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

Episodes

Episode 86 | Will AI take over the property industry or make it more efficient? | Kylie Davis, HomePrezzo

IMG_1529.jpg

Proptech - when property meets technology who will benefit?

Kylie Davis is back again combining her time at research powerhouse CoreLogic with the world of proptech & is one of the people behind Australia’s Proptech Summit, launched last year.

A proptech entrepreneur herself, having launched Home Prezzo a content marketing solution for real estate agents, she gives a glimpse into the proptech world.

Here’s what’s coming our way:

  • What happens when property & technology meets?

  • How will proptech change the way real estate is handled?

  • How to mitigate risks of implementing new technology into your business.

  • Ways to create liquidity in your property.

  • Where is innovation making the most difference?

  • Why making everything transparent in real estate builds trust.

  • Should the property industry be threatened by disruption?

This is a great episode & we hope you enjoy listening. 

WEBSITE LINKS:
Ep 30 - Kylie Davis
The Future of Property Investing - Kylie Davis

GUEST WEBSITE:
Kylie Davis - HomePrezzo Australia

Work with Veronica? info@gooddeeds.com.au
Work with Chris? hello@wealthful.com.au

EPISODE TRANSCRIPT: 

Please note that this has been transcribed by half-human-half-robot, so brace yourself for typos and the odd bit of weirdness…

This episode was recorded on 22 August, 2019.

Veronica: You're listening to the Elephant in the Room Property Podcast where the big things and never get talked about actually get talked about. I'm Veronica Morgan real estate agent, buyer's agent, cohost of Foxtel's ocation, Location, Location Australia and author of a new book "Auction Ready: How to Buy Property Even Though You Are Scared Shitless".

Chris: And I'm Chris Bates, financial planner, mortgage broker, and together we're going to uncover who's really making the decisions when you buy a property.

Veronica: Don't forget that you can access the transcript for this episode on the website as well as download our free Fool or Forecaster Report. Which experts can you trust to get it right? www.theelephantintheroom.com.au.

Chris: Please stick around for this week's elephant rider bootcamp and we have a cracking dumbo the week coming up!

Chris: Before we get started. Everything we talk about on this podcast is generally 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 buyer's agent. They will tailor and document their advice to your personal circumstances. Now let's get cracking.

Veronica: Today we going to talk about proptech ever heard of it? Well, if you haven't, it will only be a matter of time before you do. In recent years, there's been a proliferation of innovators working on all manner of technological solutions to problems plaguing both the real estate industry and its customers. Some platforms provide new ways to address existing problems while others promise to redefine how entire property transactions are done. Some innovations originate from within the industry and many more come from other disciplines and from the outside it looks as if there are a number with similar ideas racing to get to market first, some will hit pay dirt and many will fail. In this episode, we pick the brains of a passionate prop techie Kylie Davis. Now we've had Kylie on the podcast before. Her property journalism background combined with her time at research powerhouse CoreLogic, gave her plenty of insights into why property makes people crazy and you can find out why in episode 30 and since then, Kylie has immersed herself in the world of Proptech and become quite a leading figure in that area. In fact, she's one of the people behind Australia's Proptech Summit, which was launched last year. Now she herself has become a proptech entrepreneur having launched Home Prezzo a content marketing solution for real estate agents. So who better to give us a glimpse into this world and to help us find out what's coming our way. Thank you for joining us, Kylie.

Kylie: Thanks for having me.

Speaker 2: Hi Kylie. Good to see you again.

Kylie: Good to see you, Chris. Thank you.

Chris: Thank you. Um, so I know two passions of mine, property I love and technology. I love kind of seeing what's happening and what's changing and things like that. So when you joined those two words together, you get proptech so it's not, it's not that difficult, but proptech, what's got you excited?

Kylie: So look, there's lots of the proptech's are really broad church and um, and it goes all the way from residential and the elements of residential. So, um, in, so how we sell real estate, how we buy real estate, how we manage real estate once, you know, lease it, all that sort of stuff. But then it also goes all the way through building and construction and the facilities management sort of stuff. And then it goes all the way kind of nudges, uh, all the way back round almost towards smart cities. And so when we actually follow the whole prop tech kind of journ. ey, you see all of this innovation going on to make it easier for us to buy, sell, rent, live in, build, transact, share information. Um, you know, the whole lifestyle thing is really, it's really around changing our lifestyle dramatically.

Chris: That's really interesting. Just David that point because well, people think that property markets just real estate agents, right? But when you start to open it up, walk that, you know, it shows how many industries are on a leveraged off or you know, is actually in the property industry.

Speaker 3: Yeah. And you think about to the whole kind of disruption and you know, look, there's lots of agony around this all week. You know, disruption changes everything, but there's only one, well, there's a few things that, uh, um, pretty crappy about the real estate experience and buying a home and selling a home is a really painful experience still as a, as a buyer and seller, renting is pretty awful if you're a tenant, it's also, uh, less so, but you know, hard as an investor to work out what to do. But the only thing worse than buying or selling a property or renting a property is actually building one or renovating one. You know, these, the processes that we go through. If you think about how simple things are on your phone with Facebook or with, uh, you know, all the, the way that technology has made our lives faster, more, I'm transparent, you know, easier to do things. And then you think about the very manual processes that still exist in selling and buying and the handoff of information manually. And then you see, I don't, I mean, no, you guys have obviously renovated properties as well, but you think about what it's like, oh, it's our own kind of hell. So the only thing worse than buying or selling or renting is actually building or renovating a property. Cause when you think about how really manual, you know the hand, you know, the hand off of paperwork from one person to the next, the handoff of money from one person to the next, the project management of ringing people and hoping they turn up and then they don't turn up and then ringing them again and chasing them. And just the whole thing is really, you know, not, well I used to say 1984 called. But I think when it comes to building, it's actually 1864 called and like the crofters still, you know, trying to do it the same way that they always did.

Kylie: We building and renovating real property, any kind of building really still is a very handcrafted experience. Yeah.

Chris: What technology is coming out there to help with that process in construction.

Kylie: So we're seeing a lot of stuff coming out around prefab and manufacturing things on site and then assembling more. We're seeing a lot more process around, um, how things get assembled. So, um, I saw a great piece of tech recently. You know, you don't even think about this, especially as a residential person, but when you build a really tall tower, if you're delivering building materials to the things that need to be, go on to level 16. Yup. Often they know, one of the big problems they have, one of the biggest inefficiencies is that is that trucks sort of line up around the street to drop off concrete or metal or whatever the things are that they build.

Kylie: And there's a bloke in, uh, in the basement of that building with a whiteboard trying to coordinate the trucks coming in and say, look, there's technology coming through that's actually, you know, improving all of those processes. So from prefab, making it faster to build, making it easier to project manage, easier to know and more accurately know what materials are required exactly when, so they, they turn up at exactly the right time. And, um, you know, um, a diary, a pen, a mobile phone and sitting on the dashboard of the ute maybe not being, you know, the way that we, the way that we organize that. Yeah, that's it.

Chris: Now in the residential space, I'll let, um, you know, I've got a house and I'm thinking about, you know, doing something to it. Is there any technology that you know of that can allow me to visualize that or project manage that better myself?

Kylie: Uh, there is some stuff coming out. I think what's really interesting from a property investor space is there's some very cool tech coming out that is letting you see before you even decided if you want to buy the property, what the is potentially is. So, um, one of the best or one of the most interesting things, um, I see out there at the moment is a, is a company called Archi Star and Archi star is able to, is able to look at all of the, um, you know, you type in the address or you look at the any address around the country and it tells you if the property on that, on that block of land is actually built to its maximum potential. So it's sort so, especially for commercial or for you know, big residential developments, it can tell you if there's potential to get more value out of it.

