's some other things that you find that buyers are really kinda getting attracted to that before, they're like it doesn't matter, I can overlook that?

Peter Gordon: I think there's in a really strong market, buyers will see properties that need renovations and opportunity to add value.

Chris Bates: Yeah.

Peter Gordon: In a market that's going the other way, that they're really cost-conscious and nervous about having to then go and spend more money on properties after the purchase price. Yeah, the properties that are really well-renovated to a really high standard with really neutral finishes that are done properly are still selling really well. But properties that are perhaps just dated throughout and what have you, that need renovations, they'll probably punish those a bit more.

Chris Bates: What have you seen around north-facing or south-facing, or near the busier roads, are you finding that those are not getting as attractive now for buyers? And they're kind saying it's not presenting, maybe I should hold out, maybe I should wait for that something that comes up that's north-facing. Is that something that you're seeing as well?

Peter Gordon: Yeah, I think it's in today's markets, it's very easy for a buyer to say no. That's what we're seeing. They can talk themselves out of a property really quickly. If it doesn't tick all the boxes, then part of that might be aspect, and part of it might be location and what have you. But yeah, it's really easy for a buyer that will have some interest, that might come and visit a property, two or three times. But whereas if the market is rising, then they'll have that fear of missing out, and they'll be pushing themselves to get in at the moment. They're almost looking for a reason not to go ahead.

Chris Bates: I think what is why this is really interesting though is because there's only so many buyers, and there's only so many houses, right? And so, basically what the buyers are doing is saying I'm actually just going to go all the way to the best property I can possibly buy, which is the absolute best quality property. What it's actually doing is it's starting to suck buyers from the outer suburbs to closer suburbs to better properties. What ends up happens is there's 100 buyers, but then they're all just going for those top properties. And everything that is not, they're not even getting a look in.

Chris Bates: I've got a client at the moment, the exact same thing. He's going to basically pick the eye out of the market. We're picking down to streets, sides of the road that he wants to be on, and he's got actually a chance and there's actually good quality properties that potentially no chance he would've got a few years ago.

Veronica Morgan: Now, that's interesting because Peter mentioned something earlier about Balmain and I know  very, very well. And in that area, it's finite geographically, and stock levels in not just in that area, but in most areas in which we buy. We buy within say 10 to 15 minutes to the CBD in Sydney, and stock levels in most of those suburbs has drastically reduced, really since 2016.

Veronica Morgan: I think 2016 was about 30% down on the previous year. On the average over the previous years, and that hasn't changed in recent years. The pie has gotten smaller in terms of the amount of properties being sold. And so then, back to what you were saying about lots of agents, and they're all fighting over smaller slices of a small pie.

Veronica Morgan: And then, buyers have got more choice because there's less of them around. There's still less stock, but per buyer, there's more stock. The quality of stock varies, doesn't it? You might get A grade properties, but you still ... I think, what I see, I always see a limitation in terms of what A grade properties are available to be bought. Would you say that was fair?

Peter Gordon: Yeah, absolutely. Yeah, and I think ...

Veronica Morgan: And even more so, now?

Peter Gordon: Yeah, and I think people, if there's something about a property that is not A grade, then they don't tend to stay there for as long as as well. If you've got an A grade property, people are generally happy to live there, and they'll stay there for longer, and they'll be less inclined to sell. Even if the market is not as strong.

Veronica Morgan: Yeah, that's a good point.

Peter Gordon: Whereas ... Yeah.

Chris Bates: Yeah. Why would you upgrade, right? You know?

Peter Gordon: That's right.

Chris Bates: Because you're already in a nice house house.

Peter Gordon: Perfect house. And even if there is a bit of a downturn in the price, and the price isn't going to be as good as it was, you're even less incentive to sell. They sit on it.

Chris Bates: Yeah.

Peter Gordon: And so, this is the real thing that protects the inner rings in quality properties because if there is any downturn in prices, A. People don't really want to move anyway because they're happy. And then, B. They don't want us to take a price that's not great. You don't get this real supply rushing to market. And then, there's always a buyer for the good property. They'll hold the value a lot better than the things that people are very quickly to sell.

Veronica Morgan: Back to when you've got other sales agents and yourself of course, you've got to provide, and I can't remember the word ... You would ingratiate yourself. You've got to ingratiate yourself with potential listers over an extended period of time, while they're out there looking and testing the waters, and all the rest of it.

Veronica Morgan: Have you found ... I guess, you've got some stories for us around where other competitive agents have actually been representing buyers on your listings?

Peter Gordon: Yeah. We've certainly sold a number of properties that I've had other agents from other competing offices bid at auctions, and that's worked really well for us because you know that agent is highly motivated to push their client that they're representing to buy. Because as soon as they buy, then they'll be selling their house, and that's the only fee that they'll be paid. They're not obtaining a fee for the buying service.

Peter Gordon: Yeah. We’re seeing that quite a lot, and we're seeing occasionally you'll just see a really big price that'll go through, and it's like, wow, I wonder what happened with that particular sale. And then, you find out that there was another agent involved, who'd introduced the buyer through a different agent, and ended up paying well over the eyes to security a property. Sometimes off-market, that type of thing. You think, what happened there? And then, sure enough, the ripple effect is another property will pop up, and it'll be the person who bought that property, selling with the person that helped them buy.

Veronica Morgan: Yeah.

Chris Bates: Yeah, that's interesting, right? I like that little line there though is when you do see a big price, or you do see something, there is actually a story behind it.

Peter Gordon: There's always a story, yeah.

Chris Bates: And you need to find out what that story is because that wasn't a rational decision. There was maybe a reason why it was inflated for some reason, and that can ... Maybe think, well yeah it sold for $2.6, but X, Y, and Z happened, and maybe it should only sell for $2.4. Otherwise, some people would look at it and go, "Well, it must be worth $2.6 because someone paid it," but maybe it isn't.

