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

Episodes

Episode 11 | Can buyers ever win from being honest with real estate agents? | Michael Harris, Raine & Horne Newtown

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What really makes prices go up? (Hint: it’s not the agents…)

Sales agent and principal Michael Harris reveals the challenges real estate agents face when having price conversations with both vendors and buyers. It seems not everyone is ready to face the truth. Other revelations in this episode include:

  • What makes an agent over-excited and believe in the property they are selling.

  • Is a “great sales person” really the best sales agent?

  • What makes a good property and what “rubbish” property looks like.

  • Is there really a buyer for every house?

  • Presentation tricks used by vendors.

  • The biggest frustration agents have with buyers.

  • Why buyers should open up to some agents and how much they should share.

  • The dangers buyers face when they look before they have finance approved.

  • The impact of credit tightening and why inner city home owners are staying put.

  • Different types of pre-auction negotiation processes and when it’s best for a buyer to go to auction.

  • How to be taken seriously when you make an offer.

  • How agents recognise the early signs of a turning market.

  • The pitfalls of taking advice from family and friends.

  • Is the first offer a vendor receives really the best one?

If you want to understand how the slowing market affects property in the inner city, you’ll need to listen to this conversation.

Links:

Veronica’s blog on misleading headlines
https://gooddeeds.com.au/property-buyers-tip/the-australian-property-market-is-not-going-to-drop-7-5/

Freakonomics video
https://www.youtube.com/watch?v=pbFkw_roJqI

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 12th April, 2018.

Veronica Morgan: You're listening to the Elephant in the Room Property Podcast, where the big things that never get talked about, actually get talked about. I'm Veronica Morgan, real estate agent, buyer's agent and 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 you'll want to listen to find out what he has to say about communicating with agents the right way.

Michael Harris: Because you'll soon work out who is genuine and who's not because when these properties come back to market, have a look at the guide that was on it compared to the price that they're now putting on it and you'll soon be able to work out who are the ones that you should go and speak to, who are genuinely going to be able to help you, and be honest and straight with you in the process of buying a home.

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

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 buyer's agent. They will tailor and document their advice to your personal circumstances. Now let's get cracking.

Veronica Morgan: This week we are picking the brains of Michael Harris, principal of Raine and Horne Newtown in the heart of Sydney's inner west. He started his real estate career back in the same year I started, in 2001, and after joining the Raine and Horne Newtown team in 2006 he went on to become a director and owner in 2012.

Michael's always sold property in and around this suburb, so I guess it should come as no surprise that according to Rate My Agent, he's the number one agent in Newtown for number of sales and the most recommended agent for Newtown since 2014. Well done.

Michael prides himself on the depth of his local market knowledge, a strong commitment to providing sound advice, exemplary service and excellent sales results. He says he loves what he does and we're keen to find out some of his tricks of the trade. Welcome Michael.

Michael Harris: Thank you.

Chris Bates: Michael, thank you. One of the things that I guess in the investment world, if you were looking for an investment advisor and you went to see a few different investment advisors, you'd find there'd probably be three different types. The first one you would go see and they would say, "Look, I know exactly where the world's going. I'm going to outperform the market by 2% next year and you should really use me because I'm the smartest guy in the room."

The second guy you'd probably go to and go, and they would say, "Look, I don't really know what's going to happen. I know I can give you a pretty good result and I'll get you market like returns, but you're pretty safe through me."

Then, the third option, you'll probably go to someone who'll go, "Look, I have no idea where the market is. I'm just going to get you an index kind of like return and that's all you need to do."

In the real estate market you've probably got agents that, I guess, do things exactly the same. If you're trying to sell your property, you've got three different types of agents. How do you think that that plays out in the real estate market?

Michael Harris: Obviously there are different types of agents and at the moment, in this particular marketplace we're seeing fairly low stock levels. I always find when the market gets to the point where there's less stock to sell, then the more excited an agent will become in pricing a home.

Veronica Morgan: When you say "excited", you mean overly positive... 

Michael Harris: Overestimating.

Veronica Morgan: Slightly overestimate. Right.

Michael Harris: I use that word "over-excited" because I often go through this with a vendor and I don't want to sound like I'm a negative to other agents, but I always say to an owner in this situation, and I've said it quite a few times in the last month or two, to me if an agent comes in and over-prices your home in the marketplace, then all they're doing is losing your opportunities because if it's overpriced in the marketplace then the buyers won't come through the door. 

Buyers are educated. It's not like a market we were in 20 years ago where there wasn't the internet. 20 years ago we could put a just listed letter into your mailbox and you would call us because you don't have any information at your fingertips. Very, very different today. To me, by overestimating the value of the property to list the property just means that you're robbing the opportunities from your vendor because you're sending those buyers to other properties. As I said, they know the product. They know values most of the time. I find that as a really important part of the process.

If you ask me where do I sit in those categories, I'm probably a little conservative on my estimates because I find that if you can get it as real as possible and make your owner understand that you've got it real, then the relationship that you build throughout that process is a good relationship. Hopefully it's a lasting relationship and in doing so, you come out the end of it achieving what you said and hopefully a little bit more.

Chris Bates: It's very interesting you say that because I know a lot of people selling their home would probably make that mistake. They would probably go for the agent that has actually over promised and because they believe that they can get 2.2 million for it, even though you've come in at 1.9. In your situation I'm sure you'd be able to talk it as in selling around that. In the investment world they usually go for the person who is over-promising. It's a very interesting dynamic there that I think agents have to deal with.

Michael Harris: Chris, I agree and not all owners do in the sense that not all owners can you talk them around. Again, it's a very relevant topic for me at the moment because it's the conversations I'm having on a daily basis in the homes of my potential vendors, and that is ... I was at one recently where it was a property, it was entry level house for the area. An agent had come in and told them it was worth 1.1 to 1.15 and I almost fell off my chair. Realistically this house is probably worth around the $900,000 mark.

I sat down with this owner and I said to her, "Okay." I tried to explain to her that this information is incorrect, and I went through sales and one of the things-

Veronica Morgan: It's awkward isn't it?

Michael Harris: It's really awkward. One of the things she said to me was, "But this agent believes in this."

Veronica Morgan: It doesn't mean it's going to get it.

Michael Harris: That doesn't mean that the buyers are going to believe in this. So I threw it back at her and I said, "Okay. A property sold on your street last year. It was a one bedroom house fully renovated. It sold for a million and 30. So that sold for a million and 30 and we know the market has softened, how can you get 1.1 to 1.15?" And all of a sudden the penny dropped. 

She said to me at the end of it, the agent that she was really keen to go with was a great salesman and the energy that he'd come through with and all of that stuff. She called me "negative Nellie", but by the end of the appraisal, I had her on board. She was like, "You know what? I understand." And I said to her the same thing. "Don't lose your opportunities by over-pricing your property in the marketplace."