Kylie: And then it's able to give you an understanding of what could you build on it in, in sort of minutes. So you just, you know, this is what it would look like and this is what the plans would look like if it was a three, if it was full of three bedroom units or two bedroom units or one bedroom units or mixed residential, you know, commercial stuff and um, and it can help you understand what it would cost to build it and therefore what you would be able to sell it for.

Veronica: This is all AI, right? Yeah.

Kylie: So yeah, well AI driven, but it's built, it's built off the big data sets of not just property value data sets and land location and play that planning and zoning and you know, design, you know, design approvals and stuff like that.

Chris: You don't own that land. Right. So you

Kylie: no, you're just looking at it again, I don't know. I felt that, I don't know. Yeah.

Chris: For the person who, you know, it works in the development space is they could, you know, I throw a few algorithms on top of each other and say, look, we want to build something around $50 mill. We want a profit margin of x and then go find me some pieces of land. And then that would say, well then you can go buy options on it and get DA's and things like, so allowing people to that search problem for developers such a big intensive

Kylie: and they throw a lot of money at researching it all too. So it's really, it's really speeding up in improving that research process.

Chris: Yeah. Yeah. In terms of other areas of the property spectrum, what some areas that you also find quite interesting, obviously done a lot in the property management space. What's happening there?

Kylie: Yeah, so we're seeing kind of the property, the technology and property management kind of falls into four main categories. So the first category is the, the innovators who are looking to make real estate well to, to get rid of real estate agents altogether and to make it really easy for landlords to manage their own properties. And for tenants to find landlords that are private, you know, that are wanting to do it. And for that whole process for a landlord and a tenant to be really transparent. So there's a, there is a, you know, about a quarter of the market is looking at ways to remove agents out of the equation, but then the other three areas are looking at ways to probably compliment what, um, property professionals do. So, um, the first, um, area is a whole lot of innovation and there's lots of, this has been around for a while, but it's getting faster and smarter and better is around, um, how agents, oh, how property managers do their job and how property investment people do their jobs.

Kylie: So making it, putting property management into the cloud so that instead of your property managers being stuck behind desks, I can get out and inspect and capture the data on an inspection at the time and then have it loaded up and um, so really speeding up what they do. And then the next bit is looking at ways to increase the ways we rent properties. So not just, um, you have to have a, you know, you have to buy an investment property and you have to have it permanently rented for, you know, between six to six months or 12 months. Cause they're the options, you know, black or white. Um, but things like, um, in that sort of airbnb space, either helping agents to manage short term rentals, um, or holiday rentals through the big platforms or helping, um, or inventing new ways. So really another interesting little, um, startup that's pretty brand new, but called rentability looks at midterm rent.

Speaker 3: And what's mid term rent? Well, a mid term rental market is a rental market around hospitals, universities, um, pubs in between homes. Yeah, I look a, the MBA or a short term rental is still to explore. A hotel is still too expensive and actually it's not homey enough. I want a home, but I can't take 12 months and I probably want like a serve. I actually want furniture there that's kind of okay to do. Um, and so, and that's really exciting for lots of reasons because we have a grow an older, um, you know, an older population they're looking for, you know, they're looking to live much more mobile, um, lives and be traveling a lot more. If I want to go to Europe for three months, but I don't want to, I don't want the hassle of worrying about AirB&B people in and out, in and out of my, I just want to rent it to one person for that whole time. It starts to open up that as opportunities to put different kinds of properties into the rental market in different ways. Wow.

Chris: Yeah. I mean that's really interesting cause um, you know, there is legislation trying to go through right now about airbnb. Um, and they're not sure exactly what's going to happen, but they're saying a 180 days is the maximum you can airbnb your place. Yeah. If you've got 180 days left on ready, 186, um, you know, then you're going to look at mid term rentals. Right.

Veronica: And so you're gonna have a three month lease, then that doesn't count into your 180 days more than,

Chris: I'll pull it up 21 days. We can actually have a lease three months.

Kylie: Yeah. And, and, and look, I, you know, if you're going to be away or stuff like that, you probably want a property manager to look after that. You want the protection of the rental kind of structure around you and the property management structure around you and, and you want someone to be in your corner that managing that property while you're not there. But we also see that's really starting to change that well change the definition of renters in our heads. So, you know, we have this kind of old, you know, landlords and tenants. I mean that is seriously from, from you know, feudal days. Um, but if you think of investors and renters, we are seeing that renters are making up are becoming much different in our heads to what the stereotypes. Like they were not just talking about boys in their 20s you know, doing falafel in their hand, kind of, you know, shared accommodation stuff.

Kylie: You know, when we did the property model, when we did to property, you know, like just the whole, you know, share house catastrophe kind of thing going on. We see that, you know, I think about 40% of renters are, I'm in couples and families and they're earning over 1$20,000. Most of them are saving to buy, you know, a significant proportion of those people are saving to buy a property. They may, you know, a proportion of them will own a property somewhere else. They're renting in the place they want to live and they own a property somewhere else. So they're also, they're also rented investors as well as renters, rentvesting. Um, and, and in the, in that sort of midterm rent space, we see, you know, the, the demand for that easy in university lecturers or you know, around hubs of employment that have high, you know, flip, not fly in, fly out but have high, uh, you know, like around Silicon Valley we're seeing that sort of stuff. Cause yeah, I'm going to be located in, in the valley, I'm going to be located here for like four months, but then I'm going back home too. You know, so people are, and they have high standards or doctors. So, you know, a lot of locum doctors get located in a country town or around a hospital area for, you know, four to six months. Um,

Chris: even management consulting, right? Like we've got a project and you know, if, you know, 50 staff are coming from KPMG or Deloitte and then where do they stay?

Kylie: There's a lot of high worth individuals that are now looking for new and better options and the old school way of turning up for a 15 minute inspection at some random time of the day to queue up in a queue of people that's not going to fly. Uh, so, so we're seeing that and then the last kind of quarter of the, of the innovation is happening are happening around that tenants aren't who we think they are anymore. And in fact a whole lot of products and services making it better and easier. And I'm more transparent for renters to let people know who they are, what their expectations are, and to find the kind of stuff that they're looking for to rent. So, you know, there is a fifo thing where if you're renting it doesn't necessarily mean that you want to buy a fridge and move it every six months or four months or you all buy your furniture and put it somewhere. Sometimes you're just living in a place cause that's where you've got to be for awhile. So, um, so we're seeing a lot of options around that, you know, ways to afford your bond. Cause if you got bond in one spot and you're looking to buy a new one, finding the bond again might be hard. Um, all sorts of, uh, things around, you know, trust accounting or, yeah, lots of changes.

Veronica: So that's on the property managers. So there's just like one little tiny piece of this whole puzzle. But, but I am interested because, you know, we've had a couple of episodes that we've discussed, so idea of technology replacing agents and I like the, you know, interesting that that's one quarter of say in the property management space. Do you think, I mean, I, and I think to myself as a landlord don't really want to be dealing directly with tenants. You know, there's, there's absolute value to have expertise in between. Um, you know, I do, do you see that that decentralization could work? Do you think that that access to information and technology will, will or could potentially replace, um, property managers?

