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

Episodes

Episode 65 | What you need to know BEFORE you buy in a flood zone | Charles Wiggett, Hauss Realty

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Essential questions to ask & hot tips to understand.

We interviewed Charles Wiggett, Principal of Hauss Realty a boutique agency, based in the Brisbane riverside suburb of Graceville. Charles prides himself on good old fashioned service, local knowledge and client care.

Here’s a snapshot of the insider knowledge he shared:

  • Flood zone risks - why doing your due diligence matters!

  • Supply & scarcity - what that means for capital growth.

  • What maintenance issues you must consider before buying a “Queenslander”.

  • The oversupply of apartments in Brisbane and the impact on investors.

  • What’s happening to prices after the Banking Royal Commission.

We hope you enjoy this episode - it’s an interesting one!

WEBSITE LINKS:

Charles Wigget - Hauss Realty

Brisbane City Council  - Floodwise Property Report

Elephant Ep 33 - Peter Koulizos - the Property Professor

Work with Veronica? info@gooddeeds.com.au

Work with Chris? hello@wealthful.com.au

Episode 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, buyers agent, and co-host of Foxtel's Location, Location, Location Australia.

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

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

Chris Bates: Veronica will introduce our guest in a moment and I can tell you that you want to listen on to find out what he has to say about the Brisbane property market and all the things you need to do from a due diligence point of view, such as floods and building and pest reports before you buy a property.

Charles Wiggett: Talk to the pest and building guy because let me give you an example. We had a house where it was a great house, lovely, everything was going sweet. And then all of a sudden the pest and building tapped me on the shoulder and said, "Look there's a termite mound on the stump." And I thought oh here we go.

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're looking to get advice, please seek the help of a licensed financial advisor or buyers 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 Charles Wiggett principle of Hauss Realty, which his a boutique agency based in the Brisbane riverside suburb of Graceville. Their claim to fame is that they know these Western Brisbane suburbs better than anyone. From Milton to Sherwood and St. Lucia ... St. Lucia ... How do you say that?

Charles Wiggett: Probably I would say Indooroopilly to yeah Kenmore.

Veronica Morgan: Indooroopilly to Kenmore.

Charles Wiggett: Yeah. To Kenmore yeah. That'll be good.

Veronica Morgan: That'll do?

Charles Wiggett: We'll get around that, yeah.

Veronica Morgan: Okay. So they pride themselves on old fashioned service, local knowledge, and actually caring. And we're keen to uncover why they've identified these as points of difference. Now we're also looking to get insights into this part of Brisbane as we know that it's the nuances of individual markets that make all the difference when making purchasing decisions. And welcome, Charles.

Charles Wiggett: Thank you.

Chris Bates: Thanks for being our first guest in Brisbane live I guess with our guest from Brisbane in Sydney. So we really appreciate it. I guess that Brisbane's got lots of different properties like every different city's got different styles of property. In the patch that you work in, in the kind of the inner west I guess, what are those different types of properties that are very common and that buyers love and hate?

Charles Wiggett: Look it's very dynamic because you've got a whole range of not only Queenslanders, post wars. You've got fibros. You've got some are just even tin sheds almost to some degree. And then you've got modern contemporaries, low set bricks. So it's a very dynamic market and I think from a buyer's perspective there's a lot of choice, which is a good thing. It just depends what their bent is. In the area that I do, generally it tends to be more the classic Queenslander style homes that fetch the premiums and what people do search for. So that's sort of if I had to describe that, that's sort of where they would be looking for a lot of in the areas I do at this point.

Chris Bates: And what makeup do they make of the suburbs? Like are they 50%? Are they 70%? Are they ...

Charles Wiggett: Look it is very interesting, particularly let's just take Chelmer, Graceville, Sherwood, Corinda for example. I mean there's what they call low side, corridor, high side. And that I think is a reflection of not only the actual level of the land, but also the value of the land. So a block of land on low side will fetch between $600-$630K. You go to corridor it can be anywhere up to seven. And if you go high side and it can $800K plus. And that's within 500 meters.

Chris Bates: And what are the differences there? Like what does it actually mean low side, high side, corridor?

Charles Wiggett: Yeah look I don't think anyone can determine that exactly, but I think it's a combination of not only height in the land from west to east, but also I think it's the case of the values seem to have ... although that's changing, the dynamics are changing. And I think the values. Because the high side tends to be your more big, sprawling, rambling big Queenslanders on 810, 1200sqm blocks and there's a lot more of them than what there are corridor and low side and that's where I think some of the perceptions gone. It's just pricing.

Veronica Morgan: Because we've got floods to consider in Brisbane.

Charles Wiggett: Yes.

Veronica Morgan: Obviously. Fairly recent history. So I guess that's part of what you're talking about impacting on the value. I mean there's always you know the high side you're going to get views, right?

Charles Wiggett: Yep.

Veronica Morgan: And obviously better light and a number of aspects that add value to the actual land you know in a material sense. But also you got that specter of flood and that recent memory of flood as well. So I'm presuming that that is one of the big factors here?

Charles Wiggett: Look I think not really. It's interesting because if I had to describe low side it seems to be catching up. I think flood is a very personal thing now. It's not necessarily logic. And I can talk candidly because not only did I get flooded in 2011, but then in 2014 I bought in Leybourne Street which actually got flooded as well. So I know the insurances and all that sort of stuff really well and how to do it and I wouldn't have any issue with buying a flood property at any time. But I think from a buyer's perspective it really just depends on their background experience. If they're from Sydney and Melbourne sometimes they are a little bit nervous because they've heard all the bad talk about it, which is not necessarily true in many senses. You know I think there's a lot of aspects you got to look at, the insurances, the resale. And if you know a good agent that knows those things they can explain that and you can make a decision based on fact rather than a lot of the scare mongering that does go on.

Chris Bates: Yeah I mean a lot of the amazing things about market economics and free markets is that you've got demand and supply. And if there's a piece of information it should be factored into the price. So if it is in a flood zone and that is factored into the price, as in you're buying it 15, 20% under than maybe something that's up the road. That maybe means that it's potentially something to consider. But you know I guess if it's a flood zone and it's not factored into the price and you're paying top dollar compared to something else in the suburb then you got to kind of be putting it into your decision on valuation I guess.

Charles Wiggett: It's a balancing act. You know and I think that depends on the agent and how they explain it. See I'm very candid with people. And I guess they tend to feel comfortable with me talking about it because I have been flooded and bought post flood so I've got ... I know what I've been through.

Veronica Morgan: Skin in the game.

Charles Wiggett: And I was there. You know I drove a boat from some areas across streets and I helped muck out houses and we got them. And it was a beautiful community event in some degrees. So it boils down to a personal thing. But yes you do tend to get properties for cheaper if they've flooded. But then again it depends on the house. First level, how much on the first level. Did it get second level inundation? You know I've got properties where we had second level inundation and I still hold the street record from three years ago.

Charles Wiggett: So it's quite a fickle creature and I think if it's explained to buyers properly and how, where, why, and what they're buying I think there's a lot more piece of mind and they may consider it more as opposed to if an agent that doesn't know what they're talking about.

Veronica Morgan: So those buyers that are more likely to accept your explanation I guess of the impact of that, are they already living in the area? Or are they coming from outside? Or is there no difference?

Charles Wiggett: Bit of both. I think the ones that live in the area, I think one of the trends I'm seeing is if their parents or they got flooded there's probably a lot more reticence to do something because they've had first hand experience. But seems to be interesting if the parents have experienced that then it seems to be more impactful on them. If they've experienced it I guess it depends on where it was, how much it was, you know and whether it ... There's a lot of sellers that I've had where they've actually had separations over the flood. But the reality of it is it's not the flood.

Chris Bates: Yep.

Charles Wiggett: Flood is a flood is a flood. What I'm finding is is that the interstate buyers, it tends to be misinformation that's fed to them from so called experts that you know go on realestate.com and they think they know everything. And they read about the flood and they think they know everything.

Chris Bates: Yeah. Well I mean there's ... I was looking at just yesterday actually the flood map that Brisbane government's put out. And you know can you rely on something like that? Because it seems like you know if you relied on that you pretty much wouldn't buy pretty much anywhere near the river, you know, and some suburbs are completely wiped out. So you know is it actually something ... Should buyers even really look at that like in your experience? Or do you think it's a bit overdone?

Charles Wiggett: Look I think it's like anything. You got to do your due diligence. You're buying a property, you're investing a lot of money. You've got to do your due diligence and you got to take that into ... fact it in. I know what you do. It's called the ... it's a flood mapping predictive thing they've got.

Chris Bates: Yep.

Charles Wiggett: And some of the predictions have never been flooded ever.