Veronica Morgan: So how do you then deal with buyers? In the sense that you've got ... You've had to educate your vendor obviously to get the listing in the first place and so that way in your head you've got a good vendor, someone who's going to recognize a good opportunity or a good buyer when they come. Then, the flip side of that, market has softened, but you're saying that there's a stock shortage so clearly there's some pressure out there for buyers when they find a property that they want to buy, and particularly with entry level as well. How do you then work the buyer to get the buyer educated and confident enough to do something?

Michael Harris: To make the move, yeah. 

Two things. First of all, just on the stock level. As you know Veronica, there's stock out there but there's a fair amount of rubbish as well.

Veronica Morgan: Most of it's rubbish.

Michael Harris: Yes, exactly, and that's what I mean. There's property out there, but I'd hate to be a buyer at the moment in this marketplace because the quality is just not there. 

Chris Bates: While we're there, can you give us an example of what you see is actually rubbish?

Michael Harris: Poorly located. 

Chris Bates: Not the actual address in the street and the agent.

Michael Harris: No, no, no. They're poorly located, not the most desirable location for that particular suburb they're looking in. 

Chris Bates: What's that? Train tracks?

Michael Harris: Yeah, train tracks. Narrow streets.

Veronica Morgan: Houso. 

Michael Harris: Yeah. Housing Commission within the area.

Veronica Morgan: There's a lot in that area, yeah.

Michael Harris: Which is a little bit disappointing because I have a different approach to Housing Commission. I mean there's some really good streets for argument's sake in Newtown. Look at Forbes Street. It's got Housing Commission at the end of it. It's a premier street. They never have an issue.

Veronica Morgan: But there's Houso, and there's Houso.

Michael Harris: Yeah, there is.

Veronica Morgan: And there is certainly ... Some years back I had a client come to me. They'd found a property in a particular street in Glebe for instance, and when I went and met them there and went through this particular house, they hadn't engaged us at this point. They basically had said, "We found a property. We really want you to help us buy it." I go and have a look at the house because I thought, "I'm not sure you'll want to buy it when I'm going to tell you what I have to tell you."

I said, "Look around you. I think that this is one of the very few owner-occupied houses in this street", and I called ... There's a police liaison officer and so I contacted the police liaison officer and she named for me pretty much the trouble houses all along. My own research showed me that in four blocks, only six houses were privately owned. The rest were all social housing. That's not to say social housing is bad. I think it's obviously very necessary. Very necessary, but there are some areas and pockets where you have a very, very undesirable element that are basically reeking havoc in the neighborhood and you don't want to be buying in that street.

Michael Harris: Agreed.

Chris Bates: But as an uneducated buyer, and I imagine Newtown is, as the eastern suburbs or the northern suburbs, a lot of people who have maybe never lived in Newtown are considering Newtown. Do you find that's something that, a mistake that you see quite common, that uneducated buyers who haven't lived in the area before are actually buying in undesirable streets?

Michael Harris: It depends on what you call an undesirable street. For argument's sake, a house on a busy road or a railway line might be an undesirable street but it's an entry level for a certain person. Example being, this was a few years ago now and it's only happened once, but I had a house that was on a really busy road. It was ended up being purchased by a hearing impaired person. Perfect house.

Veronica Morgan: Fantastic.

Michael Harris: You know what I mean? I mean it doesn't happen very often but perfect house.

Veronica Morgan: No. That's a match made in heaven.

Michael Harris: It's an affordable ... They get it at a lesser price because of the elements that are around this and the location of the home, but for them-

Veronica Morgan: Win win.

Michael Harris: There's no issues, so ...

Chris Bates: I guess if you've got an ugly view, you just need to sell it to a blind person.

Michael Harris: Yeah, possibly.

Veronica Morgan: That's really taking it to the next level of "there's a buyer for every house". 

It is interesting you talking about the rubbish that's out there and I know when I was a selling agent I used to think that every house is okay at the right price. Now, now I've been a buyer's agent for over a decade I realize that isn't actually the truth. What would you say are the elements or characteristics that a good property needs to have?

Michael Harris: Look, again it comes down to the need and the reason for the person buying this particular property but things that I think are important is not a busy road, or across the road from railway lines for argument's sake. Potential. I think that's really important because it depends on how long you're going to live in this property, but is there time that you can reinvest in the property to get a greater return when it's time to put it back on the marketplace? Things like is there off street parking, or potential for off street parking? Again, they're big ticket winners when it comes to selling a home. Again, not everybody wants it, but there is a massive difference between a house that doesn't have the opportunity or have parking in comparison to the one that does and the difference is at the level of inquiry that you get on that particular property as well.

Chris Bates: As in buyer's just won't look at it if there's no parking.

Michael Harris: Yeah. They may not even have a house but they understand the value of having that, especially on their turn to come back and resell the property itself.

Chris Bates: The Elephant in the Room is all about the elephant and our emotions driving our decisions. What are the things that you see in the top properties that actually really get the elephant going?

Michael Harris: Presentation, 100%. I think that's a bit apparent. Again, you look at the profession over the last 20 years. 20 years ago, houses weren't styled. In fact, we'd walk in with just our own camera and take a photo and you'd make a brochure and you'd put a text ad in the paper and open up on a Saturday. It was a pretty average approach to selling houses, but that's what was done. It's come a long way these days and I get it. Presentation's really important. Gone are the days of circling a text ad on a Saturday morning having a coffee. You know what you're looking up by mid week that week and you make a decision normally from photos that are on the internet. 

I always say to my owners, if you can't get the presentation right, the chances are that you're going to lose the opportunities because your competitor down the road, if they've got it right, and I use the example without being stereotypical, there are two gay guys that live down the road. They've got impeccable presentation. They come to market. You've got your house here that you've got a family living in and I get families can't present like double income style of living. 

Veronica Morgan: That’s not easy.

Michael Harris: But, the buyer doesn't equate to that and the chances are they're going to go down and fall in love with that property. They do fall in love with presentation because it's often you'll go to a house on settlement to do the final inspection, there's no further chart at all. 

Veronica Morgan: You're taking the words out of my mouth Michael on this one.

Michael Harris: Yeah. They just go, "Oh my God did I buy this house?" 

Veronica Morgan: "What have I bought?"

Michael Harris: It's like, "Yes".

Chris Bates: I thought it was coming with the furniture.

Veronica Morgan: I remember that. 

I have to say that certainly as a buyer's agent we really work through taking the rose-colored glasses off our clients eyes so they do understand exactly what they're buying. You're not buying the furniture. You're not buying the styling, but yes, when I was a selling agent, I remember that sinking feeling quite often when you could see it in the buyer's faces, that they're thinking, "What have I bought? It's not what I remember." 