Veronica Morgan: It comes back to that idea, like you say, that people perceive ... Isn't it odd, right? Buyers, people generally perceive real estate agents to be expert. And they are to a degree, but there are experts in selling, and there are also experts in their geographical area.

Veronica Morgan: They are not experts in investment. They are not experts in the selling or the buying process, but they are experts, obviously, in the sales process. They're also no experts in what the market cycle is going to do, necessarily. They know what happens.

Veronica Morgan: I was talking to an agent the other day, and he was saying a bit of a sob story about a client that bought a property in 2016. I'm guessing paid-overs, and now they want to sell, and they're looking at roughly a 10% fall in terms of the purchase price. Sale price versus the purchase price.

Veronica Morgan: He was saying the market is tanking, it's going to be worse, next year. It's awful, it's awful, and I'm like what are you basing that on? It comes back to the recency bias, or most recently it's been awful. And so therefore, it's going to continue to be awful.

Veronica Morgan: 18 months ago, most recently it was great, and so it's going to continue to be great. The conversations that we're having with people, and I think that people have to understand when they're going and getting advice from the agent, it has to be limited to what that agent's level of expertise is. Do you want to sell right now? What are you thinking in terms of timing, and all that sort of stuff?

Veronica Morgan: At the end of the day, Peter, you've got to list it, don't you? You're not going to be able to say to them, oh yeah, wait until next year because the market is going to be doing this or that. The reality is no one knows.

Peter Gordon: That's right. I think that's ... Yeah. Obviously, we're out to list and sell property. That's what we do, and that's what feeds our kids. That's really important. But at the same time reputation is really a big thing as well, and I've talked quite a number of people out of selling in the last six months or so. And generally, my advice is that if you feel like you're going to be selling in the next couple of years, then do it now because chances are, the market is going to continue to potentially deteriorate a little bit. You've got a good quality property, and A grade property, it's not a great market to be selling in. If you're comfortable holding for five years plus, then probably wouldn't recommend going to market. Particularly now, as we're coming into Christmas, where the buyers are distracted, there's very little motivation in the market. It's not a great time to put your house to market, unless you've got a compelling reason to. We're talking people out of selling, as well as selling.

Chris Bates: Yeah, I think that's a really good point because some people, when they think about property, they go, why would you sell? It's not a great time to sell. But people's lives change, right? Their kids grow up. They want to move cities. And sometimes, they need that money to do a renovation, or whatever it is. They can't wait that five years. In that scenario there, those clients that have maybe got a good property and that will bounce back and will do well in five years' time, but they just can't afford to wait that long.

Peter Gordon: Yeah, and live goes on, and people ... Exactly that. I've got clients that are moving [inaudible] that are selling out of the Sydney market and buying in the Brisbane market at the moment and things like that, that they've got kids starting schools. We see a lot of family breakups as well. There's a lot happening behind the market, that's the reason that properties are being sold. And at the end of the day, sometimes you have to sell. You have to make the best you can in the market.

Chris Bates: Yeah.

Veronica Morgan: I think a compelling reason is important to have that conversation about what is your compelling reason. If it's purely fear  i.e. it's going to be worth less next year. Well, so what? You're still going to live in it. And if you bought an investment, then you need to be confident you bought a quality investment, and then just ride it out because that's the whole thing with the property market. It is for long term, when you're buying an investment. But if you bought a poor quality asset, then that's a different conversation to have. Or if you are bursting at the seams and it's time to upgrade, actually it could work in your favor.

Veronica Morgan: But if it's purely for fear, and this is the thing that I think a lot of agents are generating and they're building on that fear factor. It's like you've got to do it now. You've got to do it now. It's all going to fall off a cliff, next year.

Peter Gordon: We've seen that. Because in the last few weeks actually, we've seen a number of properties that have been brought on, like accelerated and brought onto market really quickly. Perhaps, haven't been as prepared as well as they should have, and they're going to market before Christmas, which is usually a terrible time to sell. And it is purely because the agents that are going in there are taking a really short-term view, and they're saying, no, the market is going to be worse, next year. We've got elections. We've got this. We've got that. There's all these different reasons that you can put in people's minds.

Veronica Morgan: Yeah.

Peter Gordon: And they get in at the market with really aggressive price guides, and they sell in them, based upon they're not getting great prices.

Chris Bates: Yeah, that's really interesting. It's not really a sustainable kind of business model, is it really. You know, just playing on fear, and then how do you keep on changing your tune. You've always got to keep second-guessing the market. And then you’re saying when the market is going up, do you say to people, don't sell now, sell in a year's time because the market is going to be better. It works on one side, but then the other side, you can't be going the opposite. Yeah, I find it really interesting.

Chris Bates: I'd love to get your thoughts, just on a current client, who is buying. They did try to ... I did refer them to buyers' agents. They decided not, which is sometimes the case with first-time buyers. They don't want to commit to a buyer agent's fee, even though they should. They've gone to buy a property. It's in a good suburb, and the agents originally listed the property on RealEstate.com.au in the sub 1 million bracket, but this property then had a price guide of $1.1 to $1.2. So it was somehow they played around with the search of RealEstate.com.au, so the property is getting picked up under $1 million. If someone was searching at $950, that's how they saw it.

Chris Bates: And then, they went to auction, it passed in and they offered $1.2, and they said the seller wants $1.4. so the agent is saying, hang on a sec, the seller wants $1.4. My client is willing to offer $1.2, maybe $1.25, if they get pushed, and there's this huge between what the vendor wants and the buyer is willing to pay, and the agent is kinda in the middle here.

Chris Bates: What do you think has happened there? Yeah, what do you think?

Peter Gordon: I don't know. Sometimes it's easy to blame the agent to say that agent did something shifty, or what have you, but you don't know what happened behind the scenes as well. I've had a client recently, where it's a situation with a family property. It's been in the family for a long time. I'm dealing with a couple siblings that own the property, and one of them believes it's worth about 40% more than the market.