Chris Bates: Yeah.

Charles Wiggett: But they predict that if this happened and this certain thing happened then it could. The reality is we live next to a river.

Chris Bates: Yeah, that's right.

Charles Wiggett: You know I mean that's what you got to factor. And I think the fact that it's happened only since 1900 twice you know of any major event. When we bought again we thought we're probably not going to be there more than 10 years. The chance of it happening while we're in that 10 year stint is pretty remote. But, you know, we're insured. We got alternative accommodation cover. If it does happen we get a full renovation.

Chris Bates: Yeah.

Veronica Morgan: It is disruptive though isn't it? I mean like you mentioned that some people's marriages haven't survived. And yes sure obviously there was something fundamentally probably wrong with the relationship that that I guess traumatic event triggered that split, but that is I guess part and parcel of the importance of choosing the right property and actually having a sense of place and home. It's intrinsically wrapped up with our identities and our successes and our families and how we live. It's really complex which is one of the reasons why I find property so fascinating is that if you get the wrong property or something terrible happens, it can put extraordinary, in some cases, unbearable strain on relationships.

Charles Wiggett: Oh absolutely. Look I think it's all about, look you know the flood does and has put ... Because a lot of people thought they were covered by insurance and weren't. But we weren't.

Veronica Morgan: Yeah.

Charles Wiggett: Because apparently it was something to do with, I don't know, back flow drain stuff.

Chris Bates: Yep.

Veronica Morgan: So a technicality the insurance company used.

Charles Wiggett: You know a flood's a flood's a flood. To me it's water, it comes up, doesn't matter where it comes from. But at that point the insurance agencies had different demarcations of what it was so we weren't covered. I mean we were quite lucky because we didn't have a lot downstairs.

Chris Bates: Yeah.

Charles Wiggett: But it still had an impact and it was worse because we were actually in Hervey Bay and we couldn't get out.

Chris Bates: Yeah.

Charles Wiggett: A friend's ... This was a beautiful thing about how community pulls together. Our friends actually emptied our house into the neighbors just up the road. And then took pictures of how the water was slowly rising, rising, and rising.

Chris Bates: Right.

Veronica Morgan: Wow.

Chris Bates: Did you get it all back?

Charles Wiggett: Yeah, like, yeah. We didn't get anything from the insurance company, but-

Veronica Morgan: Got it back from your neighbors.

Charles Wiggett: Yeah. We got all the neighbor's stuff. He was building at the time, so it was covered and it was out of it.

Chris Bates: Yeah. I mean so what some of your tips? Like I agree, I mean I think to blanket rule out every property in every suburb because it could potentially flood is kind of being the ignorant, that there would be great properties to consider in those areas. But there's things that you'd have to do additional due diligence on and insurance would be one. I mean what's some of the other tips that you say to buyers when they are considering a property that ... You know I guess there's different levels of flood risk, right? There's ones that are right on a low point at sea level, right near the river, they're the first ones to flood. And then there's ones that if it gets to so much water then they will flood. So what are the tips you say to buyers that are considering buying in flood zones.

Charles Wiggett: Look I think you got to look at the flood map. You know there's what they call flood wise property report. Now that's more of what actually happened and what that shows on it is not only where the flood levels came to and some of the other predictives, it also shows where the lowest part of the land is and the highest part of the land. And that's a good guide because then you can sort of see. Again it's an approximation.

Chris Bates: Yeah.

Charles Wiggett: It's like anything. You do as much due diligence as you can. I think the agent should be able to answer a lot of questions. Like there are certain insurers are certainly for that area I wouldn't go through, I'm not going to name them. But they're just not interested and they blanket cover even an unflooded house with a high premium because it was in a flood area.

Chris Bates: If there's like 10 insurers though, like how many insurers would look at a lot of properties in flood zones? Like one or two? Or is it like still eight or nine?

Charles Wiggett: Oh no, no, no. There's a lot of them. You know there is a lot. Not a lot of mainstream. Like there's, and again I'm not sure whether I'm allowed to mention them or not, but there are others that have come on stream that weren't doing flood before because the market's become competitive. The pricing has dropped dramatically from that perspective.

Veronica Morgan: So I guess there's demand. People want to be covered for floods so there's a product to be put out there.

Charles Wiggett: Exactly. And the agent should be able to show the buyer what the existing insurance cover is and what the costs of those are. So that's one thing I do in the buyer packs that we supply is is that you know obviously withhold personal information but we do show subject that the seller being comfortable with that, that what the cover is, how much it is and that then gives the buyer I guess some level of comfort that they can be covered.

Chris Bates: And it's always tax deductible, right, for investors? You know if it's extra 1,000 bucks a year tax deductible.

Veronica Morgan: Still that'd be-

Chris Bates: You know end of the day like if you're factoring in additional costs then I guess it might mean you're getting it at a much better price. You've got to ... I don't know I think you've got to be open to it I guess.

Veronica Morgan: Well yeah but you also got to think about capital growth and I think that if these things are going to, particularly from investors. You know living ... Making these decisions if you're going to live there is one thing because there's lots of other things involved in making a decision about where you're going to live. But for an investor you do have to be focused on capital growth and if that's going to impact negatively on capital growth or your ability to get tenants to stay there or you know that general disruption, then I do think investors have to be very careful about flood zones.

Charles Wiggett: Look they do, but I can show properties I've sold two or three times over in flood zones with nothing done to them where the ... And I'll give you one example. We saw one in Tweedale Street where we sold I think it was $765k and then two years later nothing done to it apart from a little garden bed put in, we sold it for $860k. You know and that got flooded. So I can actually show, and a good local agent that knows their stuff. And I think it's important particularly in that area that you sort of know a reputable agent that is in the area. And one way to test that is I use a rating system called Rate My Agent. That's a good way to see the credibility and the feedback of the agent because it also comes from a buyer and a vendor perspective. So if they have been in the area that sort of buys a bit of credibility from that.

Charles Wiggett: Do your research. Ask the agent what insurance companies. And the agent, you know for what I say is look these are the ones I'm aware of that have some benefits and this is what the current seller is insured with. Again, litigation is ... You got to be really careful-

Veronica Morgan: Of course you do.

Charles Wiggett: ... in how much I actually tell people and I just say, "Well look. Do your own diligence, but this is what I understand it."

Chris Bates: If you're aware ... We got to a different tactic, I think we covered the floods.

Charles Wiggett: Right.

Chris Bates: If you're an investor in Brisbane yourself personally and you're looking to buy an investment property, what would you roughly ... What would you go by I guess?

Charles Wiggett: Look I think again it depends on what you're sort of looking for. Look if you're looking for capital growth-

Chris Bates: Yeah, capital growth, yeah.

Charles Wiggett: ... you might look at properties that have like a post war home that potentially can be renovated but's in good condition. You can put a tenant in there straight away. There's a minimal dress up that needs to be done, like you know make sure you're fire alarm compliant. Those sort of things. And then you wait for time capital appreciation in that respect-

Chris Bates: When you say post war, you wouldn't buy Queenslander?

Charles Wiggett: Yeah, yeah look absolutely.

Chris Bates: Yeah, okay.

Charles Wiggett: I'm just telling you examples, you know it depends on your price point.

Chris Bates: Yep.

Charles Wiggett: And then you can go to other investors that are looking for something with a warranty on it, something that's fairly newly built and that's having a good yield on it and they don't have to do anything with it.

Chris Bates: Yep.

Charles Wiggett: So I think it depends. What I try and do with the investors find out what they're interested in because there are specific investors that will only look at that... nothing else.

Chris Bates: And would you ... If you let's say had an unlimited budget. Not unlimited, unlimited. But let's say I had $1 million dollars or $1.2, what price point would you enter as a investor in Brisbane do you think?

Charles Wiggett: Look again I think you got to be mindful of are you a first time investor or are you a seasoned investor? I think there's two differentials there. I mean if you had the money and you inherited and you're a first time investor I probably wouldn't spend $1.2 million. I would look to, and this is just personal.

Chris Bates: Yep, of course.

Charles Wiggett: Not giving financial advice here.

Chris Bates: No, no, no. Just curious in the present market what you would do, yeah.

Charles Wiggett: I would look at a post war in a good location. And I think the crucial thing is close to train, close to bus, good schools, private schools, access to the city I think are the essential elements from an investor's perspective. Let me give you an example. If you look at Chelmer, Graceville, Sherwood and I use these examples and I'm not saying they're the best, but there are other areas around obviously. But they've got on average 10 to 15% of the land masses are covered in parks. You've got private schools within a 10 minute driving range. You've got train. You've got bus. You've got a café set that's just very, very strong.

Chris Bates: And how many K's are these suburbs from the city?