Michael Harris: No, no.

I had a house recently this year on the market and the presentation, my owners lived in this house so it wasn't a styled home. You can tell styled houses. They look fairly much the same but ...

Chris Bates: They've got no wardrobes. 

Michael Harris: They've got no wardrobes. There's never any clothes. 

Michael Harris: But, this house was their presentation. It's how they lived, and I would have to say it's probably the best presented home I've ever sold in 20 years in the marketplace.

Veronica Morgan: Wow.

Michael Harris: Yeah, beautifully presented home. Only a few of the buyers coming through looked into the detail and could see through that. One buyer said to me, she took a contract and she’s come back and then she rang me, she said, "It's amazing," she said. "When you actually look past the presentation, the walls aren't finished properly. The timber floors don't match throughout the home." She said, "All of a sudden you see it's actually an un-renovated or, it's not a fully renovated house but on the visual, if you don't look through it, you walk out going, 'Wow, what a great, great home this is'. Take the furniture out of it and you've got a pretty standard run of the mill house."

Chris Bates: I think that's with the white chalk walls sometimes as well, the quick patch up jobs. They have put the cheap paint on. It hides all the blemishes and things like that. 

Michael Harris: Yeah, absolutely.

From an uneducated buyer, you think it's beautifully painted, but they've just used the cheap paint just to hide stuff and things like that.

Veronica Morgan: It goes beyond that though. I remember a house that was actually owned by a film stylist. Now, she just styled, she basically set it up like a film set. If you think what a film set is, it's usually inside an empty building and they just basically create an entire house or an entire whatever they've created inside this building. That's effectively what she'd done. She created a renovated house inside an unrenovated house and it was incredible. 

Michael Harris: Amazing. 

Veronica Morgan: Same deal. Buyers just looked, didn't notice.

Michael Harris: Same as gardens, pot plants that are potted and they look beautifully done. Edward Scissorhands’ been in and groomed it to its absolute ninth degree, but come time, those pot plants leave the house and you've got an empty concrete backyard again.

Chris Bates: Can you over-style though, as in ... Styling can be quite intimidating for people in terms of, "I don't think I can recreate this. I haven't got the furniture. I haven't got the ..." Sometimes people, they've seen it beautiful and they feel like, "I'm never going to look this good." Do you think that's possible?

Michael Harris: I don't know if I've ever got a reaction in that way, but what I can say is that when you have certain size rooms with furniture that fit that room, this is where you get into issues with buyers. It's like, "Hang on. We can put our dining table in here." Yes, you've got a dining table here, but it's quite small or, "Our lounge doesn't fit", or ... I can't tell you how many dealers I've lost because the fridge doesn't fit type stuff. It's like, "Buy a new fridge."

Veronica Morgan: Yeah, I know. It is interesting, isn't it? On one hand, it's, "Yes, buy a new fridge." I have this conversation with clients well. They're moving out and they've got this 10-seater dining table, whatever and they're downsizing. I'm like, "You might have to let go of the dining table."

But, on the other hand, you think, "Okay, but it is a really small kitchen. It's only ever going to be a small kitchen. If you can't cope with a small kitchen, then you shouldn't be buying this house."

There's two sides to that, isn't it? 

Michael Harris: Yeah, absolutely. 

Chris Bates: If that's one of their non-negotiables, big kitchen, big fridge, you can see why.

Veronica Morgan: But, I'll tell you, people often, like you say, they don't see beyond and see what they're actually buying. 

I remember I sold a house once that was a three-level terrace and it all these rooms in it. It could've been a five-bedroom house because of the way the rooms were, or it could've been one bedroom with all these living spaces. In effect, the owners were a couple and they only had one bed in the house. A guy walks out in the inspection one day, looked at me and said, "Wow, it's a really big one-bedroom house, isn't?"

I thought he was taking the piss, I really did, but then I realized he actually meant it. He physically only saw one bed, so he counted it as a one-bedroom house.

Michael Harris: But that again, Veronica, comes back to, again, it's the conversations that we have daily with the owners. They've got a three-bedroom, for argument sake. One of the rooms is set up as study. It's like, "No, you need to get rid of that study and put a bed in there." 

They're like, "But, it's a bedroom."

It's like, "No, it's a study. For a lot of buyers walking through that front door, they'll walk out going, 'It's a two-bedroom house plus study.'"

We've got to paint the picture for certain ... I'm not saying people are silly, but they you do have to paint the picture for certain amount of people that are out there looking. They can't see through that. 

Veronica Morgan: It comes back to what else you're seeing in the marketplace. If the other listings have the picture painted for them, then they don't need to think too much, do they? This is what we're trying to do. We're trying to get buyers to think.

Chris Bates: I think it goes the other way as well. When you're putting a bed in a study and you're trying to sell it as a three bed when it probably should be a two bed and study.

Michael Harris: Absolutely, and I get that, but I'm talking about a bedroom that is a proper bedroom.

I agree. The same thing. I've got a property on the market at the moment. It's a two-bedroom unit, but it's advertised as a one plus study. The owner fought with me a fair bit on this. "Look, I'm sorry, you're going to get the wrong buyer to the property."

Chris Bates: Yeah. 100%. Yep. 

Michael Harris: You can't fit a double bed in there. You go for it if that's what, I'll do it if you want me to, but I'm going to tell you now that the wrong buyer will turn up and you won't sell the property. 

Chris Bates: Yeah. Disappointment and they're not going to buy it. Yep.

I'm really fascinated around, it's been a very hot market. I imagine selling a property hasn't been a problem about finding buyers for the last five or so years. 

Michael Harris: Yeah, it's been pretty good. 

Chris Bates: In a more of an even market, it's all about finding the right buyer. How do you know that? How do you ... What are they offering you and how are they behaving that when you pick up that phone call or you're on the phone to them, this is the one and how soon do you do that and do you do that?

Michael Harris: I think firstly it comes down to ... Again, real estate has changed so, so much and for the better. Absolutely for the better over my career span anyway. There's a big emphasis now on trying to help buyers. I have one person who I employ who sits in my team just to look after buyers. 20 years ago, I didn't care about buyers. That's not where the industry was. It wasn't ... I think 20 years ago, the industry was a transactional industry. Today, it's very much a relationship and service industry. It has changed a lot. I do think that a lot of the time now, you're working with these buyers quite some time hopefully before you get to introducing them to some of these homes. You've got a quite amount of information behind, in the database on them already, which will hopefully, in turn help you understand what are the triggers and the emotional things that they're looking for, then, in turn, hopefully when is that right time to try and make a move to get in to close the deal.

Veronica Morgan: This is interesting from my point of view too because I know that as a buyer, you want to guard your information. You don't want the agent knowing too much about you, but then if you don't let the agent know enough about you, then how can the agent help you? This is a real knife edge, isn't it?