Kylie: Look, I don't think it will ever completely replace property managers, but I think what we're seeing happening across a whole spectrum of things going on in our lives at the moment is this, the technology is giving us more choices and it's making us, it's making it easier for us to choose it. There's always been a proportion of landlords that have wanted to do it themselves. Um, I think there was some recent research from www.realestate.com that said that about 30% of the property market now is self managed in terms of landlords. And I don't know if that's up or down. It feels higher than what I would've thought it was previously. And it's possibly because a lot of these apps, these new apps are coming out. But, um, there's two parts of the equation. It's a little bit like it's, there's always been a proportion of the selling market that's wanted to sell it themselves too and not deal with an agent.

Kylie: And um, you know, we can have the conversation about, well why is that? That's not because the technology exists. That's probably because the service levels they received the last time they used a property manager or an agent were so poor that they figure that it's probably easier for them to do it themselves.

Chris: Until they get a bad tenant until they get a bad tenant, then they'll probably come right back.

Kylie: Right back to the property manager. Exactly to sell the property. But one of the other things that we're seeing that this is letting us do too is kind of like the, what I call the Tapas menu of, so we're seeing all of the services of a property manager actually get broken down like menu style. So that landlords who want to do a bit of it themselves or you know, maybe they just want to handle their own repairs or they want to, you know, they want to because the properties at the end of the street, they want to collect the rent or whatever, you know, that they can actually just ask, have an agreement with a property manager to do different things and, and making that pick and mix literally small plate sharing.

Chris: That's a really interesting strategy that a lot of tech comes companies, you know, you know, go, you know, they don't go for the full chicken I guess the full haul. Uh, I, they kind of, you know, go for the leg first out. You know, it's called debundling, you know, the service offering. I mean it's what happened a lot in the Fintech like financial sector, you know, you want to replace the banking sector. You don't go straight for the home loan. You cray a easy bank account and then you add on a credit card and then once you've got their trust and then you go for the home loan and things like that. And so it's a bit of a stage process and I think that's what happening in the property industries, you know, let's just try to focus on one part and then if we, if that's successful then we'll expand. My view in the property market though is that just like the banking system, you have got to massive powerhouses that a technology companies already, how are we going to dislodge the kind of the Domains and the real estate company, Realestate .com.au You know? Are we actually going to see any really other great property fintech out there or these guys just going to kind of snap them up?

Kylie: I don't think they'll snap everybody up. I think because I don't think it's in, you know, so the big companies have a vision for what they want to deliver to and how they want to get closer to their market, how they want to offer more services and charge more money for their services. Um, that's pretty standard business practice that I guess they're following. So they're going to be interested in the innovators that are doing stuff in the space that they feel is adjacent to where they are. What I think like if we want it, there's a couple of things. If we want to take it on, we need to get our brains around what an amazing service looks like for our clients in our businesses and in our industry. And we need to be working towards that rather than worrying about the technology. Because what we see is happening in tech at the moment is that technology is actually a leadership issue and one of the biggest problems and issues and you know, chewy challenges that we're kind of dealing with as a society right now is look, the tech can let us do absolutely anything and it will amplify everything we do.

Kylie: So if we're really rubbish at something, it will amplify how many people know that we're rubbish. If we're really great at something, it will hopefully amplify how good we are at stuff. And so our agony in real estate is not, it should stop being about how do I get Mary in accounts to adopt to this new cloud software. It should actually be galvanizing our people towards what does an amazing selling experience look like? What does an amazing renting experience look like with us? How could, how can we make this as frictionless and painless and joyous as possible because we're putting people into homes, we're freeing up people's capital to buy their next home and their next adventure. How can we make it about people and about home and about that wonderful sense of, you know, of, you know, because it's, it's marriage, baby's house, it will or home like in one of those he doesn't matter what order you do it in, but they're the three kind of big and then there's death and divorce but, but the three.

Kylie: But the problem with home is that it's often on that negative side of the, of the scope, not the positive side when it should. And we all want it to be this amazingly positive experience. So if there's an industry as, as individual principals running real estate agencies, as property management teams, as property investors, if we have a really clear idea on what we want to, how we want to deliver our services, and then we work to adopt the technology that will allow us to do that as easily as possible and we get behind the businesses that are helping us to do that as quickly as possible, then we'll be able to compete with the, the deep pockets of the, of the bigger companies that are sort of looking to munch up as much of the landscape.

Veronica: and that's a totally different mindset. So you can have the fearful mindset of, Oh my God, disruption, how's it going to ruin my baby? How can I avoid it? Rather as opposed to, well, this is the service, this is what I is my vision for what I want to provide to my clients, my customers. And how is technology going to facilitate that and help that, which sort of brings us back to this sort of thing about, you know, there's, there's innovators trying to provide solutions for consumers in, in many ways bypassing, you know, the incumbents in the industry. And then there's innovations helping the industry, you know, become better. How much should this is coming from within the industry. I'm pretty people knowing and understanding the pain points versus coming from outside the industry where people are saying, well, you know, we've discovered this technology or invented this technology or I can see how we can apply this technology. So I guess, you know, is, is it sort of polarized like that or how does it work?

Kylie: It's, it's a little bit more nuance. Says there's a couple of things to kind of note. So there's been big suppliers to the real estate industry for a long time, like CoreLogic and you know, Domain and pPricefinder and like lots of big company and, and um, Rock End. Like there's been lots of businesses out there for the last 20 that you know, 25 years or so that have been doing sort of technology in the real estate space. And what's happened over the last kind of five, 10 years is that whole bunch of, you know, smart people who used to work for them I'm smiling, but he used to work for them. But who used to work for those businesses. And, and at the same time that cloud computing has just accelerated and big data has accelerated and all these sorts of things have just accelerated.

Kylie: A whole bunch of people have come out of those businesses and gone, we know this industry, we love this industry, we think we can see what could be done. And so they've started their own little businesses to or innovations to look at how they could help. So we've seen the suppliers to the real estate industry kind of have this explosion of new age kind of, you know, bright young, think more bright young things. I'm going to say young, but you know, people in the space looking to, to help. At the same time globally, we've seen investment in proptech. So you were talking about fintech before Chris. So proptech is behind, like Fintech came first and proptech is behind it, but at the same age like prop when pro, sorry. When prop tick now that proptech it was the same age as fintech where expanding and accelerating five times faster than fintech was.

Speaker 3: Yeah. So you know when, so, so back in, um, I think the numbers are back in 2012 there was about $212 million invested globally in proptech from venture capital firms. This year it's predicted to be $20 billion. So that's like a 9000% increase in funding. So two things.

Veronica: Is a lot of that wasted?

Kylie: Oh, well that's a hard to say. Probably most venture caps work on a theory that, um, 90% of their things won't fly. They'll come, they'll get out of probably another 10%, but they have a spread of risk to make sure that the 10% pays off big time to cover the other losses. They're not in the business of losing money.

Chris: But it's a really interesting stat that a lot of people would probably miss that night. So that means if you hear someone and they've raised money from venture capital, um, and the, and the ones they would give money to, that's, they've looked at a hundred to give it to that 10. Right. Um, and so then once you've got that money, the venture capital funds, you're going to cause to be so successful with funding. You, I know they've got a 90% chance of failing. Um, and they're, they're, it's like they're one of 10 bets for them. And so, you know, a lot of people, you know, think that, you know, even if you've raised money, it's means you're going to be successful. A lot of people know that's actually not actually good.