Charles Wiggett: So if you look at Chelmer for example that's about 8.5Km at the crow flies, give or take. But you do have two access points. One through Fairfield Road and one through the city and Indooroopilly. So again that's what I try and tell investors to look for. What is the infrastructure behind schools, lifestyle, park, children, families, train, bus. All that is part of the glue I guess that will then enhance the capital growth over time.

Veronica Morgan: All the typical things.

Charles Wiggett: It's nothing new.

Veronica Morgan: Yeah.

Charles Wiggett: I'm not telling anything, I haven't invented anything new here. It's just, but I think-

Veronica Morgan: Principles are the same as they are anywhere else.

Charles Wiggett: Train I definitely believe and if you look at what happened to Sydney and I do know because I did, when I first came to Australia we lived in Sydney. And if you overlay where all the growth has been it's been along all the train corridors because obviously that's the easiest access into town. It's not, I mean it's the fundamentals that were there 50 years ago are still here now, but I find it basically.

Veronica Morgan: Yeah, it's that accessibility that's so important. What sort of proportion of properties do sell via private treaty versus auction?

Charles Wiggett: Look I mean again I think every ... I would say that I probably do 80% through private treaty, 20% auction. Look it's not that I'm averse to it, it's I think a lot of people in Brisbane are still not quite comfortable with the auction process and I think there's two elements to that. One it's probably not explained properly and I think there is a way to explain it, and it is a process. Whereas a lot of people think it's just an auction, but it's not. It's actually a four step process in mind. You've got pre auction. Generally when I'm doing an auction I will sell 60, 65% of my stock before it even hits auction on an unconditional status. Then we've got auction itself. And look if that passes in. Potentially got conditional buyers. And then if that doesn't work then we got what we call mop up which we know what's-

Veronica Morgan: Mop up.

Charles Wiggett: Yeah, that's what I call it.

Veronica Morgan: Yeah, yeah.

Charles Wiggett: So we know what's been through. We know the pricing. I think price the property on the day because I think when you're doing an auction campaign you got to be seen to be strong in the marketplace. You can't dither. So the auction is finished, I sit down with the owner, we talk strategy. We've this pre auction meeting so we know what we're going to do if it passes in. And we price it then very quickly.

Chris Bates: Yeah.

Charles Wiggett: And then I go back to all the buyers and I recall all the buyers and then often I've been able to pick someone up that hasn't found anything.

Chris Bates: Yeah. I mean you don't want it sitting around, right? After you've passed in at auction you don't want to be a buyer to be looking at it in a month's time and go it's going to auction, it has passed in and it still hasn't sold. It's not giving people with confidence.

Charles Wiggett: It's very, very rare that that happens you know.

Chris Bates: Yeah. Of course yeah.

Veronica Morgan: Well you got all the price feedback supposedly so you use it. You say right they responded in these ways. Because you can't quite price it here can you?

Charles Wiggett: Look it's the craziest thing because you know I can put a price up and I know that the best I can stretch to would be doing some similar sales in the area that represent that. I don't know whoever came up with that idea, but look I respect it. It is the law and we've got to ...

Chris Bates: Can you explain that to our listeners how that might be different to other states?

Charles Wiggett: Look from what I understand is that you can in New South Wales and Victoria, you can give a price guide-

Veronica Morgan: Yes.

Charles Wiggett: ... even if it is no price. Whereas we can't even do that. You know what we can allude to is what's sold before or we can allude to what recent sales have happened in the area and that the owner's expectations, make that up for yourself.

Chris Bates: So it's either an actual price, $1.2, or it's-

Charles Wiggett: It can be price or price guide. But if you're doing for sale you've, yeah, you've ... say well that's what they want.

Veronica Morgan: Okay so if you're a private treaty you put a price on it, right?

Charles Wiggett: If I'm private treaty ... Look again it depends on the property. So what I'm finding at the moment because the market's a bit fickle I'll put for sale because we want to test a little bit, see what's going on. For the first couple of weeks we want to just see what the market's doing, do we get an offer straight off the bat, can we get it done? I think if you price it straight off away and you get it wrong, generally there's only one way you go. And then if you've seen two or three price drops because you got it too high, so I like to do for sale to start with and then ... because I do regular reviews with my vendors. We talk strategy in terms of the buyer feedback, what they're saying, where they're at. So they base their decision if there are any reductions in price. Or we price it based on fact as opposed to me just ringing them up saying you got to drop the price.

Veronica Morgan: Whereas with auction obviously you can't put a price on it. So okay a buyer rings you. I've seen this property, beautiful Queenslander on top of the hill. Love it. What do they ask you? I mean in the other states they ask-

Charles Wiggett: Look first thing they ask is price guide.

Chris Bates: Yeah.

Veronica Morgan: Yeah, of course.

Charles Wiggett: I'll say look, you know, and then I say look I can certainly help you. What I try and do I guess is well look what's your budget? What can you spend? And then if they say I can spend X and it's close I can say look you know I suggest that you-

Chris Bates: You're on the money.

Charles Wiggett: I suggest you go to the auction and find out yourself. Or I'm happy to take an offer off you. And so long as it's unconditional before auction day and the owner's acceptable to terms then.

Chris Bates: Yeah.

Veronica Morgan: This is a bit you show me yours, I'll show you mine isn't it? I mean it ... I find it insane that it's legislated that you cannot give a price guide.

Charles Wiggett: Crazy.

Veronica Morgan: I think the agent, for starters you've obviously put a price guide on the agency agreement. You've told the vendor what to expect.

Charles Wiggett: Yeah absolutely.

Veronica Morgan: You've researched it and all that sort of stuff, so clearly you've got an expectation, the vendor's got an expectation. You've done your research. And then the buyer comes along and they got to make up their own mind. And then of course you're going to try to put together an auction and work out where your buyers are at and everyone's behind smoke and mirrors. No one's telling anybody anything.

Charles Wiggett: Look, yeah and buyers are innately suspicious so they think it's a trick question when I say well what's your budget.

Chris Bates: Yeah.

Veronica Morgan: I'm not telling you.

Charles Wiggett: Yeah and I'll say well look, I said I can't help you if you can't help me. Legislation is what it is. If you help me do that I can give you some similar sales in the area if that helps.

Chris Bates: Is that new legislation?

Charles Wiggett: Last couple of years I think it's come in.

Veronica Morgan: Yeah.

Chris Bates: Yeah. And I mean what's your gut feel that a lot of agents just kind of bend the rules a little bit potentially to ... you know because end of the day they don't want to be like playing games. It's like it's roughly going to be roughly this.

Charles Wiggett: Look the way-

Chris Bates: You know and just-

Charles Wiggett: The way I get around it is by saying well what's your budget?

Chris Bates: Yeah, that's how you should play it.

Charles Wiggett: That's the easiest and simple way. I think that's the way you got to try. Look I mean you know there's equivalent sales as well what sold in the area you can ... And then the CMA, sorry in the form six you can say that you can display some ... What I tend to do is if we are going to show recent sales I'll pick what I think is reasonable and the vendor's happy with that.

Chris Bates: It's pretty close.

Charles Wiggett: The reality of it is you're not ... Pricing a house is crazy. Even houses that are exactly the same don't sell for the same prices.

Veronica Morgan: No. Look you said before you've got quite a lot of disparity in terms of the types of stock you've got. And I mean it's the same with the area in which I'm in in Sydney and so that's one of the things that makes it interesting. It's not homogenous and it's one of the things that makes it a good area to invest in in terms of where we're at where I am. But it makes it really difficult to price because the most recent sale might be two years ago that's really comparable.

Charles Wiggett: Absolutely.

Veronica Morgan: Lot of water's gone under the bridge, pardon the pun.

Charles Wiggett: That's a good one, I like that. I don't use that a lot, but yeah.

Veronica Morgan: So you mentioned around about 65% of the properties you take to auction you would sell prior unconditionally. And how do you identify the buyer ... Or how do you get to that point where it sells prior?

Charles Wiggett: Look my view is it's the reality of any campaign. It's for sale or by auction. You know if a price comes along and the owner's happy with, that's what it's determined by. I will take an offer to them. I'm quite clear to the buyer that we usually have to be unconditional one business day prior to the auction. And that's on all counts because if-

Veronica Morgan: Why do you wait that long? I mean if the buyer gives you an offer in the second week.

Charles Wiggett: Look I mean that's the absolute last.

Chris Bates: That's a last-

Veronica Morgan: Oh right.

Charles Wiggett: Because you can't go into obviously into an auction with a live offer.

Chris Bates: No. No.

Veronica Morgan: God no.