Michael Harris: That's exactly one of the points that I've made a note of before coming here today and that is ...

Veronica Morgan: Tell us more. 

Michael Harris: Yeah. I said to Matthew yesterday, I said I'm coming here today. I said, "Give me an idea because you talk to the buyers a lot." I said to him, "Tell me the frustrations." He said, "Communication". He said the buyers don't want to communicate with you. A lot of buyers don't want to talk to you. They don't want to tell you. 

Chris Bates: I think you're quite approachable.

Michael Harris: I think it's the attitude. There's two things. Some of them don't want to speak to you and the second is, when they give you a budget, they give you a lesser amount, which doesn't help because we can give them a better product to look at if we have the right budget. 

Now, we can't make you spend your money unless you want to spend it. Let's get real about this. I saw something on social media the other day where a person on Facebook was having a go at an article that we all was mentioned in the Sydney Morning Herald and trying to suggest that a real estate agent elevates the price of the property and makes his buyers buy the home. That's not true. The elevation comes from competition. 

Veronica Morgan: You wish you could, don't you?

Michael Harris: I wish I could. I would be a very rich man if I could do such things, but elevation of a property, if the property price goes up, it's because it's got competition. It's like anything. It's a supply and demand.

Veronica Morgan: Or fear. 

Michael Harris: Or fear.

Veronica Morgan: Yeah, fear of competition, which is why people make a pre-auction offer.

Michael Harris: Exactly, which we don't have a lot of in this new marketplace as you know unfortunately, but I think if you can be as real as you can with agents out there, and you'll work out good agents and bad agents. It doesn't take long to work out who is being honest and who is not being honest. It's pretty transparent. Again, transparency even coming down to being real and honest down to what you’re quoting in the marketplace. 

A lot of properties are passing in. Four and a half out of ten properties are passing in, in our marketplace at the moment. It's around a 65% clearance rate. 

Veronica Morgan: Actually, it's 3.5. Your math is out. 

Michael Harris: There you go. There you go. Obviously...

But, it's interesting because you'll soon work out who is genuine, who is not, because when those properties come back to market, have a look at the guide that was on it compared to the price that they're now putting on it and you'll soon be able to work out who are the ones that you should go and speak to who are generally going to be able to help you and be honest and straight with you in the process of buying a home. 

Chris Bates: I imagine that's not a problem you have, being in the area for so long. That's one of the benefits of being an agent and not jumping around like any ... You know the streets. You know all the properties. You know what they're sold. You're actually someone they need to get on side from a buyers point of view. Chances are, you're probably going to be selling it, the properties that they want in a few months. Actually getting to know you, why should they be fearful because the more that you know about them as a buyer, the more likely you're going to help them.

Michael Harris: Yeah. Absolutely. 

Chris Bates: The budget is a funny thing because I deal with clients before they've even gone to a real estate agent because they've got to get their pre-approval set up. Generally, not many people are going all the way up to the nth degree and there is flexibility on budget. There's a mental hurdle around, "I don't want to spend more than 1.2", but a lot of buyers can't be that specific. They have to be a little bit flexible because if the right property does come up at 1.3, they probably could stretch. Yes, they might have to find a little bit more for a deposit. Even with a budget, buyers don't really, they shouldn't really have fixed budgets because if you get two properties and one is a little bit better ...

Michael Harris: Obviously, and you know better than what I do Chris, obviously, they've got to have a budget of some sort, but I agree. Now, we ask the question once we get the budget and we start to work with this buyer a bit more and build the report and the relationship and we don't just send them to our properties. Matthew will get on the line and go, "Did you see this property is being sold by our competitor down the road?" End of the day, it's a service. Hopefully, when they come time to sell that home, 10 years, 20 years' time, they might come back and give us an opportunity to chat to them then as well. It's all for the better. 

But, $100,000, Veronica as you know, can make a big difference in the product that you end up buying. If you can be a little bit more, I don't know, I don't want to sound like a buyer is not transparent, but a little bit more upfront in what your budgets could possibly be and how far you could possibly stretch for that right property, then you're going to get more opportunities.

Veronica Morgan: I put it out there and say a lot of buyers don't really know how far they are prepared to go. I know that this is a process we put our clients through at the beginning of the search. It's something we've refined over many years and it's essential for us now. We call it our, very, very boring, it's called a "Getting Started Session", but there are three "Ps" to every property search. 

There's the price or the budget. There's the property itself, the property characteristics and then there's the position or the location. One of them typically is going to flex more than the other two. 

One thing we have to tackle at the outset to say, "Okay, this is what you get with the budget you're giving us. Now, forget your flex for a minute. We don't know what your flex is until you tell us what your flex is. This is how much you need for the perfect property." 

We actually go through and show them recent sales and show them the perfect property is going to cost you an extra X amount of dollars. 

Now, some clients have the flex and when you show them that, they go "Oh, I get it now. Let's just go out looking with the revised maximum budget because I realize that if I see the perfect property, I will go to that level."

Others can’t budge so it's good to get that off the table, but it is really important because years ago, when I first started doing this, we'd find people had been looking for months, years in fact at times and then they're always chasing the market because it takes them a while to realize "I need to spend more money." 

There are sweet spots, aren’t there? There are sweet spots within the market. An extra 100 grand might buy you that extra bedroom or the car space. Whereas, in other price points, that extra 100 grand won't make much of a difference. It's important to know the difference, isn't it?

Michael Harris: Yeah, yeah. Again, buyer's agents are so great these days because if you're having those conversations with your buyers now, then obviously the opportunities aren't going to be missed down the track for your buyer because I do think that there's a lot of opportunities that get missed by not getting this right at the beginning.

Veronica Morgan: Yeah. 

I think also, this idea about, you're not the only agent that's told us that it's a changing emphasis. The idea of telling buyers about listings that other agents have, for instance. 

Now, therefore, you said it's not transactional anymore. That's interesting too because that pulls back and says this is a much bigger picture approach to property and to being in the game than the quick smash and grab type or the new entrants that have come into the market in the middle of the boom and have just been enjoying the fact that they're just staying at an open house and getting offers. Are you finding that more and more competitors are doing the same thing?

Michael Harris: Yes. 

Veronica Morgan: Yeah.

Michael Harris: Very much. 

Veronica Morgan: Then, what's the next frontier then? How are you going to differentiate yourself next?

Michael Harris: VR.

Chris Bates: That's coming. It's coming. 

Michael Harris: Yeah. I can't wait for it. I like it's going to be lots of opportunity ...

Veronica Morgan: Virtual reality. 

Michael Harris: Yeah. Yeah, yeah. I'm really interested...