Kylie : Yeah. There's lots of different ways, like lots of different rounds that you have to go through to raise money too. Like it's not like, oh, we raised money. Good way to golden, let's done. You know, it's a bit of a, like it, there's seed funding and then there's, you know, a series a and series B and series of however many series you need and then you get to IPO. So it's, it's its own slippery slope in lots of ways. But I think too, as Australians, we have a really interesting or a different mentality around it to the, to the US, the UC are very positive and enthusiastic and, and Gung Ho in their, in how they do it, they have a really solid, whereas Australians were a lot more conservative, a lot more skeptical, a lot more dismissive of it. And I think that's to our detriment.

Kylie : Like I don't think we need to quite go down. It gets to, so you know, over over the top as some of the Americans do, but, but we are actually our own worst critics and therefore we cut down stuff because so while we say, oh look, you know, 90% of those proptech will fail that get funded. Well, define failure. Like it's not like they're out on the street living homeless. It's that they couldn't make the business idea work at the time, but they all learnt like a whole pile of skills and then they went off to other platforms that actually took those skills and turn them into other things. And probably the venture cap exited in some way during that time anyway. So it's really rare. So our definition of failure is, oh my God, it all went to absolute shit. And everyone you know, turned it went terribly, you know, all went down the toilet.

Veronica: It didn't turn into Atlassian. That's, that's the idea.

Kylie: Yeah. It's either Atlassian or give me Atlassian or give me death. Canva or you know,

Veronica: I was, I was reading a report, there were stats around the failure rate of new businesses and I think it was an American report. Now I'm trying to remember where it was, but it did say that the highest rate of failure, if you, once again, what's your definition of failure, but if you've got a new business getting off the ground, those with venture capitalists funding actually found at a greater rate than those that self funded. And, and part of that is because there's a cool, there's a point at which you say, right, that's it. We don't believe it's gonna work in our time frame. So therefore we're just chopping it. Yeah, we're pulling the pin. Yeah. So I guess that's the danger of people do go out there and find funding through that vehicle. Um,

Chris: yeah, the thing is just with technology it takes a lot longer for, even if you've got something that's innovative, you've got to have the early adopters that will use it and that's going to take a few years till you get all these test cases and then you pivot and then you get a better market fit. And then you know, market awareness and you know, a lot of people think that this new technologies out and then tomorrow it's going to take over the world. And I'm like an Uber moment and very few technologies actually get.

Speaker 1: But Uber is not even making any money. So it's like at the end of the day, what makes, what makes it stick? Is it the technology itself or is it the marketing or is it the solution or is it the fact that it hits the pain point, but even then they could hit a pain point without communicating that effectively? You know what I mean? There's so many elements to it, isn't it?

Kylie: Yeah, I think it's a, um, I think it's a, you know, the happy coincidence of all of those things together that, you know, come together to make it, to make it work. I mean, think back to like, think back five years ago to Facebook, I, we didn't have any advertising on it was losing, you know, it was spending its money hand over fist and then they introduced ads and everyone went, oh it won't work. Oh yeah, I didn't we show Zukkerbuerg , so, so

Kylie : we, we, um, just because it, you know, these things don't follow a really, the trajectory isn't just up. You know, there's a lot of learning that goes on and I think there's an, and not all, um, prop techs and not all innovators are exactly the same. So some venture caps look at funding really early stage, but most actually look at funding in Australia now. I think there's three, uh, three major funders that are all pretty brand new. Um, and they all have different ways and styles that they like to invest in. But most of them are looking for businesses that have already been established, have either got, you know, friends and family to invest in them, to get them up and running and have a proven product that's out in the market that is showing some traction. And then they look at those businesses to see if we put the might of our processes and structures and funding behind you. Could we scale you? So NAR which is in the US the National Association of Realtors, they have a really successful program called NAR reach over in the U S and they've just launched it here in Australia. They see that will be their first intake in Australia, um, for, you know, now, which is combination of Australia and Asia. Um, but the, the businesses that get into that, you know, basically you become part of, now you go onto their conference circuit, you get access to thousands of agents cause there's 1.2 million agents in the u s and so your ability to scale if you've got a good product working in Australia that you can demonstrate will work in the US um, just that is golden. That's an absolute got and so active pipe, um, box Brownie, um, and now, ratemyagent are all in that program. Wow.

Chris: Hmm. Yeah. I think, you know, one of the biggest um, success stories in the U S it's commonly called compass. Have you heard of them? I mean it's an Australian guy. We thought the Ozzie market was too small basically. So I'll just do it in the US and you know, they're basically taking over the real estate market. I think they've got like 20, well just, yeah, basically, you know, digitalize the whole real estate experience that for agents and you've got like 20,000 agents or something.

Kylie : Yeah, I do have the numbers written down cause I was looking at them the other day. So they're the single biggest investment in proptech at the moment. Um, so out of the 20 billion, I think their market cap at the moment is around 6.4 and the last round of funding was something like $4.4 billion. Like just, they've just received ridiculous amounts of, I think they've got about $10 billion of that $20 billion over the last couple of years. So there's, they're funded by Softbank, which, um, or you know, which you may know from funders such as Uber and um, we work. Yeah. Like they have really, uh, and what's the other one? Door dash or something, which is, I've heard of, I think they do, um, food to your door or something. Um, in the US so, so they have a really big success. Um, and, and the way that that's changing real estate and the way that that's changing our industry is that Softbank are funding it when, as a business, if you start a business up from scratch and your growing it out of proceeds that you know, and of your sales and things like that, then you need to be making a profit in order to keep investing.

Kylie : Compass don't need to be making a profit in order to be spending money on investing in what they're doing. So they are building this or they have built this astonishing platform that again, their mission is to make real estate. Um, I was reading the mission statement, there's something along the lines of we want it to be a beautiful experience for everyone who's looking for like trying to find home and um, and it's got nothing to do. They say nothing about the technology in that, but, but they employ just as many programmers and data engineers and um, and tick people as they do real estate agents, you know. So what we're seeing in there, they're not a franchise. They're just, they're there, they own, you know, they have a structure where the agents work for them. But what we're seeing in the kind of big real estate brand space that will, what does a franchise do now in the past they always did marketing and they did technology and they did and they did processes and training and stuff like that.

Kylie : And I thought, well, is that what we need? But I said what's needed that could be disrupted. Absolutely. I did ESL. I think it is. Yeah, it completely is.

Veronica: Yeah. It's sort of interesting too because the thing about, you know, the fail fast idea, which is obviously very pretty prolific in, in innovation, um, means though that people could be adopting technology and adopting new platforms on of it, they actually will fail and won't be around next year, you know? So I guess that's one of the risks with it as well in terms of taking things on board and saying, well, I'm going to implement that in my business and bring it on board, you know, bring it in and then to find that risk that maybe it won't take off.

Kylie: I think there's some things you can do to mitigate that risk though. So, so the good question to ask is what's the worst that could happen?

Kylie : Well, the worst that could happen is that I upload all my data into something. I can't get it out. And, um, and then it doesn't work. And I, I know that can either do the thing that I was supposed to do with this technology and I've lost all my data and I've lost all my business into it. Pretty rare. I can't think of a single tech company that would do that to you. At the end of the day, if the whole thing failed, you get all your data back. So, um, and so while it would be annoying, deeply annoying energy, lost, stolen training and all that. But here's the thing too, it's like we tend to think about it, um, we tend to think about it like, so we have a lot of these little things that we can innovate. Like a lot of these new programs that are coming in that we can innovate with.