Charles Wiggett: Because that's catastrophic. So I say to them look that's the time you have, 5 PM on that day. And the reason I allow a business day is because if they need an extra bit of time and the deal's 99% there it gives us a big of wiggle room.

Chris Bates: For buyers, what do you think ... Is it a four week auction campaign?

Charles Wiggett: Depends on the house. Generally the more expensive ones we'll do five.

Chris Bates: Okay.

Charles Wiggett: A million plus I probably would do five. Under that I'd do four.

Chris Bates: Okay and let's say it's a four, what do you think as a buyer is the premium point to begin to go hard on a property? What would you do it? Week one? Week two? Week three? On four?

Charles Wiggett: Again what that depends on is depends how keen they are. I sort of think like anything if you go in strong, you like the place, don't muck around. You know I mean end of the day a house is only worth what a buyer is prepared to pay and in your head you have a price. That's the reality. What I can do as an agent from a seller's perspective is because look my philosophy I work obviously for the seller, but I work with the buyer. Is I can potentially show value to the buyer by what I know, what I can deliver to them, and how I can talk about the suburb.

Chris Bates: End of the day you're selling to the buyer, right? They've got to buy it, so you know you want it sold and it's aligned interests. I guess with when you've got some people ... It's very common now, I get it with clients, they're potentially getting priced out of Sydney and Melbourne in the areas that they would really like to live. If they do want to buy they potentially could push themselves, but then that would equate to a lot of debt, and what does that debt mean for their working future and you know I guess their need to earn a big income and then that means the stress and the time. And a lot of them are considering Brisbane you know because they come up here and you know they see the price of the property and look on realestate.com.au and think about wow I can get this house the same in Sydney for $700K and it was $2 million.

Chris Bates: What's your view of when you see those buyers walk in on a Saturday and how they approach it? You know is it easier for a real estate agent? Do they kind of overpay?

Charles Wiggett: No I don't think it's overpaying. I think it's all relative to your perception on price. Locals will always be a little bit ... not blinking's probably the wrong word, but a little bit stoic on what they think it's worth. Because they've ... Obviously on realestate.com it's a very tight community around there so people know a lot of stuff through talk and everything like that. So I think a Sydney buyer comes in a little bit, or a Melbourne buyer, I don't think they overpay, I just think they see better value. So for example I saw one in Graceville is-

Veronica Morgan: I love ... Sorry I just love.

Charles Wiggett: But it's true. Let me give you example. This guy said, "I can't believe I've just paid $945,000 for a four bed, two bath house, with a pool. 8K from the CBD."

Chris Bates: Yeah.

Veronica Morgan: Yeah, but the problem is they are comparing it to where they come from, not where they are. And that's ... It's interesting. I mean as a sales person of course you're going to say it that way and see it that way and I 100% agree with you as a sales person. As a buyers agent I go, "Guys, it's not good value because it's not in the area in which you know." You know like if the local buyers are more stoic on the price and they're not prepared to pay that money, then you got to be careful, you know?

Charles Wiggett: Look, you do. But I think there's also balance. I think what you got to look at it as is that sometimes the locals can be, you know they can be a little bit ... they're too analytical.

Chris Bates: Yeah I see what you're saying.

Charles Wiggett: And what I say to buyers is if it falls over on bank val, you renegotiate. That's the big determinate. If the bank is prepared to lend to that amount and you're prepared to spend that amount, then that's what it is. And the reality of it is is what I look at is that if we never paid more than what a house was worth ever, prices would've never have gone up.

Chris Bates: Yeah.

Charles Wiggett: So I mean the buyers agents that I use and the buyers that are buying off me, they're not being ripped off or anything like that.

Veronica Morgan: No, no, no. I'm not suggesting that. It's-

Charles Wiggett: Yeah they're not. Because one of the things when I work with the buyers agents is you know they know exactly the value of the property and I can show them evidence of why I think it's worth that.

Chris Bates: Yeah I see what you're saying. Like if you've got two people looking at the same property. One's from Brisbane, lived in Brisbane, you know maybe being a little bit more conservative, "Oh I can't justify paying that." You know they sit on their hands a bit more. You got someone, a Sydney/Melbourne buyer coming in and yeah it's a great property. It ticks all the boxes. They've done their due diligence. And they're willing to just put that little bit more in. They're the ones who'd get the property. And if it's in a good area and it's a good suburb that is growing. Like sometimes part of the process is actually just getting the deal done and sitting on your hands is ... So I can see why. You got to kind of be also a little bit optimistic and be willing to get a deal done.

Charles Wiggett: Look-

Veronica Morgan: Well obviously it's like a bit going to auction. I mean the highest bidder buys the property. So obviously, that's not what I'm talking about here. What I'm talking about here though is that as an interstate buyer or an out of area buyer, and I see it myself exactly that, they don't get the nuances of an area and they might by the low side property for argument's sake and not realize that the local buyers won't go for that as hard as they would. That type of thing is what I'm talking about.

Charles Wiggett: Yeah look ... Look I think it's, you got to be a little careful with that because I think there are elements in there that you'd question how serious are the buyers. And I have had buyers that are local say, "Geez I wish I had actually bought it," because they've almost cut their nose off to spite themselves in some degree.

Chris Bates: Yeah. Especially when they're flying up from Sydney.

Charles Wiggett: When I'm dealing with buyers from interstate, look I'm take them on a suburb tour, show them the area. I can substantiate everything I can on that price. And then it's up to the buyers agent to make that decision whether they think that's valuable. And I think the backstop is is that if it is paid too much for it, the bank will soon determine that.

Chris Bates: That's a good point actually because in Sydney you pretty much don't buy a property without a 66W. I mean now you probably you're finding you maybe can.

Veronica Morgan: Yeah, you can now.

Chris Bates: But for the last six years let's say you haven't been able to. You know if you want-

Veronica Morgan: And just stepping in there. A 66W is a certificate in New South Wales that is given by the ... sorry the purchaser's solicitor or conveyancer that allows them to waive the cooling off period.

Charles Wiggett: Okay.

Veronica Morgan: So it's all handled by the solicitors. Whereas in Queensland of course the-

Charles Wiggett: In email. It used to be-

Veronica Morgan: ... yeah, the buyer can waive the cooling off themselves.

Charles Wiggett: Yeah. It used to be ... It used to be with so now so long as you've got an email. And there is Realworks from REIQ. Our local governing body in real estate have a document.

Chris Bates: Yeah. And how often are people doing that though?

Charles Wiggett: Look it tends to be under intensive multiple offer, yeah ultra property.

Chris Bates: Ultra competitive property. But that doesn't happen that often?

Charles Wiggett: Look it does. But look you know some people will, and again it depends on the buyer. Like I've got some big time investors that are looking constantly for opportunities and they will come in no pest and building, no finance, cooling off period waived, cash.

Chris Bates: Bang ready.

Charles Wiggett: Big deposit, 10%, boom, done.

Chris Bates: So if you do, because one of the things you know a client recently bought in Brisbane without a preapproval and if he's listening to this, I love you, but don't do that next time. But we got there, right? And one of the things is we had to you know ... I said, "Look if you got to do it make sure you get a 10 day cooling off with finance approval," just because the banks at the moment you know, by the time we lodge it and get it through it takes some time. One of the things in Brisbane I think with signing contracts is there is always a finance approval, right?

Charles Wiggett: Correct.

Chris Bates: And that just doesn't really happen in Sydney and Melbourne. So you know if you don't have that luxury if the valuation does come in low you couldn't go back to the vendor and say, "Hang on a sec. I can't get finance."

Charles Wiggett: No. Yeah no, correct.

Chris Bates: Does that often happen on established property here where valuations are coming in low?

Charles Wiggett: Very rarely because you know the growth in the areas that I deal with has been consistently. It hasn't been huge, but if you look at the track record the last three years has been consistent growth. Albeit a little bit wavy if you like is the word.

Chris Bates: Yeah.

Charles Wiggett: Generally rule of thumb, if I had to give you a guide, if you're putting an offer in Brisbane it generally is 14 days for finance. You've got seven days for pest and building. And that's calendar days. Your cooling off period is five business days. Now the challenge you've got with a cooling off period is if you pull out under that is potentially a .25% sting that can come.

Chris Bates: .25, yeah.

Charles Wiggett: I've never seen it enacted on my properties ever. So what I generally find if someone's going to pull out it'll generally be under the finance or pest and building. And if you look at the contract that we have it says satisfactory to the buyer. Which is pretty ambiguous.

Chris Bates: Yeah I actually have made a mistake there. I said a cooling off. I meant finance approval.

Veronica Morgan: Yeah.

Chris Bates: Yeah I said to him at least get a 10 day finance approval and he got a seven.