Peter Gordon: My job as the agent is obviously to try and bring the sellers and the buyers together. We've got under the new laws that were passed around providing estimated selling ranges and things like that. We're able to provide our clients with documented evidence that there's been a change in the estimated selling range.

Peter Gordon: If I initially appraised the property at $2.7 to $2.8 based on recent comparable sales at the time, the market shifted since then, the market is now at $2.4, I've been able to say the clients were changing the estimated selling range. I communicate that to buyers at auction type sale. The buyers are at $2.4, and the owner is at $2.8.

Chris Bates: Right.

Peter Gordon: It's out of my control. And ultimately, it's worth $2.4, and it'll probably sell for $2.4.

Peter Gordon: I haven't done anything shifty. I've been trying to do the right thing by the client. I've been trying to do the right thing by the buyers. But at the end of the day, where there's a lot of emotion behind the scenes, and the owners have some reason, where they've got an attachment to a property and there just is an illogical pricing factor that comes into it sometimes.

Chris Bates: Yeah, I think what's happening here..

Peter Gordon: I don't know what happened in that case though. That sounds really odd.

Chris Bates: Yeah. Kinda ...

Peter Gordon: RealEstate.com was actually ... It was an email from them this week saying that they're changing their guidelines, and we can't manipulate the search prices anymore.

Chris Bates: That's good.

Veronica Morgan: I thought that was done some time ago, to be honest.

Chris Bates: This is definitely literally market, now. This episode will come in many months, and hopefully, they've got a deal.

Veronica Morgan: We don't always release these the month they're recorded. Sorry, guys.

Chris Bates: But yeah, it's just really interesting. I guess, there's the seller is hellbent on getting $1.4 and won't negotiate down at all. Can't even get 'em to negotiate, and you just wonder where that's the market has moved so much. The agent hasn't changed a marketing cost, so they're only getting paid if they basically sell it.

Veronica Morgan: That sounds a little bit to me like someone who might've bought a listing.

Peter Gordon: Exactly, yeah. Yeah.

Veronica Morgan: Yeah.

Chris Bates: Yeah.

Peter Gordon: We see that a bit too, where in a hot market, you can get away with it. If the prices are going to keep going up, it might just mean you need to work on it for a bit longer. The market will catch up to the vendor's expectations. But at the moment, the gap is getting bigger, then you're in real trouble.

Veronica Morgan: When you're dealing with inexperienced agents or agents that aren't really high caliber, you are going to come across people that are out of depth. They don't know how to manage their owner. And also, they're desperate for listings, so they'll take a listing on at any price, and they'll just okay ya, and they'll basically jump in the deep end and paddle like crazy trying to get into the shallow end.

Veronica Morgan: That may well have been the case. I'm sure you ... I guess in some areas, there's less of those new agents around, or less of the ... I guess everyone is at a similar level. Yeah, but you know.

Peter Gordon: One of the good things that's come out of this change in the market as well is that the sellers are being a lot more selective about the..  They're a lot more ...

Veronica Morgan: Conditioned by the headlines.

Peter Gordon: They're a lot more selective about the agents that they choose.

Veronica Morgan: Right, yeah.

Peter Gordon: Because in a really hot market, you can train a monkey to sell a house. It's all about getting the listing because the house will sell itself.

Peter Gordon: Now, it really does come down to having someone that's got the experience to be able to guide them through the process, who's got the confidence and negotiation abilities to be able to get the job done. They're seeing there are some agents that are still out there, selling lots of properties, and others that are just carrying stock and not selling.

Chris Bates: You can see that with purple bricks, right?

Peter Gordon: oh 100%

Chris Bates: The cheap and cheerful. The property will sell itself. I don't need an agent, $4,000. You can see that you don't really see many of them or their signs around anymore.

Peter Gordon: Not at all.

Chris Bates: Yeah.

Veronica Morgan: On that though, I was listening to a podcast. I'm not going to say who it was, and they were a fairly high-profile person in the real estate industry. They were talking about the purple bricks model, and the idea of paying upfront. This person was denigrating that, and I was a bit surprised actually to hear this. Denigrating, not so much the purple bricks themselves because I don't agree with low-cost models, and I don't agree with their model at all. However, the concept of somebody actually paying a real estate agent for advice. Because at the end of the day, one of the reasons I jumped the fence from being a sales agent to being a buyer's agent was I actually prefer to be paid for my advice.

Veronica Morgan: Now, you guys are experts at the selling and marketing of a property, right? And so, you often give a lot of advice out that never actually materializes into an actual transaction, right?

Peter Gordon: Mm-hmm.

Veronica Morgan: Wouldn't it be good to be able to charge for that? And also, how many people do sign up with an ... What's the word? Too high price expectations.

Peter Gordon: Unrealistic?

Veronica Morgan: That's the word I'm looking for. Thank you. How many people do sign up with unrealistic price expectations, and you put in a whole lot of work and effort, and they're never going to sell at the end of the day because they won't listen to you. I think isn't there a case that you should be able to charge for advice?

Peter Gordon: Yeah. Think that there is potentially that's different to a selling agent kinda role. But yeah, I think there is maybe some sort of a service you could provide to potential clients, where it's like an evaluation of a property. It's advice about how to present it for sale, and how to maximize a price, and all that stuff. It just doesn't include the negotiation, and the actual during the transaction advice. But yeah, possibly there'd be like a vendor's advocate kinda role, isn't it?

Veronica Morgan: Yeah. There is. I mean, there is such a thing as vendor advocacy. But even then, most ... And actually, it sounds really awkward here because we do offer this service in my business, but in that regard, that's not why I led this question. But we do charge for it, agents that offer vendor advocacy take it as a cut from the sales commission. So once again, it's all predicated on actual sale, before anybody gets any money. It's not actually anyone paying for advice.

Chris Bates: Yeah. I guess there potentially would be, but you would have to be, A. A good agent wouldn't be just chasing rabbits, and if a vendor's not been offering them ... You know, wants a stupid price. They don't believe they can get it. A good agent has enough runs on the board and probably things this is not going to be worth my time. I'm not just going to be desperate and take it on.