Kylie: There's not a lot of sunk costs in terms of time. And training, because when you go into the platform, you should be able to use it straight away. This is the new kind of tech that we're used to. We come at it, especially at our age, you know, thinking because we've had 20 years of technology behind us already that I'm gonna have to learn into this home. I'm gonna have to learn new program. I don't want to do that. It's going to be so hard. It won't work. It'll, you know, it'll stall on me. It'll do this, you know, it'll be hard and we tend to kind of catastrophize that in our heads. But, but here's the thing too, like we need as an industry to get better at small experiments and to understand the technology terms of, you know, minimal viable product and proof of concept.

Kylie : So maybe you have, um, and so look at ways that we can conduct experiments in our business as to what works before we go the whole hog. So I heard, um, I heard a really good example from, uh, a real estate agent over in Balmain who specialized in property management and she really liked some technology that had been presented to her, but she had concerns around it. I know who that is.

Veronica: Lisa Indge? Yeah,

Kylie: Yeah, that's right. Yeah. From my, yeah, she's a, she's on the REI New South Wales community and so she, she worked out, she decided that she would introduce this tech with, um, some of her, um, with her existing landlords because she could have a good conversation with them to say, look, I wanna get my, we want to get your new tenants signed digitally. Um, we're a little bit anxious about how this is gonna work, but we think that the benefits of it really outweigh the downsides. So with tenants that are renewing existing contracts, um, are you okay if try this?

Kylie : And they're like, yeah, no, it's a complete no brainer. Do it. And so she was able to do it and test it and then feel secure that it works and then roll it out further. So you can break these things into smaller projects to give them a go, see how you're happy with that and then learn from like, and that's the fail fast thing. Well, if it didn't work, what didn't work about it? Was it that we didn't execute it properly? Was it that they didn't do what they said they.

Veronica: were not risking everything, you know, haven't checked everything into it.

Kylie: Little bets, small bets.

Chris: So, you know, I guess for our listeners who are probably thinking, you know, what can I, how's it gonna change my investing? Right? How am I going to, you know, invest differently with technology? I know I can see that agents dealing with agents is going to be different. The actual buying process is going to be different. How you manage a process. Yeah. Dealing brokers is going to be different. You know, there's going to great technology there coming out. But if we want to like new investment options, what sort of, you know, Fintech or, you know, proptech is coming out that, you know, allow us to invest in different ways that we hadn't had before.

Kylie : So I think it's gonna let us, so as investors, it's going to help us research stuff a lot more quickly, understand stuff a lot more clearly like so, so, oh right. I get it now. Like not feel like it's extraordinary amounts of homework that we have to do. So it's not going to be as painful. Um, it's, which is going to make us feel more secure in what we're going to be doing and it's then going to make us, uh, and the whole process is going to be a lot more transparent. So I think it's good. I think it's going to take a lot of the fear, anxiety and paing, there's always going to be an element of that and that's where you want a human to guide you through all that process. But you'll have access to all the information that you need at the time that you wanted and you'll be able to find it.

Kylie : And, um, and, and, and the whole process will be feel easier. But I think too, what we're seeing in the prop tech space that is changing property investment is, is some stuff around, um, how we invest. So at the moment, how do you invest in property? Well, you either buy property and then you rent it out or you buy shares in a, in a Reet or something and, and, and, and they're kind of your options I can't think of. Yeah. But yeah, so you're all, and so we're seeing things like that. So we're seeing the, this, um, these new ways thinking about, or how could I invest? So, you know, Brickx is doing, you know, where you buy bricks in, in different properties. We're seeing some stuff in the super space come out where, you know, there's our super funds that are just going out and buying residential properties and you can buy shares in that.

Kylie : Well, you can buy memberships in the super. Um, we're seeing, we're seeing a lot of rethinking too around as we get older, ways that we can use the investment in our current property and let basically, instead of, you know, reverse mortgages ewwww but, um, and no one wants to do that. But we're seeing some innovative thinking around, well, letting people buy a share of your property and then sort of saying, well, when I die, you get to exit and at disagreed. Right. Or a great proportion of it. So, but that then gives you, you know, quarter of a mill, half a mill to live off for the next 20 years or whatever.

Kylie: So creating a bit of liquidity in your property and your property. Yeah. And then you sell it and we need educated sell it and instead of them getting 100% of it, they get maybe 85% or 80%.

Veronica: Some interesting sapace And so on the, um, on the, on the buying and selling side of things, I've seen some interesting things around this idea of, um, the pain point being lack of trust. So agents don't necessarily trust buyers. Buyers don't necessarily trust agents. So you've got this whole, or they don't necessarily trust owners either and owner doesn't necessarily trust the agent.

Kylie: Buyers are liars yeah, everyone, everyone, no one's trusting each other.

Veronica: And so they're everywhere. Everyone's sort of got the guard up, you know, the owner typically wants more than it's really worth the agent's gotta try to flatter them into, into listing with them the agency and got to go and talk to the buyers. It's slightly less than what it's worth. So they get the interest and then hopefully dry drag those two competing interests together to get a sale. I mean, that's a very simplified, um, uh, overview of what happens.

Veronica: So I've been watching with interest some of these apps come up, you know, some of these new new solution, shall we say that supposedly say, right, well an owner is going to get a valuation and if as long as they agree to sell within certain percentage of that valuation, then they'll put onto market and that'll be trusted by buyers. And buyers would just automatically say, yes, sure Mr Owner or I'm going to pay you what it's worth. And then this is miraculous, wonderful agent, free transaction is going to take place. Have you seen a lot of that sort of thing around?

Kylie: So in the US the ibuyer craze is, which is a bit wrongly named, I think cause it's actually an iseller. But um, yeah, but what, but the way that it works in its purest form is that there are companies out there and Open Door was the first to do this in the u s um, and they do it and they dominate the Arizona market. So it's, which is a lower, like, I think the median house price in Arizona is about $250,000. So these are, this is the affordable end of the market that this is going off. But in that space, um, Open Door turn up, um, you, you've got a house worth $250,000 and you don't want to deal with an agent. And basically they say, well, we'll give you 250K]. If it was worth $250, we'll say, we'll pay you $235, no agent and we'll give you the cash tomorrow.

Kylie : Right? So they literally turned the cash around in about, you know, 48 hours. So you've got the like, so you back it up in a you whole and you shut the door for the last time and that's it. You're gone. Um, and, and, and that's kind of attractive, but that's attractive in the US for lots of reasons. I'm remembering that in the u s commission, 6%, so 3% of the sellers at 3% of the buyer usually. And um, and you know, and they would have, and there's lots of anxiety in the u s around, well, you know, when I sell my house I have to do all these repairs, I have to get it staged. And so there's a lot of costs as well. So, so for a particular part of it, yeah, no, absolutely. Yeah, yeah. The preparation goes and then you get the house beautiful when you go, why are we selling it again? But finally, finally it looks lovely.

Kylie: I should've done this 10 years ago.

Speaker 1: The idea for ibuyer at they bite a bit cheaper than the market rate and then they resell it and makes a profit. And I, you know, put a bit of, you know, might do a small rent, I wanna it's or you know, I saw it. It's kind of like we buy any car, we buy any house, we'll give you a price sort of thing. I think it's a commodity. You know, if they're treating it like a commodity, then yes,

Kylie : there's two plays that are, and so as property people we go, oh, you know, so they're making their money on renovating it and then reselling it. So I know they're making the money on the data because they actually, because that they now have a property team, they have a lead to sell and so they can then make that available to other agents. So there's a big data play going on behind it as well. And in fact, everyone who even clicked the button on the website to say, so Zillow now do this as well. They've got Zillow offers so you can click on the button. So you know, most people, yeah. It's all about the database. All about the data, the pain point. Yeah. The data. You got Amazon,

Veronica: oh no. I'm going to skip back to this, but have you got, um, a, what do you call it, Alexa. Alexa, Google. Google home.