Charles Wiggett: Look seven is pretty tough unless you're a cash buyer. I often get buyers that'll be cash and there's pest and building, which case obviously there's no finance clause at all. But look ... With the banking commission I'm noticing that the finance clauses are getting longer. The buyers agents I deal with tend to be business day, so they'll say 10 business days for finance and seven business days for pest and building.

Chris Bates: And just on the finance as well, a 42 is pretty standard in Sydney/Melbourne. But in Brisbane it's 30.

Charles Wiggett: 30 generally is what we look to do.

Veronica Morgan: You're talking about settlement periods.

Charles Wiggett: Settlement period.

Chris Bates: Yeah and so you kind of, you know a buyer if you are buying in Brisbane, 30 days is tight for finance.

Veronica Morgan: It is.

Chris Bates: You need to be on the ball. And so in Sydney/Melbourne 42's pretty good. You'll be fine. Like you should be fine. But if you want to swap banks from a preapproval point of view, your preapproval is Macquarie and they're not offering you a great deal and you want to go to St. George or Westpac, you know 30 days is getting tight. So you got to be really careful.

Charles Wiggett: I'd strongly, don't change banks if you can avoid it, particularly in this because I've got a lot of clients now where they've gone back for their preapprovals because they haven't found anything and because of the banking commission rules, it's not so much the rules change it's they're just being a lot more ... Like for example in the past you'd say what's your living expense and you'd sort of say ohh that, and as long as it met the minimum requirement you're in. But now they're getting the statements and saying where's your mortgage, where's your house insurance, where's your ... and by the way, that surplus you said you had, where's that?

Chris Bates: Yeah.

Charles Wiggett: Because we all had surpluses in the past, they probably were there but generally rule of thumb got spent.

Veronica Morgan: So you ... Obviously when you're selling prior to auction you want to sell without a cooling off period. So that gives people opportunity, well they've got to do the building and pest inspection and all that due diligence prior to actually submitting their offer and waiving that cooling off period.

Charles Wiggett: Correct.

Veronica Morgan: Actually on your website it's noted that "Auctions remove a certain level of control from the seller." What do you mean by that?

Charles Wiggett: Look I mean I think I do like auctions and I think they're a great process, but you know it can put a little bit of pressure on the seller that they may have to make a decision on the day and that's not necessarily a bad thing because you know ultimately I think what you've got to look at is as a seller when you do these things is what is the macro end game? I think we get too focused on price and the conditions, but there are people that it might suit. They may not get the extra 10 they wanted, but it does get them into the next house. It does get them moving forward. They're buying and selling in the same market and I think we got to be a little bit caught up and being a little bit too ... Look I've got some properties where they turned down an offer five grand away. You know and they were adamant they could get more and I said, "Well okay that's fine." And then since then it's been a lot more difficult to get even close to that.

Chris Bates: Because money's not always the motivator, right? 100%. You know it's not about I want to sell this for the absolute premium price. If that facilitates me to buy another place or it facilitates me to do that quicker or allows me to ... The terms of a deal is just as important sometimes as the price.

Charles Wiggett: Look I think, yeah. I think it's ... And again it depends on each individual. There's some older couples that I'm dealing with and their prerogative is to get into the unit or the townhouse, downsize so they can travel. They've had the house for 20 years so you know if there's a five or 10 grand difference to what the ideal was and what we said we would get. You know part of what I do is I have my appraisal. I'm generally pretty conservative. And the owner then has their price. So we will always go for that price to start with, but any sort of changes that I make is always driven by fact, reports, and follow up. Because I think if a vendor's going to make a decision to change price it has to be based on something, not just me ringing them up.

Veronica Morgan: Yeah. And how do you get into the vendor's head and understand what's actually motivating them in the first place?

Charles Wiggett: Look I think it's just listening. You know it's not, again, it's not rocket science. You know it's ... And I don't always get it right. But I try and listen because I do a two step appraisal. So I always do the first step is when I go and see the house, I look at it and I get a feel for it because I'm very visual. I ask them what they like, what they don't like. And then I look around. Have they kept ... like you know. Then I ask questions at the same time. Where are you going to? What are you doing? And I find out about them. So by the time I'm finished that I know what the house is, I know what it is at. Then I go away and do my research. And I think it's ... Personally in this market and any agent should be doing that. It is a bit more work, but then I can come back well versed what, where, why, and how. And I have a feeling for where I think they're going to be.

Chris Bates: Rather than gung ho I can sell this at $920k tomorrow, no problems. You know here's a contract.

Charles Wiggett: Look I've lost listings because the agent that I was up against said, "Oh we'll guarantee you this, but I don't think Charles can." And I said well ... And I said to him, I said, "Look," I said, "Look if that's where you want to go, go."

Chris Bates: I love the word guaranteed.

Veronica Morgan: Oh I know.

Charles Wiggett: That's what they said. They said guarantee.

Veronica Morgan: And also saying that someone else can't.

Charles Wiggett: And then the irony of it is, and this is how some agents just have no idea, they ring me up and say, "Hey look we got the listing off you, and by the way if you got any buyers can you bring them through to us?"

Chris Bates: Yep.

Veronica Morgan: Oh no..

Charles Wiggett: And I said, "Yes, okay, good luck with that one."

Chris Bates: Yeah.

Charles Wiggett: Then the seller rings me up, the end of it and saying, "God I wish I'd gone with you," because guess what they got? $805k.

Chris Bates: Yeah. Yeah. I mean it's a behavioral bias. We all do. We always go for ... It's unfortunate we go for the person who promises the most. And I guess one of the things I was seeing a lot in Sydney/Melbourne is a lot of the tail winds that pushed up the property market are turning into a bit more of a head wind. You know relaxed borrowing, some more conservative kind of borrowing limits. Interest only loans now moving to maybe more principle and interest. You know the Royal Commission. There's lots of things that are forcing the property market to slow down and give it maybe a challenging time. I guess when you look at Brisbane they had the same tail winds and low interest rates and things like that. Why didn't Brisbane boom when Sydney and Melbourne did?

Charles Wiggett: Look I think it boils down to primarily job opportunities. You know there's lot of job opportunities, but there's certainly not the level you got in Sydney and Melbourne. If we had the same job opportunities available to people in this area, it would've gone the same. But in saying that I think Brisbane's not a bad ... hasn't done badly. It's been consistent in its growth. It's been steady in its growth. And that to some is probably what's reflecting now, it's probably not having as much impact with the changes in the market as opposed to Sydney. I see more divergence happening.

Veronica Morgan: I think one of the issues with the Brisbane market and a lot of the press is around the over supply of apartments and there's been lots of reports around particularly at the moment you know settlement risk and obviously valuations coming in up to 25% less than contract price. But also the fact that there's been negative price growth, which is a nice way of saying loss in many, many suburbs in this new stock. And it's a little bit like Melbourne when you consider Docklands and that over supplied area of apartments down there versus the rest of Melbourne has done extraordinarily well. So I guess there's similar things happening in the Brisbane market. Correct? And there's a lot of press around the over supply, less around everything else.

Charles Wiggett: Yes, there are, but I actually think the two are distinctively different. The unit market is very much different from the housing market.

Chris Bates: Yep.

Veronica Morgan: Yep.

Charles Wiggett: And yes there is an over supply. But again what it boils down to, and look we've had units and they have been challenging to sell, but I think part of the process is what I say to my vendors is that look you've got a ... if it's vacant you need to dress it. We do a lot of uncut iPhone videos on places where we try and specifically identify where we think the buyer's going to come to and we deliver that within the 10K radius through social media. Different things we always try ... you know we have buyers agents that I always, before the property goes to market I will send it out the buyers agents so they can see if there's. So as an agent you can't just stand and wait for people to come to you. You've got to be proactive.

Chris Bates: Especially when you got a new unit that's there's only a thousand other out there at the moment.

Veronica Morgan: Yes.

Charles Wiggett: Absolutely.

Chris Bates: So you just can't ... You know you're trying to sell something that everyone's selling. It's very hard.

Charles Wiggett: And it's back to basics. It's phone call, phone call, phone call, phone call. You know it's just that constant back because I've often had buyers that didn't like it to start with, haven't found anything, and I've rung them back and they said, "Oh is that still available?" I say, "Yeah absolutely. Come along, have a look."

Chris Bates: Yeah. I guess in the inner rings of Brisbane there's some parts that have done really well, right? You know and it has been ... Even though Sydney and Melbourne have gone up, they've done really well and there's been a bit of a pressure cooker there, a shortage of quality properties. There's been you know a lot of buyers upgrading into that area. The ones who are kind of getting wage growth and got good jobs. Do you find that's in the inner ring? You've seen some patches have done really well?