Chris Bates: A new agent that needs some sales will probably take it on and hope that the world just aligns, and they get the deal done. It would be pretty gutsy for a big agent to then start saying to sellers, I can only reevaluate your property and give you some advice. It's going to cost you $2,000 upfront. And then, the next agent comes in, and says, I'll do that for free. You know what I mean?

Chris Bates: I think in mortgage broking, there's some good brokers out there that are charging fees for pre-approvals and things like that, and you just haven't got enough runs on the board with that client sometimes too for them to go, actually, you know what? I know you're amazing at what you do. I'm going to give you $2,000 now, knowing that. You know what I mean? It's just ...

Veronica Morgan: I get that, but isn't it ... I think a conversation needs to be started around this because I do think that consumers complain about getting bad advice, and yet they're getting advice for nothing and that advice is part of a sales pitch, isn't it?

Peter Gordon: Yeah, it's a tricky conversation, really. I think as an agent, we get paid really well.

Veronica Morgan: You do, when you sell.

Peter Gordon: When we sell. And look, I'm fortunate that I sell everything I list, basically. I don't take on bad business. I generally attract good clients, and with that. But yeah, there's plenty of agents out there that are probably out there just trying to do as many appraisals and listing appointments as they can, and probably giving not great advice, and listing lots of properties, and maybe not selling all of them, or what have you.

Chris Bates: Yeah, I think as well, like you're in a very high prestigious suburb and your average sale would be quite high compared to the average across Australia. But the problem with percentage fees just generally is it all comes down to the total value of your sales. It's not about how many clients you've got. It depends on how much is the total.

Chris Bates: The same thing in broking. So being a mortgage broker in Sydney, I'm very fortunate. My average loan size is probably triple the size of most brokers, and so I get paid triple what most brokers get paid per client. But if I was a mortgage broker as a good mate of mine is in Orange, his loan size is pretty much exactly the same work within reason, but the way he gets paid is much lower. I think an agent is very similar, right?

Peter Gordon: Sure.

Chris Bates: Like if you're an agent and you're selling property in Port Macquarie versus in Balmain, you can see why the person in Port Macquarie needs to be more conscious that they're making sure that they're getting paid for every client. I guess, that's the hard part. It's easy for you to kinda I don't need that $2,000 because I'm getting paid very well. I feel the same way.

Peter Gordon: Yeah.

Chris Bates: Yeah.

Peter Gordon: Yeah, and our fees have just about doubled in the last in the last six years.

Veronica Morgan: Well, as prices go up, yeah.

Peter Gordon: Your loan size and the property values, and what have you.

Chris Bates: Yeah, exactly. Right.

Veronica Morgan: Anyway, this is ... I think that as certainly as real estate agents pursue this pathway to professionalism, it's going to be interesting just to see how that space unfolds. And certainly post Royal Commission as well with brokers. I was hearing yesterday, I think it was Commonwealth Bank, who have decided they're really not going to deal with small brokerages anymore. That's what I've heard. It could be that there's a whole shift in terms of certainly the mortgage broking space.

Chris Bates: Yeah, it's really interesting. I was on Sky last week talking about this. And so, part of the Royal Commission is you've got things that have been highlighted with mis-selling of products, not by the banks, by brokers, by financial advisors. A lot of that, and the reason of what they're saying is because they're incentivized to sell products, and they get paid a percentage of what they sell.

Chris Bates: In the mortgage broking world, it's a little bit different to financial advice because financial advice, there's just been problems through the whole system because it's just too conflicted. Where someone is licensed, the way they get paid. All their recommendations are pushing people to investment products, that they can charge assets under management fees to. You can really manipulate, over-sell insurance. There's so many ways that financial advisors have been able to make more money by giving poor advice.

Chris Bates: In mortgage broking, it's very hard to do that within reason because you can't put someone in $2 million of debt, if they haven't got the deposit, or they don't want to buy this property. You can't give them too much more loans. All their commissions are very similar to all the banks.

Chris Bates: From a consumer point-of-view, they've actually got really good experiences with brokers. Their broker volumes, percentages are rising every year. More and more people are using brokers. The broker world hasn't really got a consumer problem, but there is maybe some conflicts that are getting changed.

Chris Bates: The CBA stories has been quite ... They've consistently over the last few years, wanting to stop working with brokers. They've brought in new accreditation. If you're not a broker for two years, you can't write lending with us. There's all these small things. If you are not writing much business with us, you've got a really long time to get your file assessed. It could be like eight or nine days, and you're just not going to write loans with CBA.

Chris Bates: What CBA are trying to do behind the scenes is basically get rid of brokers. Because if they get rid of brokers, it stops brokers funneling clients to their biggest competitors, which is ING and Macquarie, basically.

Chris Bates: You've got 15,000 brokers out there, that are no longer using CBA, and they're all just sending their business to their competitors. The way CBA are going to do, they've got the biggest branch network. What CBA want to do is basically get rid of brokers by moving them to a flat fee, and then that will kill the industry. And then, if there's less brokers, then more people go to branches. And then, CBA will get more business.

Chris Bates: That's kinda what they're trying to do, and that's why they came up in the Royal Commission, and push for the flat fees. It's not something that consumers are really out there batting for. It's really the banks, who are kinda wanting wanting to get rid of brokers.

Veronica Morgan: Well, there you go. That's a conspiracy theory. Do you think the other three of the big four are high in the wings, preparing to do the same thing, or is it just CBA?

Chris Bates: No, it's really just CBA. ING have come out and said they support brokers. ANZ have, and all the little small lenders are. It's just CBA. And the other reason why why Matt kinda came out and said it is deflected all the focus from him and what things CBA have done wrong to ...

Veronica Morgan: The brokers.

Chris Bates: ... what have brokers done wrong. All the AFR, and all the other papers, the next day were brokers earn $2.5 million a year. Thousands of brokers earn $1 million a year. They should go to flat fees.