Chris Bates: Well, matterport is only growing, isn't it, where you go for a visual tour around the home with the listings?

Michael Harris: Yeah. 

I think it'll be good as well. I look at the amount of time that buyers spend in a house before they buy it.

Veronica Morgan: Not long. 

Michael Harris: It's scary. We spend more time in our cars before we buy our cars then what we do in a house, where if you've got the visual reality there, you can spend quite a bit of time on these things exploring and looking and doing these things, hopefully if the software allows it to and I'm sure it will. You can get more engagement in the property before you make that final decision because people spend two million dollars and they spend 10-15 minutes in a house.

Chris Bates: On that point, people naturally feel like they want to the right thing by you. They don't want to waste your time. If you're my buyer, I don't want to waste the real estate agent's time, but should a buyer be, I guess, concerned about asking to see the property three, four, five, six times or is that, from an agent's point of view, do you see that as a good sign?

Michael Harris: Yeah, it's a good sign in some regards as long as they're qualified ready to go, but obviously you'll go through that process before you get to having five appointments with them.

Chris Bates: Does every buyer, not just some guys who might see me, but just generally, does every client get their finance sorted prior to?

Michael Harris: No. Some think that they have got finances approved and they don't.

I had a house, we had a house in Newtown the other day where we had it going to auction. We quoted 1.4 on the property. All the buyers said, "No, no, no." The experience they're having with underquoting, they thought we wanted 1.6. We pulled it from auction. We put a price of 1.398 on it and we had a buyer within 10 minutes ready to go. We exchanged with a 5 day cooling off, which is what we do at the moment with the banks because they want to see a contract signed before they'll value the property, et cetera, but they had no idea about their finance. They had no idea whatsoever. The ended up, we're in a ten day cooling off and they ended up realizing that they just didn't have the budget to buy the home. They lost their money. 

Chris Bates: Did they?

Michael Harris: They lost their 0.25%. Yeah. But it's only a few thousand dollars, but it's a few thousand dollars.

Veronica Morgan: It's inconvenient for you too because ...

Michael Harris: We've lost opportunities unfortunately. Yeah, I've got the property back on the market now. 

It's like, my owner unfortunately is ...

Veronica Morgan: Not happy.

Michael Harris: In some regards, has lost lots of opportunity because we gave him that time, which you kind of have to do to get the the sale done, but in this occasion, the buyer just wasn't up to speed and they work for the bank.

Veronica Morgan: Wow. There you go.

Michael Harris: It just shows you.

Veronica Morgan: Yeah.

I've definitely seen that buyers underestimate what's involved. I'm sure, Chris ... How much longer is it taking to get finance approved these days and how many more hoops are buyers having to jump through? 

Chris Bates: The major thing that drives whether you can borrow money or not is servicing. Generally, it's not really the deposit. Servicing calculators, every week or every month the banks are having to update them because they're having to be more conservative because APRA is basically telling them off more and more and they're not realizing that maybe they got a pre-approval 12 months ago or they've had a pre-approval before, but that's on the old calculators. On the new calculators ... Or, their policy might change around maternity leave or part time. Policy changes from the banks. I guess people just aren't aware that how much policy change has actually happened and are just assuming that it should be alright, mate.

When you're buying a two million dollar property, it's not okay if you haven't got the cash in 42 days. 

Michael Harris: Yeah. 

You would know, again, better than me Chris, but I was reading the other day recently where all these changes are coming through from APRA at the moment and the inquiry at the moment with the banks, et cetera. They're saying, there was some articles I was reading saying if you earn, I think it was 80,000 or 100,000 dollars a year, they're suggesting that the loan maximum was going to be something around 200,000 dollars. 

Chris Bates: That's our good friends at UBS.

Michael Harris: That's scary. 

Chris Bates: UBS highly conflicted. UBS want to crash the property market. If you type in "UBS and property reports", they are the worst, which I'm just going to throw it out there.

Veronica Morgan: Can I just jump in there because seriously, there was a, I wrote a blog on this a couple years ago. The Australian property market is overvalued by 7.5% UBS. That's the type of headline that comes out of their economists or their PR department. It does my head in. What's behind all that?

Chris Bates: “The market is going to fall by 40%.” They're the lie-alones. The UBS very regularly writing reports, but what they're talking about there is that borrowing capacities could fall 40% if the banks did look in detail at people's living expenses. If they did do that, which this week, Westpac have actually started to say that they are going to do it more and more, it is going to have huge ramifications on it. It's something just to watch this space at the moment though. 

Veronica Morgan: It is interesting. I was reading that report the other day and I was thinking that's fine people can't borrow as much as they could borrow before. It's really only going to impact on prices though if people start to have to sell. If they can continue to service the loan they've already got, but they can't actually go and borrow more money to upgrade or whatever they're going to and so they sit tight. They just wait. 

Michael Harris: What about the buyer coming into the marketplace that's already got the lesser amount of money? 

Veronica Morgan: What I'm wondering ...

Michael Harris: Is it the rich people who are going to continue to buy houses because they're the ones that can only afford it now?

Veronica Morgan: There's still people. You know that upper end of the market has got lots of buyers in it at the moment. This is interesting. There is still money out there. I'm not necessarily certain who has got it, but the thing is though, if people don't transact because they don't upgrade or they don't downsize even because of this, then it's just going to, the whole market will grind into a halt. It won't necessarily be that prices fall. It'll just be that they stop transacting.

Michael Harris: Yeah, yeah. Then state government will lose their taxes and they'll have to change it again. 

Veronica Morgan: Yes. 

I don't think we've been here before. That's the thing. This is not a ...

Michael Harris: But, it's kind of happening now to agree. Again, Veronica you'd see this once every seven years was the average people hold their houses. It's way longer than that now. 

I was looking at statistics the other day in Stanmore of how sales 20 years ago, 15 years ago to today, the volume that was going on 20 years ago is unbelievable compared to the volume that we're seeing now. Less and less people are turning the houses over. It's expensive to sell a house, to buy a house so they're staying put. 

Chris Bates: Even when you look at the comparable of "we could upgrade, but it means 500 grand plus costs and we might not get, so let's just stay here."

Michael Harris: Absolutely. Yeah.

Chris Bates: If you think in a world of five, ten years time, that's only going to get worse.

Michael Harris: Yeah, I agree. 

Chris Bates: Which makes it even better when you actually got one of those properties because there's going to be less and less supply, more and more competition for the ones that do hit the market and that process will continue.

Veronica Morgan: There's been a lot of talk about what has caused the boom in recent years. There's a lot of talk about that, but one of the sources of data that we use is Pricefinder. You've probably looked at this, Michael. There is a suburb flyover that they offer. You go in there and you plug in your suburbs. It might be Stanmore and you plug in houses. There's this nice little graph that shows you the volume of sales, the amount of property that have sold every year and then the median price. Over the last five years, that gap between the median going up and the volume going on, there's this neat little triangle on every single graph on every single property type in every suburb that we operate in. It's one of the reasons I go for this 10-k radius thing, but you see that play out that as more people, as the value of property goes up, the transactions go down and then that pushes the prices up.