Charles Wiggett: It is quite interesting and look I'll have to be candid, I'm not a unit specialist. So I go on what I sort of see. But what I have noticed is a lot of the ones that were bought off the plan, the cheaper end of the market, are struggling because they're not hitting the valuation price points. And obviously what's happening I have heard is that they're defaulting, foregoing their ... their-

Veronica Morgan: Deposits.

Charles Wiggett: Deposits. And they're going into things like the developers are then putting ... I heard one guy was given a car away or it's a furniture package.

Veronica Morgan: Yep.

Chris Bates: Yep.

Charles Wiggett: But I think you know you got to be ... I think you've just got to be a bit careful not to just get caught up in the general foray because there are good locations with good units everywhere. And I think it's a case of just being diligent. And look if you do use a buyers agent that's one way of doing it where you can get the research done for you, but do your research. You know because what you find with the apartments is it's interesting I think from what I can see is that the higher end of the market's actually doing quite well.

Chris Bates: Yep.

Veronica Morgan: Right. And so the higher end, give us some example of what the higher end would look like.

Charles Wiggett: Look, eight, nine plus, million, you know that sort of thing. Because-

Veronica Morgan: At river front? Like we're talking-

Charles Wiggett: Not necessarily river front, but in good locations. You know what I'm finding is a lot of older couples are looking to go into units from the end of my area in particular. It's either into a lifestyle village-

Veronica Morgan: Sorry, can I just double check? You said eight or nine million for a unit?

Charles Wiggett: No, no, no. Eight to $900k to over a million.

Veronica Morgan: Oh right. I was like wow.

Charles Wiggett: I would love to have a unit like that.

Veronica Morgan: Yeah.

Chris Bates: Yeah and there is. There's beautiful ones right?

Veronica Morgan: Yep.

Chris Bates: Like and there's, they're older blocks generally. They're massive. Great views. You know lifted.

Charles Wiggett: And I think it boils down to do your homework.

Chris Bates: Yeah.

Charles Wiggett: You know do your homework. You know find the location, where is it at? And things I say to a lot of, if you are a buyer looking is, particularly in unit blocks, look at what developments are coming.

Veronica Morgan: Supply.

Charles Wiggett: Yeah, it's not so much that. That is part of it. But also you might buy a unit with a view and all of a sudden two years later-

Veronica Morgan: Right, it's lost, yeah.

Charles Wiggett: ... there's a building in front of you. So you've got to look at those elements. It's good buying now I think for buyers so it's actually you know I think if you're out looking for a unit, there's some opportunities out there.

Chris Bates: One of these things that I've thought about with Brisbane, I'm happy to be wrong, is that in Sydney and Melbourne people who work in the city would much rather live you know in the inner ring, you know the east or the lower north than to live in Central Coast or Wollongong because of the commute and the lifestyle benefits and you know on weekends and things like that and the beaches. In Melbourne very similar, most people would like prefer to live in the inner ring or on the bay side or than live in Geelong or Mornington because of the commute and things like that. But in Brisbane you know I feel like there's a part of the population who are doing quite well and working in the city, but would much prefer to live on the Gold Coast or the Sunshine Coast. And so what happens is a lot of the higher incomes get sucked out of the city to those hubs. Is that true?

Charles Wiggett: Look I don't have stats on that, but look I wouldn't have thought so. There is a move for people to downsize into those areas.

Chris Bates: Yep.

Charles Wiggett: I know particularly the Sunshine Coast because it's not as developed and it is some areas a lot cheaper than the Gold Coast.

Veronica Morgan: A retirement market as opposed to a-

Charles Wiggett: Yeah. Or they're buying with a view for retirement. You know so they'll buy a unit up there, three bed, two bath, with a bit of a view. And they'll use that either as a holiday destination or they'll buy it, rent it out with a view that in 10 years time that's where they'll move to.

Chris Bates: But a lot of like 40 year olds, like couples who work in the city and maybe have quite high paying jobs that they are happy to commute. Is that common? Or is that-

Charles Wiggett: Look I'd be ... Look we're a bit spoiled in Brisbane. I think a commute in Brisbane versus a commute in Sydney are two different things.

Chris Bates: Yeah, I know what you mean yeah.

Charles Wiggett: That's what I mean. I think we're a bit spoiled here so there's probably more chance of that happening, but I've never met anyone that likes to commute up from the Gold Coast into the city. That's not a fun thing to do.

Veronica Morgan: No. It doesn't strike me with-

Charles Wiggett: You know it's just as crowded. It may not be as bad as Sydney, but my view is that generally what you'll find is what a lot of couples like that may do is they may go for acreage you know where they're looking for the bigger sprawling house, a bit more land. Again it depends on what the profession is. I've got some friends that are doctors and they just like to live out in Brookfield for example because they got the nice big houses, the 10,000 square meters, the big pool. That sort of thing. So where I live in Chelmer, Graceville around there and right through to all those sort of areas you know, the great thing about it is you can actually buy something fairly substantial. Or you know I mean ... Like Chelmer for example. You can buy, as long as you don't mind floods, you can buy three bed, one bath house on 600, seven square meters for about $600,000.

Chris Bates: Yeah, I've seen a lot of buyers agents and property sellers I prefer to call them sometimes, and they will go to the outskirts of Brisbane and they'll buy what I consider like low price point, more affordable houses and they'll buy them anywhere from 20 to 30 K's from the city. And you know low cost investmenst. What's your view on a strategy like that?

Charles Wiggett: I think you got to be a little careful with that. And again look all these outlying areas are all great and they're going gung ho and they're doing really well. What I find with that is that where you find if there's ... Look at like Chelmer, Graceville, Sherwood, and I come back to that because that's-

Veronica Morgan: Your core area.

Charles Wiggett: ... my core area. There's no one's making anymore land anywhere.

Veronica Morgan: Yes.

Charles Wiggett: So the land is very tightly held, if at all. And when blocks come out they generally go pretty quickly because no one's making it. Whereas if you look at the further out, and I won't name them, but the further ring suburbs.

Chris Bates: Yep.

Charles Wiggett: You know if they need more land they just go and bowl a whole bunch more trees and develop it.

Chris Bates: Farms.

Charles Wiggett: And the reason for that is what I think happens then is then you don't see a lot of growth in the houses because they just develop more. I had a doctor that bought out that way two houses. If he had bought one property post war, semi renovated, renovated, he would've made four or five times more doing that. But they serve a purpose out there. And again you got to be a bit careful.

Veronica Morgan: I love this, Charles. Full disclosure here. Charles has never listened to an episode of the podcast. This podcast. Have you, Charles?

Charles Wiggett: No. I've been bad.

Veronica Morgan: Because you're just saying exactly the same thing that we have talked about in regards to the outskirts of Sydney, the outskirts of Melbourne. It's that principle of supply, ongoing supply and that lack of scarcity. And the fact that your capital growth is going to impact it because of that and whereas if you buy something in the inner area where you've got high demand for individual property and high scarcity so therefore you got lower supply, higher demand, of course that's going to put pressure on prices to go up. And your investment long term is going to do better. They're the basic principles. So it's nice to hear that you're saying exactly the same thing applies in Brisbane as it does in Sydney and Melbourne.

Charles Wiggett: It's nothing new, but I think you got to be careful too because there's ... those suburbs are great suburbs and they offer affordability. They offer ... You look at Springfield Lakes. I mean it's got Orion, it's got a huge LF complexes out there. It's got huge schooling out there. So from someone who moving out there, look absolutely, you know from affordability perspective you would. If I was going to buy out there I would be buying it as a diversification of my portfolio. You know where you might get a better rental return out there at a cheaper price point and you then might buy inner suburb and match that off and then you might buy a townhouse. So I think it's ... If you were going to buy out there with a view for high capital growth I think you'd have to be a bit careful.

Chris Bates: Yeah I think that's good advice. I think ... I've actually got a client who's got something in those areas. And we're talking quite hazy here because we don't want to offend I guess people who live in these patches.

Veronica Morgan: No, but also buying to live versus buying to invest are two different decisions.

Chris Bates: Well and a lot of that when you say, key point there was actually was what's affordable. And affordable is generally based due to someone's income and what someone's income is then driving what they can afford. And that means that mortgage repayments. So that then pushes the pressure on prices long term because the incomes aren't there to push prices up. Secondly what's affordable is based on current interest rates. And you know what's pushing up the price of these properties? People are going there with a certain amount of borrowing capacity and a certain amount of income and then they're saying, "Well based on 4% interest rates I can afford $550,000." The big risk to that is if there's interest rate rises, or if there's no income growth, or there's an unemployment shock. And these things would smash these regions.