Chris Bates: We were going to do it in February. We were going to do it, but you didn't actually do it. They created all these stories that then the media took off on. And then, all the things that CBA did wrong just got forgotten about. It was a ...

Veronica Morgan: It was a deflection strategy.

Chris Bates: Yeah, it was. And so, there will be reform in broking on a big level, and all the little conflicts, and all the things that brokers can do to manipulate the system, and banks to manipulate the system will get highlighted and hopefully get shut down. I think that's what was trying to happen on last week.

Veronica Morgan: Actually, on that, Peter, the buyers that you deal with, what percentage would you think are dealing with brokers?

Peter Gordon: I would think probably 80% of buyers. The buyers that I've been working with would be dealing with brokers rather than direct with banks. I always think that someone will do better through a broker, for whatever reason.

Veronica Morgan: Yeah, it's interesting, isn't it? I've actually say we’d be say 25% of our clients even would use brokers rather than directly with banks. We've even had some situations, where a client has been a longstanding client of a particular bank, and then the brokers actually managed to get a better deal through their very own bank than they were able to get themselves through their relationship manager. That's a bit interesting in itself.

Chris Bates: Yeah, so that's another problem with CBA recently. CBA have been giving better pricing through their branch network than they would offer through brokers. And so, branches have been competing with brokers, and the branches have been calling, trying to get clients off brokers and things like that. There's been this power shift, where from the outside-in, CBA don't really want to work with brokers, and there's been this kind of..That's kinda what's been happening.

Chris Bates: It's not just CBA. There's this kind of power struggle going on. At the end of the day, CBA have to pay hundreds of millions of dollars of commissions to brokers in upfront fees and ongoing revenue. But at the end of the day, banks want to make more profits. In a world of low credit growth, which we're going to be going into with the Royal Commission, the tap that keeps funneling higher bank profits is growing credit. And if you say with the Royal Commission, you can no longer keep growing your credit, your mortgages like you were your not growing profits aren't going to be as big. That's kind of what's happened.

Veronica Morgan: Peter, dealing with buyers, who obviously are finding getting money harder, what processes are you going through in terms of your qualification processes with buyers to find out whether they, A. Are financed. B. Really are financed, Because I imagine some people still think that they're going to get money quite easily, and it might be a little harder.

Peter Gordon: Yeah, I think what seems to happen a lot is that a buyer will start a conversation with a broker or with a bank, and they'll been given really quite a positive sort of yeah, yeah. Should be all right, mate. No problems at all. Probably will be a couple of weeks, and we'll be able to lend you $1 million. If it's a professional couple, whatever it might be. That couple of weeks is turning into a couple of months, really, and the $1 million is turning into $700,000.

Chris Bates: Yeah.

Peter Gordon: And so, where as agents we need to kind of qualify them without going into the nitty gritty, and obviously without bursting their bubble as well. We always talk about if you bid on other properties, if you've made unconditional offers on other properties, that's a good way of knowing if you've actually got capacity to buy. And then, just talk to them about where they're up to with their finances. And if they have got somebody looking after them, if they've got that sort of formal approvals in place, and what have you.

Veronica Morgan: Because I know that in terms of you and the advice that you feedback to your owner, you've got to somehow give your owner the sense of confidence in each individual buyer that may or may not be interested in their property, right?

Peter Gordon: Mm.

Veronica Morgan: Do you find that there are buyers out there that are looking that think they're going to be financed, and then?

Peter Gordon: Yeah, I'd say there's probably 8 out of 10 buyers that are out there in the market at the moment are not really buyers because they haven't got the money. They've been told that yeah, probably by the end of the week, we should have something, or that people are saying in a couple of weeks, but they're disappearing. They stop taking calls. These buyers that think they're going to be able to get the money haven't been able to, or the banks keep coming back to them and asking for more documentation, and that's common.

Chris Bates: Yeah. The process shuts down sometimes. The back and forth, and sometimes they just lose interest. Sometimes life takes over, and it's all getting too hard. And then, they're reading the press, and it's like actually, you know what? I can't get finance, or they don't even go to a broker. They go to the bank, and then they get a bad outcome. And then, they don't even go to shop the market, and there's always things that are just kinda compounding behind it, where you're right, they're just not getting finance approval.

Peter Gordon: Yeah. And they're reading that the market is going backwards, and it's going to be ... That it's going to come down another 30% in the next 12 months, so there is no motivation there either, particularly if they're comfortable renting something. If they've got a growing family and they're looking to up-size or something like that, then that's different. But in our area, we deal with a lot of young professional couples, probably in their 30s, that are renting. Both on really high incomes, who traditionally have been able to go to the banks and borrow whatever they wanted to borrow, and they're paying their $1.5 million to buy their entry level three-bedroom terrace in Balmain. They just can't get it anymore. They've gone.

Veronica Morgan: Are you still taking the lion's share of property to auction into these conditions, or are you changing the way you're marketing them?

Peter Gordon: The auction environment has definitely changed a lot. I still feel as though the auction process is a good way of bringing the buyers and sellers together, and giving you a bit more control over timing. We're selling a lot more property via private treaty than we were 18 months ago. But even if ... Quite often, we'll see that auction might but it sell later that afternoon, or it'll sell the following week to a buyer that was flushed out by the auction process. Particularly, if you've got ...

Peter Gordon: I had a property in Rozelle we sold two weeks ago. The owners wanted to sell it before the auction. The buyer was kind of humming and awing about buying it before the auction, but he just wouldn't commit. He just couldn't get in to actually make the decision to commit.

Veronica Morgan: You would've loved to have got him over the lump, before auction, wouldn't you?

Peter Gordon: Yeah. We do our best to get 'em to buy it before auction. The owners were saying, we can't have the auction if we've only got one buyer. I said, no, we can. We just need to look at it really simple. And if it brings the buyers and the seller together on the same day and the same place, then we'll get a deal done. We sold it, we got a really good outcome, but we still needed that auction process to put them there in a position, where they could buy it unconditionally, and they had to make a decision on the day.