Kylie: I have,

Veronica: Oh my, it's you pay to have that thing in your home so that you can give it data. So it can sell. It should be paid. They should be paying us to have those things in our homes.

Chris: Well, they're getting cheaper. They're not $400.

Veronica: Doesn't matter.

Kylie : So I live in a family of boys and I never have the remote control and now I don't need it thanks to Google because I just go and sit on the couch and say, hey Google, play this. Right. Suits. Sorry. Yeah.

New Speaker: Back to this, some of these solutions that's a back, oh, sorry, I was segwayed there. But that is a very interesting point that a lot of these solutions really aren't about the solutions. Are they?

New Speaker: Not In that case that Opened Door or it's, you know, it looks on its right. Amazing website. It looks cool marketing. Um, but yeah, you call up open door and your house is worth $250 they offer you $200 Oh, he's on me. That you're not going to take. And then they sell you as a customer as I want it. You speak to our real estate agents, we've got good relationships with is here's a few and then they talk a cop of the real estate commission. And so that's what I've heard, that they, how their model kind of works. Sometimes it's not properties. I do property. If you want to sell for 200 yeah.

Kylie : If it's really important to you to get out.

Veronica: Now it's a fallback position, but I'm thinking more about the ones that sort of promised to say, look, you know, this vendor has been vetted, they've got to, the price is right. You know, if you make an offer via the app, then then there's trust. You know what I mean? There's, there's a few of those around. And I always think to myself, it takes away the human behavioral component, which is every owner wants more other than those ones that have paid to sell to Zillow or Open Door 200,000 was really worth two 50 but generally speaking, owners want more than they, they're really worth. And generally speaking, buyers don't want to pay what they worth. Do you think that that's something that an app or technology can solve that problem?

Kylie: Well, look, I think the reason, I think the reason that distrust exists. So I was talking to Tim McKibbin actually from Rei New South Wales yesterday about it. It's like, well this is what the process is at the moment is that you want to sell a property. That's great. Talk to me. And if you want to buy a property that's great. Talk to me and I'll manage all of the conversations and then I'll tell you what you ought to, I think you need to know and I'll tell you as a buyer what I think you need to know and you know what? My life might get really busy and I might have stuff with the kids at school or I might have other buyers and sellers doing the same thing and I might not get back to you until I'm ready to get back to you. And this is all the noise and stuff that creates a distrust.

Veronica: And you were talking about the, the role of a sales person.

Kylie : Yeah. The role of the sales person is to be the, to be the bottleneck in the communication and the understanding of what's going on on, I mean, that's not a great role. So, so what the technology is doing is actually not trying to bypass the role of the sales person to be the person who helps guides, coaches and who has been through this process a hundred times before and knows how it plays out and understands the emotion and the, and the behavior that goes on and the fears and concerns and worries and joys that everyone has and can recognize that behavior and guide and help. But it's to get rid of the bottleneck stuff. And so the trust gets established because as a buyer, I know that what I'm seeing is the stuff that the seller is also seeing. I know that I don't have to wait for four days to get a contract because I know that if I accept the offer to join the, the room for the, you know, if I said that I liked the property and I'm interested in making an offer on it, I can join the shared data room and see the contracts, you know, and they can see that I've seen them and I know that.

Kylie : And if I decide not to make an offer or if I decide to low ball it and I want to play the game and then, then I then someone who's also in that space might outbid me. So it's around trans like trust, trust gets built with transparency. And what the technology is doing is making it transparent, like making, so making whatever the seller probably knows about their property and can see about their property is something that the buyer can also find out.

Veronica: Which is interesting cause I mean the auction bringing them closer together. Yeah. And the auction process is often put forward by agents as being, well, that is the most transparent way to buy a property and it is. It is after all that stuff has been done,.

Kylie: It's a deeply stressful process, very deep distress for most people. Both sellers and buyers.

Veronica: Yeah. And that's partly because there's so much else it's hidden. Um, but it is quite interesting about that, putting all the data in one spot so that people can dip into it and get it and access it equally. And that is true because the reality is that, um, you know, you still gotta you still got all these gates, you know, and like you said that the agent will sort of modify what they say to one party and, and modify it again for another. Because the reality is that they don't really know how everyone's gonna react to what they say. So there is that element of got to you know, we've got to sort of catch this in a way that people can digest it. Sorry. It's very complicated. It's a really complicated thing.

Kylie : but it's always complicated because when we're trying to hide things it's because we're a little bit worried about what the outcome of that might be. So you know, say Chris has got a house, it's with that he wants $250 for maybe see unit I did somewhere in the country. Um, but if you've got a property that, you know, like we'll say it's two 50 and, and you want 250 for it, but you know that the bathrooms are a bit overdue and that the toilet likes a bit. And so, you know, open for inspections, you can just make sure it's pristine and it looks, it's as clean as it can be and, and you can make sure it's nice, but you really hope that when the auction comes, no one notices that the toilet's leaking. Yup. Well, why is Chris done that? Well maybe it's because he doesn't have time or he, he because he's, worried because he, well he can, but why?

Veronica: Because he can. You've got to remember, well, it's buyer bewhere.

Kylie: But why is it, why hasn't Chris fixed the toilet? Because it doesn't. No, no. But why didn't you fix it while you were there? It's like I haven't had the time. I can't be bothered. It's hard to get a plumber in because I'll have to see, I will have to be home for four days while I wait for three people to stand me up and not turn up to fix my toilet. It's all of this stress that comes around it. So as the technology becomes more

Chris: so the open homes going to use the toilet, then no one's going to check it. Yeah,

Kylie: no, that's right. That's right. You can get picked up. It was really easy for you to capture a, um, to work out how much it's going to take to fix the toilet or to get the toilet fixed. Because you could book a plumber on an app that actually guaranteed that he would turn up and it wouldn't be, you would, you would just fix it or you could be transparent about it and the buyer coming in would go, you know what, that's going to take $16 to fix. I, you know, it's just the missing valve or whatever. It's more, but we don't know what people come to like. So, so what our fear is around making this transparent is that we assume that everyone will then behave exactly the same way as exactly. And that's not right. They don't because everyone's got their own agenda and their own context and their own filter.

Speaker 1: That is part of the problem with transparency. I'm all for transparency. It's one of the values of my business. But, but that's because I also represent buyers and only represent one buyer per property. So, um, you know, that's a very different um, sort of equation. But the thing is, and, and the Andes, true I've been a sales agent, I know damn well when I tell you one thing and I tell you Chris, the exact same thing, you will react in one way and you react in a different way. And what you want as an agent is to corral everybody to pretty much act in the same way. You know, cause you all want them making offers at the same time. Effectively. That's fundamentally what you want to do. So it's a really, it's it, you know, it's lovely and, and I'm all for transparency. I think everyone knows, it's probably one of my personal values, well it is, but, um, however, if other people don't value it, it doesn't necessarily transact in a way that the agent gets the best outcome for their owner. You get my drift?