Chris Bates: When you're saying buy out of these regions, I've got a client who's got a property there and we had a really good chat around it. And what they've got is huge blocks of acres and they're in areas where every block in that area is an acre. And they're not building anymore acre blocks. They're building 350 squares. And that keeps as that suburb does get bigger. Whether it's the right thing to hold or not you know et cetera, but at least there's a bit of scarcity there for them. You know because it's-

Charles Wiggett: Look and I think it's ... Look and I think that's why you if you're investing it's always prudent to get a financial advisor that is au fait with property. And I think that is important.

Veronica Morgan: And not getting kickbacks from developers.

Charles Wiggett: Yeah and I think that's very important too. Because anything I do or any advice or anything I do, any of the people that I recommend, I get nothing for it. I don't ... Even the financiers that do offer it, I say no. Look, just look after them.

Chris Bates: Yeah I mean, I wouldn't mind having your thoughts on this around developers and how that plays with real estate agents and what your experience is. Because I've had developers offer me 12% on Brisbane apartments. I've never taken any commission from any developer and I never will, and I completely don't go anywhere near off the plan. But you know is that true? Like is that ... You know in your experience have you heard developers paying massive commissions?

Charles Wiggett: Yeah, they do. They do. Look but, again it's like anything. They're just businesses and they're just trying to get a sale and look and if they're prepared to pay that and take out of their margin, then so be it. I guess it comes back to ultimately as a buyer, buyer beware. You know do your due diligence. Do your research. You know and just make sure that the valuations, vals stack up when doing it.

Chris Bates: Well they probably won't, so that's probably the challenge there is that money's got to come from somewhere and it's coming from the developer's profit, which means that you know the property is probably not worth that much. And you know there's a whole string of problems. I was just driving through Brisbane yesterday and I thought it was ... I hadn't seen this ever before where there was a couple of billboards and the billboards were huge. In Sydney they'd be advertising an iPhone or an Audi or something. But in Brisbane they were advertising rentals and you can rent an apartment in this building for $395 a week. And to me that just seems like absolute desperation by a developer where there's no way they can rent these apartments. And so is there like a massive over supply of rentals and developers or just getting desperate to rent?

Charles Wiggett: Look I think, you know I mean developers do cop a little bit on it. But I think you got to remember end of the day, they're businesses and they've got margins and things. And it comes back again, I always come back to as a buyer you got to do your due diligence. You know you're responsible for your own due diligence. And if you don't you can't say blame the developer. The developer's just a person or a conglomerate that's bought a block of land, they put thing they're making. And look yeah sure they want top dollar for it and sure they're paying ... some do offer huge commissions. Although when they're offering huge commissions you usually got to sit back and say, "Well why?" You know no one offers huge commissions if their houses are selling.

Chris Bates: On stuff that's selling.

Charles Wiggett: I mean that's just. So ...

Veronica Morgan: No. That's a really good point there. And look we're not here to bash developers. Developers they're in the business.

Charles Wiggett: No, absolutely not.

Veronica Morgan: But we're here to help buyers make better decisions and they need to be aware of these. Exactly what you're saying, that yeah if there's a big commission on an offer, why? But also they need to ask and they need to question if they're getting advice from someone, so if it's there accountant or their financial planner or their mortgage broker I think it's good to ask the question, "Are you getting ... How are you getting paid to make this recommendation?" Because I often think that they aren't asking the questions and it may not be disclosed.

Charles Wiggett: Look in Queensland you don't have to disclose commissions anymore. You used to.

Chris Bates: Right.

Charles Wiggett: You don't anymore.

Veronica Morgan: There you go.

Charles Wiggett: The only thing you have to disclose now is, for example if I was getting a third party you know like the developer was buying me a holiday on top of it or something like that or the pest and building guy that I went and he gave me a bottle of champagne every time. I got to disclose that and give a value representation, but I don't have to disclose my commission or what I'm getting and where I'm getting it from.

Veronica Morgan: Wow.

Charles Wiggett: We used to.

Veronica Morgan: That's an elephant.

Charles Wiggett: You used to ... You used to have to.

Veronica Morgan: Yeah.

Chris Bates: Winding back regulation, that's always interesting in property.

Charles Wiggett: Look I think ... No in all fairness I think you know I mean real estate agents do get smashed and you get commissions and this. But what people don't realize is that's all we get. We don't have a stable job. We don't have any of that and we got to take on all the risks. And I have a couple of people and I say, "Work with me for a month. See how you feel with it." So I think from an agent's perspective, look I don't blame an agent if a developer comes along and offers them 12% that they would take it onboard. The reality of it is is that property will either stack up or it won't.

Chris Bates: Yeah I guess ... I guess it's where your moral compass is really. I guess if you see yourself as more of trusted advisor as an agent and see yourself as more of a sustainable future within agency world, you want to build people that love you and care about you. You can take the short term route where you can get a bit extra kickback, but I don't know whether you want to be in business in five years time.

Charles Wiggett: Look someone's offering you 12% there's a reason for it.

Veronica Morgan: Yeah.

Charles Wiggett: And you can tell you what it's going to be an extremely hard sale generally rule of thumb. Because they wouldn't be offering the 12% if they didn't.

Veronica Morgan: No.

Chris Bates: Yep.

Charles Wiggett: So what I've got to manage as an agent is what is good stock to have and not good stock. There's no point in me having 12% thinking I'm going to get 12% and my decision based is look I look at that. I'll be candid with you. Obviously it's an incentive. But I know, I know nine times out of 10 we will struggle to sell that property at the price the developer wants.

Veronica Morgan: Oh and that's a point. If you knocked 12% off it maybe you could sell it easier, but there'd be no commission in it.

Charles Wiggett: What I would rather say to the developer is why don't you ... Look and again I got to be careful is why don't you offer other incentives to the buyer and from that perspective because then you're more likely and it might be, you know, I don't know. You got to be careful what you offer these days. But you know it might be that they pay-

Chris Bates: Free car.

Charles Wiggett: Well they do do that. They might pay the stamp duty. I know that some developers are doubling the first homeowner's grant from that perspective.

Chris Bates: Yeah. I mean and the thing that's interesting right now is that there's bank lending is getting quite tight and black listed post codes is a thing. You know a lot of people jump online and say banks don't black list post codes, they don't black list developments. They 100% some do. And all the banks are on risk off. And so you need bigger deposits now for these areas. And you know they're trying to find ways, developers, to give this deposit to the client. Which is not really a deposit. It's actually just a higher price and then you're giving the deposit to get it sold and it's really quite clever marketing to be honest.

Chris Bates: Every week we hear incredible stories of the dumb things property buyers do. Dumb things that end up costing a whole lot of money and/or creating a whole lot of stress. Mistakes that can be avoided. Please, Charles, can you give us an example of a property Dumbo? We can all learn what not to do from these stories.

Charles Wiggett: Look I do. And I think ... I think there's an innate sometimes suspicion from buyers not to trust the agent. Look and I get where that comes from because look sometimes we haven't don't ourselves in good stead with people we are being dealt with.

Chris Bates: Yeah.

Charles Wiggett: And I do know that some agents for whatever reason which is beyond me, don't treat buyers with kid gloves. Because ultimately end of the day, as I've said, you work for the seller, but you need to work with the buyer.

Chris Bates: You haven't got a deal, have you.

Charles Wiggett: And I don't have any sort of a magic words that I can hypnotize people and pay more.

Chris Bates: You haven't done NLP training?

Charles Wiggett: Yeah, no. I mean look, my view on it is is that job is to show value to the buyer. And the more buyer I can show the buyer suburb tour or showing them relative sales and showing them what insurances are and things like, then they may see more value in the property and offer more. But also because they trust my judgment in terms of where I think it sits. And I'll give them candid of where I think, that sort of thing. So they're more likely to come up in price as a result of that.

Charles Wiggett: Now the example I'm using is that what happened was he had a buyer and he was innately suspicious about everything an agent did. So I said okay look, what we look to do when a house is going through a contract process is we like to help as much as we can. We have a thing called Hauss Concierge which basically allows us to do things outside that maybe most other agents wouldn't. One of them is to make sure that ... tell us who the pest and building people are that you want to engage. We're happy to recommend some, but if you don't want to do that, bring your own in. Get him to give us a call. We will book the time. We will tell you when they're coming through and the come through. But this particularly individual just didn't want to buy all that. So he said, "No, no, I'm not telling you who it is. And I'm not telling you when they're coming," well obviously he's going to tell us when, but he said, "I'll tell you that the last minute." And I said, "Well okay, but it makes it difficult because I got to give the vendor some notice and stuff like that."

Charles Wiggett: End of the day he ended up booking it and they made a mistake and it went a couple of houses down. So this guy, and there were tenanted so you know they got a free pest and building and the tenants were none the wiser as a result. And they were-

Chris Bates: So he did a building and pest on the wrong house.