Peter Gordon: Yeah.

Chris Bates: That's their urgency, right? Like if there wasn't a day, like he was just like, I'll think about it, life takes over. And then, there's just no real pressure. But if there's a Saturday auction, at least there's a due date, where a decision has to be made.

Chris Bates: From an agent's point-of-view, I know Balmain doesn't struggle with this, but what's your thoughts on kinda off the plan, kinda newer properties and apartments? If you were buying one, would you ever buy an off-the-plan apartment?

Peter Gordon: I don't think I would. I have absolutely zero ... I shouldn't say that. I sold one little block of townhouses off-the-plan, a couple of years ago. But aside from that, I've never had anything to do with off-the-plan sales. I've always sort of felt that there's a lot of marketing, a lot of spin, a lot of hype that goes into those off-the-plan sales, and I think they're really dangerous. A dangerous product for purchasers. There's some really slick sales tactics.

Peter Gordon: I was contacted by a client this week, who is settling on two apartments in Balmain that were bought off-the-plan. He said they're investment properties, we're going to be renting them out, and the developer had gave us a rental appraisal of $1,200 to $1,300 a week, so we should be able to get that. In reality though, it'll rent for about $850 a week.

Veronica Morgan: There are a lot in the developers' rental appraisal. I mean, seriously, people. You've got to take responsibility for your decisions. The developer is trying to sell you something. Oh my God. Okay. That's going to wack their cashflow.

Peter Gordon: It blows the model out of the water, right?

Veronica Morgan: Yeah. Can they settle? I mean, as in ...

Peter Gordon: Yeah, I'm sure. I'm sure though.

Veronica Morgan: What about the settlement valuations? Do you know?

Peter Gordon: I haven't got into that. Yeah. Yeah.

Veronica Morgan: I love how they bought two.

Peter Gordon: Yeah, why not?

Veronica Morgan: Yeah, because you just buy two, it’s about diversification. I love how they call themselves investors.

Chris Bates: From an agent's point-of-view, I guess if you're helping buyers, but if you were investing in the market, what are sort of the things that you think the buyers should really put a high priority on and things maybe not so much?

Peter Gordon: I think it's fundamentally about supply and demand. I wouldn't buy in an area, where there's lots of cranes in the skies, and lots of new apartments being built. You jump onto RealEstate.com, and you look for a two bedroom apartment in Ryde for example. There might be 150 of them that could buy at the moment. They might look cheap, but there is a real supply/demand problem there.

Chris Bates: And 800 for rent.

Peter Gordon: Yeah.

Chris Bates: Yeah.

Veronica Morgan: And 800 available for rent. Not getting $800 a week for rent.

Chris Bates: Yeah, and that's one of the things, right?

Veronica Morgan: 800.

Chris Bates: If you search in Ryde or Waterloo, or these areas. There's hundreds and hundreds are for rent, and you'll see the ones trying to price $800 a week. And then, there's one at $750 that's better than the $800 a week. You just look at it, and you think, God, I would not want to be owning a property here and trying to rent it out right now because how do you find someone to rent it, when even if it is beautiful?

Peter Gordon: Yeah. I think I've always just really liked solid, three floor walk-ups, no lifts, brick buildings, built in the '60s and '70s in suburbs, where there's not a lot of development. You're close to the CBD. You've got good amenity, parking, outdoor space. It's all the fundamentals. If it's something that you would want to live in yourself, and you work at what your target renter is. If it's an area, where there's a lot of young professional people that are singles that are living there, then you want to buy a property that's going to appeal to them.

Chris Bates: Do you think it's a good time to be trying to buy grade A suburbs, like Balmain? But be buying grade C or grade D property, I guess, that maybe it's not on the best road, or maybe it's not the best layout, or maybe it's not the biggest block. But it still suits families or something like that, if you can get it at a really good price right now, or do you think that you still wouldn't buy that type of property?

Peter Gordon: I think it's fundamentally not a great property, then price ... It's going to come around to you, when you get a seller as well. You're going to be impacted on price, when you go to sell it at the same time. I would probably prefer to buy a better quality property in an area, where you can afford rather than try to buy the worst house in the best suburb.

Chris Bates: Yeah, it's interesting because that's naturally what people are thinking about now, right? Because in a lot of your premium suburbs, a lot of the C and D properties aren't performing very well, and they're losing value a lot more, and a lot of investors are saying I can buy in Balmain for $1.1, but it's not a great property, but I'm still in Balmain. I guess, the challenges there is yes, get it at a cheap price. You might still get a good rent, but it always comes back when you want to sell.

Chris Bates: Every week, we hear incredible stories of the dumb things property buyers do. Dumb things that end up costing you a whole lot of money, and/or creating a whole lot of stress. Mistakes that can be avoided.

Chris Bates: Please, Peter, can you give us an example of a property Dumbo? We can all learn what not to do from these stories.

Peter Gordon: We see buyers doing dumb things all the time. I asked my team this morning, I said, guys, what do you think sit the dumbest thing that we ever see buyers do? One of my guys said, what about the buyer? And the buyer is not just a buyer, it's a type of buyer that is usually a middle-aged man with a much younger girlfriend that arrives at a property and they come through. They've probably got a sports car, and he sort of puffs his chest up and walks around and says, send me a contract on this one, and buy it as an investment, and that type of thing. He's just trying to puff his chest up in front of his date. And then usually as they're leaving, they'll say I'll be making an offer on this one on Monday. And guaranteed, you never hear from them again, but it probably happens once every couple of months, you'll come across this type of buyer.

Chris Bates: Wow.

Veronica Morgan: That's so embarrassing.