Kylie: I do. Yeah. But I see other things coming through the pipe that are dealing with that as well. So there's a whole raft of new tech companies in Australia coming out right now that are looking at, well how do you actually make that buying, selling process, really transparent for both parties. And how do you help the agents manage those conversations in it? So Rezo um, in out of Adelaide, I'm not working in New South Wales yet, but, um, hopefully very soon at WA, South Australia. And um, I think Tassie um, but basic and then there's also, um, Open and then there's another one that Dave is doing, which I think is called buyer something Buyer app anyway, but, but they capture all of the information about the sale in one spot. And, and then depending on which app you're using, but, but buyers get invited to both see all the data and to make offers. Um, and, and they office can be, you know, and, and so they can see the value of the property. They can see and they get asked to offer what it's worth to them and they get asked to put the conditions in that they would want to. And so some often the best, the highest price isn't what's accepted. It'll be a good price But with terms around it that, that are, that are good. But it lets you be really transparent too about what your terms are and to put your best foot forward. And some of them let you see what other people have offered. Some of them don't, depends what up which one it is. But um, but yeah, with Rezo it sort of gives you a lot more,

Chris: 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 a whole lot of stress mistakes that can be avoided. Please. Kylie, can you give us an example of a property Dumbo, we can all learn what not to do from these stories.

Kylie : I do. And, and this is kind of in the fail fast kind of category. So, um, this is a dumbo from a friend of mine. Um, so I had a friend when I was, uh, when I was at News and I was looking after the real estate sections across News. And, uh, the girl that I sat next to, she had done the, um, gold coast white sock brigade and had bought three properties. So, so, and again, the White Shoe Brigade. Yeah. Well with white socks, I think there might be socks in there as well. Knee length socks you need the white shoe and sock brigade on the go. Okay. So she had, so, you know, I think it had been through, you know, difficult divorce, all that sort of stuff. Um, and decided that she wanted to be independent and organized. And so she had bought a whole pile of properties in about 2012 or something like, and it just before the GFC and the gold coast hit it really, really hard.

Veronica: Hang on. So you see it was in 2008 of 2008.

Kylie: So I'm trying to work out what my time was. 2012 was when was when the gold coast kind of went completely under. Yeah. Just before Sydney took. So yes. Think of opportunity costs already. That's what I'm going to, yeah. Yeah. So she was completely hocked up to her eyeballs and locked into these contracts that she couldn't get out of. And the market was completely tanking and, um, said to me, what should I do? So I, at the time I was head of real estate, uh, editorial at news. Um, I had access to all the CoreLogic data. And I said, well, I'm not an expert, but I can see this as what's gone on. And you have to really, you have to, like, you have to make a call on what you know, like, why don't, she's like, I just don't even know what's going on.

Kylie : Like, I know it's all going backwards and I'm panicking. Should I sell? It's like, well, I don't think we should make a decision on should you sell from the information you've shared so far. And so what we got to was basically you need to understand exactly how much this is costing you right now. So what's, you know, how much can you get for rent for them? How much is that gonna take out of your living expenses every month? How are you going to get through that? And, and so this is a dumbo based on someone who actually didn't want to face something but then did and came through it. So what she did, she had three properties that were all kind of around Carrara and places like it in that Gold Coast belt, that commuter belt. And um, so she, she worked out what her expenses were for it and they were basically going to send her under really, really quick.

Kylie : So she moved back in with their mum. Like she got rid of her rent. Like she just cut all their expenses right back. But she hung onto them and I think, um, and from the last time I spoke to her, which was a long while ago now, but she sold one of them a couple of years ago. So she hung onto like, cause she was like, I just want to sell them. I just want this pain to go away. It's like if you, if this pain goes away right now, do you know how much you're going to lose? And that's going to really take you out be because she just, she was so locked in, she was completely trapped. But she got out of the rental agreements thing that she had. She, she was able to get out of that. She got them rented, um, but took a loss on what they are getting rented for.

Kylie : And, um, and it's just the importance I think of even when you don't want to be real, like, like you have to, you have to pull your big girl pants up and you have to look like look at the scary thing right in the face and go, okay, let's make a decision based on what I actually know is going to happen if I do this or if I don't do this and then how can I just paddle through it. So she, she went through all that for like, so she lived with her mom for like the next two years just to get through it and then, and then came through it and then sort of got rid of them once the market got back up to there.

Chris: What a stressful experience. What a stressful experience. So yeah,

Chris: Life changing experience too. Yeah. You know, and what a financial cost, relationship costs, health costs, you know, there's so many other elements here that get forgotten about with property. You know, like spruikers would be out there and selling stuff that you destroying lives. Like, if you are actually mis-selling stuff and you're just selling it to people and these are big deals, you're not selling tee shirts, you're selling big financial investments that can completely ruin someone who don't know what they're doing and they're signing up to things. Um,

Veronica: And she bought three.

Kylie: I think she should be on the same, I think like, I think this is, I hope it's a good tale too because like, so when we were talking about like when we were, uh, like a lot of the conversations we had, she's like, I feel so stupid. How could I fall for it? Like she felt like she'd been scammed and she was really locked in. And I remember saying to look, you have to feel like it's happened and you have to kind of forgive yourself. Let it like, you need to stop beating yourself up. Then it happened like you were vulnerable and this kind of happened and, and feeling sorry for yourself is completely normal, but it's actually not going to fix anything. So we need to get like, we need to it, you need to, you do need to pull your big girl pants up and work out what we're going to do at what you're going to do about it. Stop feeling sorry for yourself because that's not helping. It's not helping in any way now. Yeah. And let's just put and put that energy into the action that's going to fix it rather than,

Chris: yeah. I mean I would not get a client and you kind of would talk through what they've done and we hit of these stories every week and um, you know, I just, I do, I'm straight out when this, when this, when something's not right, so they've got a property that's not good or there's, it made a bad mistake. I just try it with my approach to giving you advice. It's quite blunt just to talk about the facts, explain the situation. There's no judgment and what pastor could have done or hindsight. It's easy for us all. The reality is I will be out today. What we care about is what we are going in the future and what we can do. And you know, and sometimes you've made mistakes, we've all made mistakes and we just got to figure what they are, what they are and start to put a plan in place and all that fear or that worry is kind of gone for the client because the reality is it's, it is what it is and let's just move forward.

Chris: You know, and that's the, and they actually making the base thing they can be doing is taking action and actually thinking about it and going, actually yeah, okay, I did that. Uh, now what I'm going to do is x, y, z. And sometimes though it is keeping poor assets, you know, like I've got a client, the moment it's got a place in Perth that's a house and land package, it's, you know, it's right on the outskirts. Um, I get paid $360, I think it's worth $270 or something, right? The loans $290. So like the loan is 20 grand more than what the property's worth. And you got agents costs, they sell it, they've got their 30 40 grand down that they have to pay out of their own pocket. Just luckily it's not crossed, secured cause then it would be 80 into their other equity.

Chris: And you know, and it's, you know, the, all these stories are our client has got seven properties that are all over the place and now has to unwind it. And that's a lot of effort, you know, that he's going to have to go through to get rid of them and things like that. But every time he gets rid of a poor, one, it creates opportunities for other things. And so I think the best thing to do is just dealing with it today and, um, you know, accepting that you may make mistakes, but you know, we all have, so it's, um, that's good. It's good. Dumbo.

Veronica: Oh my God.

Kylie: Oh, it hurts, doesn't it? It hurts to hear about it. It some, it does because you know, and you know why I think because people do make these mistakes with the best intentions because then they do it at the time. And I remember her telling me, she, I thought I was doing the right thing. I thought I was being a grown up and I thought I was being sensible and I thought I was investing in my future and I thought I was doing, you know, I thought I was doing it right.