Charles Wiggett: Yeah. So and then look yeah so basically after that never heard from him again. So ...

Veronica Morgan: He didn't buy the one he wanted?

Charles Wiggett: No.

Veronica Morgan: So he just had his tail between his legs and ran off. Oh my god.

Charles Wiggett: Yeah because I mean I left messages and called, but I heard through-

Chris Bates: Did he donate the building and pest to that vendor and say, "Oh if you wanted a free building and pest, here you go mate."

Charles Wiggett: But you know the thing is I can't-

Veronica Morgan: What a goose.

Charles Wiggett: I can't influence a pest and building person.

Chris Bates: No.

Charles Wiggett: In fact if I start talking too much to a pest and building, they're more likely to pull away because they don't trust the real estate agent if you like. But you know that's crazy because my job's there to be, and what we do is we get the client to attend and we book everything and make sure it's all so that everything's done and ready to go. The buyer then attends the last half hour. I attend because then I can manage the guy coming in. And look the reality of it is like anything, it's also dependent on a little bit of the quality of the person doing the job. Sometimes they're good, sometimes they're bad like any industry.

Chris Bates: Shout out to good building and pest people. Right like you know they are worth every single dollar if they're quality.

Charles Wiggett: Absolutely they are.

Chris Bates: And they spend time there.

Charles Wiggett: The ones we use, you know they do a good job. They're thorough. And it's a lot of it's about wording. You know how some people word things can be destructive to a buyer when they can ... Generally what I look for is a pest and say, "Look the house has a few things that need to be addressed. They're not major." And the reason why the buyer attends is we want them to eyeball it.

Chris Bates: Yeah I mean that's a little tip there, it could easily get lost in this podcast is that you're saying that the buyer should attend-

Charles Wiggett: The last half hour attend, talk to the pest and building guy because let me give you an example. We had a house where it was a great house, lovely, everything was going sweet. And then all of a sudden the pest and building tapped me on the shoulder and said, "Look there's a termite mound on the stump." And I thought oh here we go. Now the buyer was there and so I said, "Well look, give me the breakdown." He said, "Look it hasn't breached the ant cap. It's there. It's live and the main reason is there's a cracked pipe underneath which is releasing water, drawing them in."

Chris Bates: Yep.

Charles Wiggett: So I went to the buyer and said, "Look this is what it is. Let's have a look at it." So we got under, had a look. And I said, "If I can get the seller to fix that, fix the pipe, and get everything done, would you still buy the house?" And he said, "Yeah, absolutely." Had we not been there, had the buyer not been there the report would've been termites and that's all they would've seen.

Chris Bates: Yeah.

Veronica Morgan: It's a really good point actually. And we certainly in our business, we encourage our clients to come along to the very end of the building inspection as well to have a walk through of everything that's been found. And if they're not there obviously we do that on their behalf, we're there with them if they are there. But one of the things that is important to look at also is not just those potential deal breakers and okay is it really a deal breaker? What can be done about it? What can we go back to the agent and get the vendor to address? Et cetera, et cetera. But it's also the maintenance of a house. Every property needs to be maintained and it's part of maintaining the value of that property as well. And so just understanding that and understanding those things that you will need to take on when you own it. So I think they're all important to cover when you're doing a building-

Charles Wiggett: Oh look agree. You know like particularly when they're Queenslanders, you know Queenslanders like-

Veronica Morgan: Oh timber.

Charles Wiggett: Yeah.

Chris Bates: Love and hate them I guess

Charles Wiggett: Pprobably say this but live dangerously, it's like my first girlfriend. You know like a lot of effort went in, not a lot came back. Just having a bit fun here. But what I say to them is look-

Chris Bates: That's why you date a Queenslander.

Charles Wiggett: ... make sure you wash down the house every couple of years. Make sure get the pest and building done every year. The thing with Queenslanders and any wooden house, if there's issues or wood rot that you see happening, get it fixed straight away because it can accelerate very quickly. But apart from that, look you do all that, it's actually not that bad.

Veronica Morgan: Well because there's actually ... Timber's actually quite easy to maintain as long as you're on top of it.

Charles Wiggett: Look I say to people look these houses were built in 1920, they're still here and they're probably still going to be in another hundred years. So that's a testament to the quality of the building.

Chris Bates: Yeah I mean, I know you work with a buyers agent that's been here on our podcast and you know he's very common. I mean one of his strategies with clients who are investing in Brisbane is, A, yes go for a Queenslander on a great street, but also maybe try to get something that has been quite recently renovated you know to a certain level so you know those maintenance issues aren't really there in the first five to 10 years for an investor.

Charles Wiggett: Look-

Chris Bates: So it's to ... Would you agree that that's-

Charles Wiggett: Look I think it depends on what you want.

Chris Bates: Yeah.

Charles Wiggett: Look there are some benefits to buying an unrenovated but tidy say for example a post war. I just saw one recently which is, it's not renovated, but it's very tidy Queenslander on a good size block.

Chris Bates: Yeah, that's right.

Charles Wiggett: And the investor that's buying that is going to sit on it and then rent it out and then with the view that in time he may move in there and build himself.

Chris Bates: Renovate the property, yeah.

Charles Wiggett: Or he might renovate, increase the rent. So there's options there for him.

Chris Bates: Yeah it's just a lot of investors just when they move and the underestimate the cost of maintaining some of these buildings and if it has been recently renovated you're just taking out that cash flow risk in the first five years.

Charles Wiggett: Yeah.

Chris Bates: Which is the danger zone with every property. So, Charles, it's been absolutely brilliant.

Charles Wiggett: Thank you.

Chris Bates: I appreciate you being very candid on lots of different stuff.

Charles Wiggett: That's right.

Chris Bates: We talked about lots of different areas.

Charles Wiggett: It was fun.

Chris Bates: So I really appreciate it.

Charles Wiggett: Great. Thank you very much.

Veronica Morgan: Thank you. Yeah it's been great.

Charles Wiggett: Thank you. It's a pleasure. It was fun.

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

Veronica Morgan: What we talked about with Charles was investors buying timber houses and old houses. Now you certainly don't in Sydney/Melbourne and probably any other state see that a timber house would specifically be a good option for an investor. But in Brisbane the Queenslander has enormous appeal. You know in terms of looking for a period home with charm, one that a lot of buyers want and then there's scarcity. Then the Queenslander actually has it all. But they're made out of timber. So there are certainly things that you need to really understand if you're going to have an investment and it is going to be timber.

Veronica Morgan: Okay first and foremost, the maintenance, you need to be on top of it. So if you live in Brisbane and you buy a Queenslander then you know you're on hand basically to keep an eye on that. But you need to really make sure that you've got a top property manager. One who's very proactive and one who's very, very involved in having regular inspections of that property. They'll also make sure that you get a really good tenant to look after the property and let you know if there's things that need to be addressed. And there are things like wood rot and termites and lots and lots of risks around timber. It's a relatively cheap material to actually deal with with a property, but you do have to stay on top of it.

Veronica Morgan: Once again the reason why you might buy that type of property in Brisbane if you are an investor is because of that gentrification piece. Now you can go back to episode 33. We interviewed Peter Koulizos who's the property professor and we talk a lot about gentrification there. So you might want to go back to that episode to look for what are the key factors behind gentrification and how to identify an area that's about to go off. But it's the type of property that's really important as well.

Veronica Morgan: Please join us for our next episode when we have a conversation with an absolute difference. The conversation we'll be having is with Michele Adair, the CEO of The Housing Trust. A Wollongong based, full-purpose organization that builds and manages affordable housing. We're going to be talking about housing affordability and not just whether first home buyers need to stop eating avocado on toast so that they can afford to get on the property ladder. We're looking at rental affordability and other options for property investors. A very interesting episode. A lot of surprises. And we challenge a few preconceptions as well.

Chris Bates: Don't forget we're on all the social channels. We're on Facebook, we're on LinkedIn, we're on Twitter.

Veronica Morgan: Or you can connect with us on theelephantintheroom.com.au. The links are all there for you.

Chris Bates: Please connect and send us a message, we'd love to hear from you.

Veronica Morgan: The Elephant in the Room Property Podcast is recorded at the Sydney Sound Brewery. This week's podcast was recorded by John Hresc, editorial by Gordie Fletcher.

Chris Bates: Until next week, don't be a Dumbo.

Veronica Morgan: Now remember, everything we talked about on this podcast is general in nature and should never be considered to be personal financial advice. If you're looking to get advice, please seek the help of a licensed financial advisor or buyers agent who will tailor and document their advice to your personal circumstances with a statement of advice.



Veronica Morgan