Peter Gordon: It's embarrassing for them, but it's great for us. Because quite often what'll happen is there will be a real buyer in the room, and the real buyer won't recognize the alpha male puffing his chest up, and what have you. They'll come up to us and say, listen, I think that guy is going to make an offer, isn't he? And you'll say, that's what he said. Quite often, he'll create some urgency around a sale with some real buyers, but it's just being a peacock.

Chris Bates: It sounds like you should hire him.

Veronica Morgan: Yeah.

Chris Bates: And he should just be ... I know there's a real estate agent, he's done something quite similar to that, but maybe not with men.

Veronica Morgan: Isn't that the equivalent of dummy bidders?

Chris Bates: Yeah.

Veronica Morgan: It's the dummy buyer.

Chris Bates: The dummy buyer. Yeah, I mean that was in the papers this week about some women that were getting stupidly some crazy marketing tactic. I'm not sure if you saw that.

Peter Gordon: About some swimsuit models or something for a ...

Chris Bates: Yeah.

Peter Gordon: For a photo shoot...

Chris Bates: I just read the headline. But yeah, it was some agents use swimsuit models or something to sell property. I was just like ... I saw the headline, and I was like that's ridiculous.

Veronica Morgan: Don't they realize that the women make so many of the decisions? Do you remember, years ago, Peter, this was ... Do you remember Elizabeth Shields?

Veronica Morgan: She was an agent in Newtown, I can't remember the name of the agency, but she did this campaign. It was called Real Estate with a Happy Ending. I kid you not. There was a billboard on Parramatta Road in Camperdown and she was there in a negligee holding a gavel, and that was the headline on the billboard. Real Estate with a Happy Ending.

Veronica Morgan: There was another one up on the bridge thing there in Rozelle. There was another one. It was hilarious, and we just kept laughing and apart from the fact that there's a lot of big gay population in Newtown.  The lesbians aren't going to go for it because seriously? She's just not my type. Men aren't going to go ... Gay men definitely aren't going to go for it. And basically, no hetero man is going to be allowed to go for it because the wife is going to say you are not going anywhere near that woman. But it misses out on every single demographic, and just hilarious.

Chris Bates: Just shopping for the sake of it too.

Peter Gordon: He just ... Yeah.

Veronica Morgan: Swinging...

Peter Gordon: Yeah, yeah. He's just trying to impress his date. He said, listen, I'm just going to look at a couple properties.

Veronica Morgan: How mortifying.

Peter Gordon: Yeah, pretty embarrassing.

Chris Bates: But you find that also with young kinda couples that are out there shopping. They're really just doing it because they're kinda thinking that they want to buy something, and they're kinda window shopping three years before they're even ready. Just going through the process of just waste of time on a Saturday, do you see them around a lot?

Peter Gordon: Yeah, we do. Usually, they'll get really dressed up as well to go out and look at houses. So yeah, it's funny. We see all sorts, and with the experience, you get to be able to pick them pretty quickly.

Chris Bates: I've got a client who just missed out on a property. She told me she was devastated. She wasn't pre-approved. She's an ex-client. She was going to buy another property. It was in Edgecliff and she called me and says, I was told ... I asked for a contract from the agent, and the agent didn't think she was serious. She goes, I rocked up. I'd been in the Edgecliff Shopping Centre, out shopping. I had my dog. I tied my dog up with my shopping outside. Went in this property, and asked for a contract, and the agent thought she was a waste of time, and wanted] to know that she's not a waste of time. She could afford the property, and she would've bought the property.

Chris Bates: I guess you should never really assume sometimes

Peter Gordon: That's the other thing. Particularly in Balmain, you get a lot of people that don't like to show off their wealth, and it's really a sort of down-to-Earth kind of demographic, really. We've sold some really big properties to people who if you look at them they look like your average punter on the street.

Veronica Morgan: Yeah, you wouldn't know.

Chris Bates: Yeah. And then, you think different nationalities I guess, the tactics and different nationalities and things like that. Sometimes people assume that someone is going to act a certain way, and they don't, I guess.

Peter Gordon: Yeah, yeah. That's right. That was just the other kinda Dumbo is the buyer who comes in and just tries to down talk the property as loud as they can, and they go does the owner know about the crack in the wall? And does the owner know that it needs renovation? Does the owner know how much it's going to cost? All they're doing is telling us that they're really interested.

Veronica Morgan: Yeah.

Chris Bates: Yeah.

Veronica Morgan: And every other buyer too.

Peter Gordon: Yeah, exactly.

Veronica Morgan: It's just like whatever...

Chris Bates: Yeah, or they've just got nothing else to do on a Saturday, and they just like to be a bit of a pain. I think they rock around, don't they, and they're just serial offenders, probably I see.

Veronica Morgan: You're getting many buyers being cocky, that they na, na, na, na, na. The market's gone down, you're finding it harder to sell?

Peter Gordon: Yeah. Yeah, there, right. There's buyers that have just read a lot of headlines about prices going down, and they're saying ... It's a property you're hopeful of initially you might've expected mid threes and it might really be $3.2 or$ 3.3. They're coming in and saying, you know it's going to be around $3 million, and they're sort of trying to factor in the 20% that hasn't happened yet into where their pricing is. Or they'll say, why does the ... The owner wants the settlement in three months' time, but it'll be worth a couple hundred thousand dollars less by then, or whatever it might be.

Veronica Morgan: I love all these crystal ball holders.

Peter Gordon: Yeah.

Veronica Morgan: Yeah.

Peter Gordon: But fundamentally, the house might suit them really well. It could be a great property that's going to do really well, long term, but they'll still talk themselves out of it, or they'll just be completely unrealistic about the way to approach it.

Veronica Morgan: Yeah.

Chris Bates: If they make a low ball offer at the moment because they're trying to factor in a future drop, just hoping that they have to sell. You're finding many properties that are going through it because there is literally one has to sell, and there is only one buyer. And if this is going to happen, they're only going to offer a certain price. It's happened to a client last week for me. Three weeks ago now, but they got a property that was meant to be selling for $2.2 for it. It was in Maroubra and it went to auction and it passed in and they put in an offer when it was for sale for $2 million, and they ended up getting it for $1.85 because it was a...