Veronica: She would have been full of positivity and full of promise and, and, and basically being fitted item and year. She's reading a lot of these property investment magazines as well around that. And Yeah, like you say, you know, this is what I, I'm told this is what we do to make people do.

Kylie: Anyway, she came through it.

Chris: Fortunately. Yeah, I'm pretty guilty of this, you know, um, you know, they'll want great stories, but then if you flip over, you know, page for those young couple, they're buying their first home and they're taking control of their financial future. And then you look at some times what they're buying and you think, but this is what you're pushing out as success is time. You have to kind of get on the market. And they, you know, taking control of their life. Well, not really. They just don't know what they're doing. They've actually gone and bought a really poor asset that they are a) going to outgrow in a couple of years and b) support investment and you know, you're putting them up as a pinup of what success is. So. Yup.

Veronica: Well on that note, thank you very much Kylie. Um, being a really interesting chat because I know we've had offline a few chats about prop tech and just dabbling in the very edge of it. And I know that's our conversations in here with any devil on the very edge of it as well. I think that, um, there's a lot more that um, you know, if anyone's interested they can look into and I know you've got some links, um, and we will make sure that we include that information in the show notes. Yeah. And um, the web, I've got a presentation on it, a Webinar that is with, uh, Pippa, with the property investment officials Australia that's now available. So if you'd like to find more wonderful, we'll put the link in the show notes.

Kylie : Thank you.

Chris: Thank you Kylie.

Kylie: Thanks.

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

Veronica: just picking up on what you were saying back there, Chris.

Chris: I think that the hard part with a lot of this is that, you know, as a buyer it's extremely frustrating. Rob, you know, you call up an agent, they send you on a little bit of a goose chase and then you, you know, you can put two in any, you speak to them again, they've told you something that contradicts what they said and you're like, hopefully they said that. They said that last week and they told me this and you know, I was on the phone last week, you know, and this agent was on, you know, to a client, you know, this mythical buyer in London. Yeah.

Veronica: The old mythical buyer in London and they want a six months settlement. There's usually these little clues that they give.

Chris: Yeah. He was pulling his hair out like what was going on. Right. And yes, this is one of the values of having a buyer's agent. He actually knows you're speaking to get the cut through.

Veronica: Hey, did that before. Yeah,

Chris: yeah, exactly. And, um, yeah, but end, I was quite a lot laughing at the situation. Cause you know, as a buyer you pull your hair out, what does a seller, you know, you know, that's what sells the property is kind of mythically kind of creating, you know, supply and uh, you know, demand and urgency. And that's what made him

Veronica: well back to the elephant. The thing is social proof and fear of missing out and scarcity. All those things, humans behave in ways that are emotional. So it's all nice to have all this rational information via tech. But the humans still gotta react in a rational way in order to make it truly,

Kylie : but they don't. I don't think they will. I don't think the tech world, I mean I don't, we don't, no, we don't. And I don't think the tech's gonna Change. No, I think it's gonna help us. I feel that we're not getting ripped off because I mean that's the worst thing about, you know, the worst thing about that buyer journey that you, that you'd explained this before. Is it the whole we'll, I've put an offering and I've got no idea. If you know, like, when, when are you going to call me back? You're going to call me back. Like was I completely off the mark? Like where did I, you know, how, where did I.

Chris: Now there's another buyer now. So what am I like, what's the competition look like? What do we need to do to make this serious, you know,

Chris: The agent with purposely ignoring his calls. The agent wouldn't pick up the phone for two days to just make him feel because he's like, I'm so busy. I, and you talk on text because he wanted the answer. Like this is the experience the buyer's getting because, and then when the agent is trying to sell her is kind of like really hazy and come up all this. No, I don't think that the property didn't have any other buyers on it. Yeah. And it was young and so, but, but the client, yeah. Um, you know, was trying to buy this thing and you know, the only reason what made him make an offer was the fear of you not getting it. And so if you bring transparency into the situation, he would know that he's the only buyer he's going to go low ball offers. That's not what the seller wants. And so the market's just not, the deal is not going to happen. You know what I mean? So I think there are a lot of this transparency in real estate. As soon as you bring transparency in, then you basically, you know, a lot of property just won't sell for, you know, premium prices. Right. You won't create, I, you know, the whole industry is built on not having transparency.

Kylie: so did it sell and in the entity buy it in the end for, and he was happy with the price that he offered

Chris: you? No, you had to go up much higher than what he wanted to offer because the only reason because of the feeling of the prison and there's a feeling of scarcity there that if he doesn't get it, someone else could buy it.

Veronica: So, but yeah, he's a thing. I mean, this is what really, really frustrates me with buyers. Okay. And I don't know what process you're mate went through to work out what that property was worth. But I find, and I've talked to buyers all the time who've made an offer and, and they obviously not my clients, these people, and I say to them, how did you determine the price to put your offer in it? Oh, well I worked out that last time it sold and I thought it might've gone up, but you know, x percent per year. And then, oh, you know, the agent's quoting this and so I added 10% or above blah, blah, as all the stuff that has got absolutely nothing to do with the property, nothing, um, or I can get this much money. And I figured I'm almost at the end of, you know what, I'm going to be able to afford in this area.

Veronica: So therefore I've just offered what I could afford. You know and these are educated, smart, successful people who obviously excel in their own field of expertise and they suck at buying property. And so often they make this first offer and then they get the call from, you know, from the agent or there's a buyer in London. That's usually the trigger that actually causes it, causes them to pick up the phone and call my office and then we had this conversation and sort of start digging. Okay, well tell us a bit of the background. What's the story? Why do you want this property? Blah, blah, blah. What do you want to do area? How have you worked out the price to pay? Oh, I've just sheepishly plucked a figure out of the air, right? When the agent comes back to you and you've plucked, a figure out of the air, you have no foundation for that figure.

Veronica: Then they say to you, oh well someone else from London is going to buy it or elsewhere or whatever. Then fomo kicks in and you are, the elephant is running rampant. You have to understand people. If you're going to spend multimillion dollars on property, you have to try to work out what the frigging thing is worth. It seriously does my head in and I say this over and over again. I have these conversations with people yesterday, you know Rachael in my office, she gets his call from somebody who wants us to bid at auction and we have a whole bunch of questions we ask, you know, how have you determined your limit? You know, Dah, Dah, Dah, Dah, Dah, all this whole whole bunch of stuff. I know property I've bid before, I'm comfortable. I know, I know, I know, I know. Well, why are you calling us?

Veronica: There's a niggle at the back of your mind, honey. Then you don't know. But anyway, in the end because we asked so many questions and we said, you know what? Tou don't need us. If you know everything you don't, why pay us? Go off and do it yourself. The thing is that people are to blame. If I don't get it, Yay, I want to get it. Well, if you want to get it at all costs and it doesn't matter and you're not going to regret that, just stick your hand up. Go for it. If you do care, take the time to actually work in it. Sorry, I've just had to rant. I know it. It's just, do you know what I mean? You are less susceptible to some agent who can't negotiate because the agency can't negotiate. We'll pull in the fictitious buyer from London. That is their go to when they don't know how to negotiate. Right. But the buyer equally doesn't know how to negotiate in that situation and the buyer has to take responsibility for their own part of this equation.

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

Veronica: Or you can connect with us on the elephant in the room.com today you, the links are all there for you.

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

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

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

Veronica: 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 buyer's agent who will tailor and document their advice to your personal circumstances with a statement of advice.

Veronica Morgan