Chris Bates: Why would you sell when prices are going up? You don't.

Veronica Morgan: You don't want to upgrade, do you because ...

Chris Bates: If my property was worth a million last, two years ago, now it's worth 1.3. Momentum is behind the market. Let's just hold it for another year. We're crazy to sell. 

One question I'm going to ask you, it's a bit of a knife edge and I guess it's a challenge for agents. One side, a buyer, we're thinking, "I want to be friends with the agent so they're going to help me", but you're really there to represent the vendor. How do you play that game where, "I've got to look out for the vendor's interest here, but I've also got to look out for the buyer's interest", and where's the line? Where's oversharing? Where's under-sharing? How do you ...

Michael Harris: At the end of the day, your client is your vendor and that's your number one priority is to make sure that you do the best possible job for them without a doubt. That goes without saying, but that doesn't mean that you can't have a relationship with buyers and build report with buyers. I talk about buyers in my market appraisal with my owners. I think it's important that they understand that you've got the ability to build report with these buyers and to help them. It comes back to, I think again, the shift in the profession of the more recent year. That is, yeah, we do represent our vendors, but we have got an opportunity to give a service to a buyer and to help a buyer, then why not do that? As long as you ...

Chris Bates: You think your vendors care about the buyers in terms of who they are, what they do ...

Michael Harris: Yes. Probably not so much who they are and what they do, but they certainly care about you treating a buyer with respect and being upfront with the buyer. They understand negotiation is a win-win process. As much as they want to get that final price, they, if you read some of the testimonials, my vendors talk about that we did look after the buyer, not that we jeopardized their sale or got them a lesser amount. 

I flip it around the other way and go, "Look, if we look after a buyer and we can build report with a buyer, then hopefully we've got a bit more trust or they've got a bit more trust in us. Hopefully, that means that we can have a bit more real conversation and maybe get you a bit more money because they trust the agent."

Veronica Morgan: Dropping a barrier. 

Michael Harris: Yeah. Yeah. Exactly. 

I'm not saying that's always the case, but there's ...

Veronica Morgan: Beware the friendly agent.

Michael Harris: But, I do think there's a responsibility in today's real estate world for you to give a certain level of service to a buyer without a doubt, even though they're not your client. 

Chris Bates: Then, the bidding war that sometimes happens prior to auctions when you've got a really good offer on the table and your buyer, he's really keen, but I haven't seen the property enough, how do you play that for that buyer?

Michael Harris: If that's the case, then obviously you try and get them back into the home as soon as possible, but it'd have to be rather quick. 

We have a process where, if we were to say "Okay" to an offer sometime this afternoon, we'd be wanting to have the deal done by midday tomorrow, so to speak. In a lot of ways, your buyer has to be ready on the financial sides and all of that, but if it's just the throws of making a decision, get them back there. Get them into that home. Get them into that property. 

Chris Bates: If you were a buyer, what sort of offer would you make if you had to make an offer on a property?

Michael Harris: It's hard, isn't it, because it depends on how the process works. Some agents go, they'll tell you the offers ...

Veronica Morgan: Office.

Michael Harris: Office. Others will say, "We're not going to give you what it is. You've got to put your best and final last.

Veronica Morgan: There's no rule.

Michael Harris: No, there's no rules at all. 

In a hot market, I tend to follow best, sorry, your best final last, you've just got to come forward, which is, when I take, when I put on the shoe on the other foot, I go, "Wow, I would hate to be in that situation because it's a hard situation to be in."

Veronica Morgan: Yeah. Look it is a hard situation. I have to tell you that as a buyer's agent, as a selling agent, I used to do best and final. I found that you're more transparent if you gave very, very clear directions in terms of what the parameters were.

Michael Harris: Process. 

Veronica Morgan: I also used to say, "Don't give it to me on a contract. I will give you 12 hours or however many hours to actually exchange." In one scenario, actually the first two buyers fell over. I ended up selling it to third one for $2,000 less, but because I had the respect of those buyers through that process, but I also recognize ... That was only after a few horrible experiences where I was learning to do it and did it awfully and buyers hate you. You think, "That's not working", but as a buyer's agent now, we'll always ask, "What process will you follow if this happens?" 

You will get agents that have got no idea how to handle it. You've got others that are very clear on how it's going to work and others that will shop every offer around. To be quite frank, I'd rather go to auction than have that happen.

Michael Harris: Yeah. 

I completely agree with you on that. I think there's two things there. One is, the agent needs to know the process because if you get an offer, it's the agent's responsibility to go back to that buyer and say, "Okay, your offer is accepted, but there are certain terms that's accepted. That is that we are going to follow this process. If you don't like that process, then the offer is not accepted, because they have the right to say 'No, we don't want this to happen.'"

If you're not clear with your buyer, then that's the wrongdoing of the agent in my opinion because if you were to do that process, or if you'd accept that offer and not explain the process to the buyer, then I don't blame them for being pissed with you if they find out what you're going to do. 

I'm with you again. I don't like shopping offers around. I hate it. 

Veronica Morgan: It's messy. 

Michael Harris: I think it's messy. 

I feel like it's not ... Almost sometimes when I hear it, I think, "Oh God, is it a real offer? How real are these people?"

Chris Bates: Then, you'll also know from a buyer point of view that when you, say for example you say the offer is 1.5 and I say, "I'll give you 1.55", you're going to shop my offer. 

Veronica Morgan: Yeah. Exactly right. 

Michael Harris: What I do is, I do it, and we're really strict on the process. I won't change it for nobody because it's not fair on anybody if you change it part way through because you've got to be fair to every single player out there. End of the day, you work for your vendor, not for a buyer. You've got to be fair to all your buyers.

I do it in a way that, okay, if we accept your offer, you need to bring your contract into our office unconditional and we park it. That way I know you're absolutely real and I can exchange you straight away with my vendor. I've got no risk of losing the deal or wrecking the option process for my owner.

Veronica Morgan: Yeah, because that's an important point there that one of the reasons, in a hot market that a lot of agents don't want to go down this process is because they don't want to ruin the auction campaign. Once you start on these path, the auction is done.

Michael Harris: Absolutely. It is. 

Veronica Morgan: You've really got to sell it.

Michael Harris: You've wiped it out. Yeah.

I do that and then I will then go to all of our buyers and I only go to the contract holders. Obviously, really you can't, in a hot market especially, you can't go through 200 people. I make it very clear to a contract holder because people come in and they go "Were interested in the property, blah, blah, blah. If there's any offers, let us know." It's like, "You need to take a contract if that's the case because they're the ones that we will target if that happens. That way, you won't miss out."