Peter Gordon: Yeah.

Chris Bates: And so, are you finding that's happening at all, or?

Peter Gordon: Yeah. Look, it is. I think ... Look, we are. We are definitely seeing, and I think buyers need to recognize that they've got to be there. If they want to buy a property, they can't call you on Monday and say, jeez, I would've paid more for that. I can't believe it only sold for $1 million. Like if you're not there, you're not there.

Veronica Morgan: Yeah.

Peter Gordon: Yeah, so I think money talks. And if you're cashed up and you've got the capacity to buy, then you need to put yourself in the game, and attend auctions, and be involved in negotiation processes with properties. But at the same time we have an apartment at the moment, where the owners paid just under $1.5 for it. It's a really good property. It's an A grade apartment in Balmain, they will sell it for $1.4. They've acknowledged that the market has come back from where they bought it from.

Veronica Morgan: When did they buy that?

Peter Gordon: About 18 months ago.

Veronica Morgan: Right, yeah. At the peak. Bang on the peak.

Peter Gordon: Bang on the peak. Exactly, yeah. Buyers come in and said, we'll give you $1.2. all that's done is just hit the owner right off side. You've upset them from the start. There's not a happy dialogue. It's not a proper negotiation. Never going to get off the ground.

Peter Gordon: Whereas, if they'd come and said, okay, you're aiming for $1.4 we're probably there, somewhere in the mid $1.3s, how do you think we should go about it? Then, I'll try and work with them, and try and get the deal done.

Chris Bates: That's right. They need you, right? Buyers?

Peter Gordon: Yeah.

Chris Bates: They can't go directly to the vendor and say, can you make a deal? If you want to on-side with them and you're not going to really ... If you haven't got a good working relationship with your buyer, how are you going to possibly get a deal done?

Peter Gordon: Yeah, I think a lot of buyers don't realize that ultimately if you're an experienced selling agent and your client has got a lot of faith in you, then quite often while a vendor will give us instructions as to if they'll sell it or not, it'll be based on our advice.

Veronica Morgan: Yeah.

Peter Gordon: We're the ones who basically need to make the decision about, yes, it's a green light to sell it or not. That's what I think a lot of people don't realize is the agent has a lot more control over what the owners will or won't accept because that is part of our advice piece.

Chris Bates: Have you ever not sold to someone that you didn't like, like if a buyer was a right twat that you thought I am not actually going to help you, and you

Peter Gordon: No. We'd normally just give them a bit of a fine.

Veronica Morgan: I love it. There is the message for buyers there. There's no point trying to outsmart the agent. At the end of the day, the agent is the one with more information than you are, and they also are in ... If they are experienced and accomplished agent they are in a trusted advisor relationship with their vendor and that vendor is going to ask for their guidance in terms of whether they should or shouldn't entertain your offer. If you're going to play silly buggers and really try to get the agent off-side because you think that you've got the upper hand, even in a buyer's market, it doesn't always play out in your favor. I love it, that you fine them. I've seen it happen, can I tell you? Where someone ... And actually, on the flip side of this. This podcast is not meant to be a sales pitch. But honestly, honestly, buyers need a buyer's agent more in a buyer's market than they do in a seller's market in many ways and that is because there is a lot of money left on the table in a buyer's market, much more than I think in a seller's market with buyers. Because you don't have competition, so the only competition is really your own mind.

Peter Gordon: Yeah. Yeah, I'd agree with that. For sure.

Veronica Morgan: All right. I think we're going to wrap it up. Thank you so much, Peter.

Peter Gordon: It's been a pleasure. Thank you, guys.

Chris Bates: Thank you, Peter. Cheers. Thank you.

Peter Gordon: No trouble.

Veronica Morgan: We've covered a bit of ground. I hope you've enjoyed it.

Peter Gordon: It's been good.

Chris Bates: We want to make you a better elephant rider, and this week's elephant rider training is ...

Veronica Morgan: All about timing when you buy a property. We get asked about this a lot. Obviously, with a “falling market”, and I'll use rabbit ears around the word falling because it isn't falling across the board, and it's certainly not falling with all property. But the question is always, when should I buy? When is the best time to buy? And the answer is a little bit more nuanced than you might think.

Veronica Morgan: I think one thing that buyers need to understand around A, B, C, D grade properties is that when you buy an A grade, it doesn't really matter so much because they pretty much hold their own in these sort of market conditions, and they're never going to really fall. You buy it when you're ready to buy a property, if you want it right away. If you actually want to try to work the market to your advantage, and this is where you get into speculation, and not investment.

Veronica Morgan: Then, yeah, there are potentially sort of a case to say, right, I'm going to buy a B/C grade property now, when they really have fallen considerably. And then, I need to pick the market conditions at which point to sell that thing. When the market is at its peak, I’ll flog it, and then I'm going to make the maximum gain. However, even the experts can't predict the bottom of the market and the top of the market. You miss it, and that whole theory goes out the window. This is the thing that like yes, I've sold a couple of properties over the years, and I could dine out when I sold them. The same with buying them.

Veronica Morgan: One of my investments in particular, I bought in October 2012. I'm lovin' that one. I got every single piece of that boom, and I didn't get ... I got one month of the flat period, beforehand. I could have a whole career based on that. But the reality is there's been times when it's not been the right time market-wise for me to sell property, but I have sold for other reasons, and vice versa with buying. The point being that experts can't exactly pick the bottom, and the only way you'll know that bottom is when it starts growing. That's when you know you hit the bottom, and it's in the rear vision mirror. The same with the peak. When the market starts falling, you know you've reached the peak and it's in the rear vision mirror.

Veronica Morgan: Trying to do that, trying to outsmart the market, yeah, do it by all means. But realizing the risk you're taking, and realize that you are speculating, not investing. But when you're buying A grade, it doesn't matter when you buy, just buy it when you're ready.

Veronica Morgan