Veronica Morgan: Absolutely. 

There is a tip for buyers and we've said it before. 

Michael Harris: Get the contracts. 

Chris Bates: Let the agent know.

Veronica Morgan: Show the agent that you're interested and the best way to do that is by taking a copy of the contract. 

Michael Harris: Absolutely. Then, all of the sudden, we know we have to speak with you and include you in all processed. We go through the process and you make a call, you send a text message and you send an email. Three processes. It's all transparent and you can track back to the buyer because some buyers are going to be like, "Oh, you didn't tell us." Like, "Actually, we did. Here's your email. Here's your text message. You may not have picked up the phone, et cetera." 

Then, you've got the buyers who say, "Can't you tell me what it is?" It's like, "Okay. I'm going to put the scenario to you. Let's say the property is selling for 1.5 million dollars. You think it's worth 1.65 million dollars and you're prepared to pay that. I tell you 1.5 so you give me 1.55 and then somebody else who I didn't speak who just put their best offer forward offers 1.6, I've just lost the property for you because you would've paid 1.65", or whatever the difference is. 

I try to explain to a purchaser, "I know it's a crappy process, but if you do put your best foot forward, at least you know you've done the best job because if I tell you and you pull back on what you're prepared to, it doesn't mean the third person I've spoken to isn't going to give a better price."

Veronica Morgan: A lot of buyers, they try this to try to second guess. They're trying to work it out...

Michael Harris: I get it's hard though, Veronica. I would hate it. I would hate. 

Veronica Morgan: It's very hard. It's extraordinarily hard, but I think, this is where I think it's important to ask what the process is because then that can inform your opinion. If you're not prepared to go to your maximum on a sudden death situation like this, then you've got to realize that there's a big chance that you might lose it for a price you'd be prepared to pay. That's the question you've got to ask yourself. 

Chris Bates: The standard line I've always heard from real estate agent, when it's really, you should only be buying a property if it's a good property, that's what my philosophy is. You should only be buying quality. If it's not, you should be really considering to rent it rather than buy it, but if you are buying a property and it's a good property, for the last six years, a lot of the time, it's been going to auction. It's pretty much the only route. If you are going to go to an open home for a property that's going to an auction, a real estate agent is going to basically say one thing to you and, "Look, we're not taking offers and it's going to go to auction" and you don't even start that process. 

How does a buyer who doesn't want to auction... We've just spoke to a few auctioneers on how an auction can potentially take you in the wrong direction. It's there to get price. How does a buyer get you at least into a price conversation that they know they're going to be involved with potentially making a deal? Is there a way? 

Chris Bates: Again, it'll come down to the heat of the marketplace for me. If it's a really hot market, I would just much prefer to say there is no offers. I'll ask my owner before. In a really hot market that we've come out of, if you go and look at the back of my agency agreements, I'll get my owner to write on it, "I will not accept any offers in campaign." Or, "I will not accept any offers in campaign that are not on a contract, blah, blah, blah." If you want to come make a verbal and not do your research or your homework, then we're not going to take it.

There are ways that you can try and push back at the buyer because at the end of the day, I would much prefer as a buyer, I know buyers don't like the auction process, but unfortunately that's how you buy houses in this marketplace in this particular part of the country. Go somewhere else, in country NSW you'd probably find private treaty sales. No issue at all, but for here, unfortunately, it's the way that we do do it, but I always say to a buyer, "At least on the auction floor, you can eyeball your competitor and you know, it's a transparent process, you know what's going on. Once we start this process on a telephone, it's not transparent."

Veronica Morgan: Oh, absolutely. It's blind as.

Michael Harris: It's horrible. 

I try to give examples to a buyer of why they should reconsider about coming to an auction floor rather than getting into a conversation about an offer. Obviously, as the market changes, it becomes very different. Now, we're very happy to talk about offers prior.

Veronica Morgan: Yeah. This is where buyers beware. 

With the agent suggesting an offer or pushing that direction then, go to auction.

Michael Harris: Matthew that works with me said, "Can I maybe suggest?" Like, "No, don't do that because you're basically telling your purchaser that you probably don't have a lot of competition and you're losing the ability to negotiate for your vendor."

Chris Bates: For the last six years, the only properties that have taken offers is that and that's generally a massive warning sign for the reason not to be buying the property because everything else was just selling. 

Veronica Morgan: Yeah, but when the elephant is in control, the elephant goes, "Oh great, I have an opportunity not to compete" and they go and buy a dog.

Michael Harris: But you'll know when, you tend to ... Again, a good tip for buyers, you know, an agent will know and a buyer's agent will know when the market is turning before a buyer will know because there's early signs that we see that make us prick our ears. Before our market turned last year, we knew. The banks were coming and hitting hard already. I was thinking, "Don't hit too hard because the market is changing now. Buyers don't know that yet, but there are signs out there."

One of the signs is that if you start to see properties sell prior to auction, that's a fair sign if you're in a really strong market that maybe that market is changing.

Veronica Morgan: Yes. It's the smoke and mirrors of auction clearance rights. Because the sold priors are included in the clearance rights, you can ... we were chatting with Matt Hayson on this and he was saying that he doesn't believe that those sold priors should be included in the clearance rights. Then, the flip side of that argument is, but the auction process actually got that far on the table and got that contract signed prior. It's a whole podcast episode we could dedicate to this.

Michael Harris: Depends what you call auction clearance rights as well. In some regard to being sold prior, does that mean there's only one buyer on the property, but I tend to think there should be just all in one. There is no right or reason for that, I just think it's part of the process.

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

Do you have a good example for us, Michael of a Dumbo? We can all learn what not to do from these stories. 

Michael Harris: Yeah. 

I think one that comes to mind, the example is my sister and her partner Joanne were looking to sell their property in Canberra a few years ago. 

Veronica Morgan: I love the fact you've given away who it is. 

Michael Harris: Yeah, yeah, yeah. I often use this example. I find when you're talking to people when selling houses and listing houses, examples are a great way to get messages across. 

On this occasion, I knew what I could do for them and that was I could come down and give them my knowledge of presentation. To me, that's what I can do for them because they're in another state. I went there and I worked my guts out for three days in their garden and I got a stylist in and I said, "Let me do that side of it for you." 

They got to market. Now, they went to market. In the first open house, they got an offer and they got an exceptionally good offer, but what they did was they rang me and asked me to give them advice. This is my point. You need to be careful who you take advice from when you're buying or selling in a home because family and friends think they're giving the right information and they believe they're doing the right thing by you, but a lot of the time, they're giving you the wrong information and they don't know that. 

My point to Sal and Jo was, you need to go and speak to your agent. I am not going to make a comment because the chances are, I'm going to give you the wrong information and it's going to cost you money at the end of it. 

Veronica Morgan: It's a very good point. What did they do?

Michael Harris: They went and spoke to their agent. That's what I said to them. "You've chose this agent because you trust this agent and, in your opinion, they're the best person to represent you, so go and talk to them."

They went and spoke to them and they exchanged the property and it was sold.

Veronica Morgan: The Dumbo there is what they could have done, or they're lucky that the person that they asked for advice actually gave them good advice, which was actually go back to your agent who you've chosen to represent you. But if they called someone else potentially who gave them the sort of advice that often well-meaning friends and family give, which is, "Never take the first offer."

In fact, there's a Freakonomics story on this. Have you heard of Freakonomics?

Michael Harris: Yes. Yes.

Veronica Morgan: Yeah, there's a Freakonomics story. We'll put the link to the video of this in the show notes. It is the economist and a journalist have done some research and found that real estate agents in America, their houses sit on the market longer than the average Joe. 

Michael Harris: Their own houses they're trying to sell.

Chris Bates: Okay. Yeah. 

Michael Harris: They would list that on the market for say, 50 days, but if was your property and I'm trying to sell your property, I'll try to sell it in 10.

Veronica Morgan: Yes, so the idea from an economists point of view is saying that if, over there the fee is generally 6% and it gets split between the buyer's broker and the vendor's broker. 

Michael Harris: Correct. Yes.

Veronica Morgan: They're basically saying 6% of an extra 10, 20, 30, 40, 50,000 is not much and when you halve it in terms of the selling agent and all the rest of it, the actual difference to the agent is not significant enough for them to want to hold out: the extra days marketing it, taking buyers through it, all the rest of it. The output versus the input is not worth it. They will encourage you, Mr. and Mrs. Vendor to sell your property quickly.

Michael Harris: Get on with it. 

Veronica Morgan: But, when it comes to selling their own property, they'll take as long as it takes to get the perfect buyer at their highest possible price. 

It is interesting, isn't it because ...

Michael Harris: Yeah, but I look at this and if I had said to them, obviously they're going to make their own decisions, but if I had said to them and I probably would've done if I wasn't in real estate, I would have said, "No. Don't take the first offer." But, the chances are that the next offer may not be there. It's a bit like this marketplace now. 

I say to my owners at the moment, "If you get an offer in the first week", and I have this conversation when I'm listing their property because there's no point having it when you get that offer because all of the sudden you do, you're not genuine. But in that listing presentation there is certain things I will cover and one is that if you get an offer first up, early, don't run away from it. Don't shy away from it. Let's get in and see what we can do with it because it might be that one buyer. Chances are, there are only one and maybe that one buyer you're pushing away and the next offer you get may not come for some time and it may not be at the price again.

Chris Bates: That's the power of picking the right agent to sell your property because I guess, if you haven't got that real trusted relationship and that trusted agent absolutely knows the market ...

Michael Harris: Absolutely.

Chris Bates: ... Who can actually say to you, and you have zero doubt they're trying to force you to sell because they're too busy and they're just trying to get a transaction. That's a gut feeling really and you're only going to get that if you really believe that the person selling the property is telling you the right advice. 

Michael Harris: Hence, Chris, why you have that conversation at the listing because then, at least, do you what I mean, if I was selling my...

Veronica Morgan: What they call "set to sell"?

Michael Harris: I don't know. It's just stuff over my years of selling. I've realized that it's like anything. If I was selling my house and an agent said to me, "You should take it", the offer, but didn't tell me beforehand that chances are, if you get an offer early, it might be the only one, then my approach to it would be very different if they told me that at the beginning because all of the sudden, I feel, "Okay, hang on a minute. This is the scenario that they gave me. Therefore, this is something that can happen." There's a bit more hopefully trust associated with that.

Veronica Morgan: They key here is, as well, in terms of the Dumbo of the week that your sister called you, her brother for advice. Now, she's fortunate she got good advice because you're in the industry, but the idea here, the Dumbo of the week could've been if she called her brother who was not in the industry, you're going to get the sort of feedback and the advice such as the Freakonomics theory, which is around a journalist and an economist giving real estate advice. They don't know enough, certainly in our market, maybe it does apply in the US, but certainly in our market. The logic might be there, yes hold out longer, but is it really likely and what are the risks associated with that. 

Michael Harris: Yeah. 100% agreed.

Veronica Morgan: I think it's how to avoid being a Dumbo, that one. 

Michael Harris: Yep. I agree. 

Chris Bates: Thank you, Michael. That's been extremely insightful and being very forthcoming with everything that you've shared. I really appreciate you taking some time. 

Michael Harris: Veronica, Chris, thank you. It's been great to come along and have a chat. Hopefully there's something in there for a buyer and a seller. 

Veronica Morgan: There's a lot in there, Michael. I have to say that I've worked with you many times on opposite sides of the negotiation table. The insights I've gained from talking to you today have been fabulous as well so thank you so much for coming. 

Michael Harris: Pleasure. Thank you. 

Chris Bates: We want to make you a better elephant rider. This week's Elephant Rider training is: 

Veronica Morgan: One thing I really picked up from the interview with Michael was that property styling can really lead buyers down the wrong track. Seeing beyond the styling is really, really important. He did say, in one particular example that he gave about buyers that were looking at the detail of the property. I guess that's a really interesting thing for buyers to be aware of, that they can hoodwinked if you like or they can be misled by presentation. They need to look beyond. They need to look at actually what they are buying. 

Is the kitchen, for instance, what it is? Are those tiles what they are? Have they been sanded back and painted, for instance? Is it a look and feel that you're falling for or is it the actual fundamentals of the property? Has it been freshly painted? Is that covering up a myriad of sins in terms of rising damp or whatever it is? 

It's very much looking past the presentation of the property. That is this week's Elephant Rider Training is to go and train yourself to look beyond presentation. 

Chris Bates: Veronica, what have we got to add to the elephant memory bank this week?

Veronica Morgan: This week, Chris, I think we should put the video for that Freakonomics article. There's actually a video that explains the economic rationale behind why they think that real estate agents take longer to sell their own homes than they do to sell their client's homes. We'll pop that in the show notes at theelephantintheroom.com.au. 

Tune in for our next episode when we interview John Cunningham. Now, John was the president of the REINSW and now he's spearheading the pathway to professionalism with the REIA or the Real Estate Institute of Australia. We had a very, very interesting chat with John really about what the future looks like for real estate agents and whether, in fact, there will be as many agents in the future as there are today.

Chris Bates: The Elephant in the Room Property Podcast is recorded at the Sydney Sound Brewery. This week's podcast was recorded by John Hresc and edited by Gordie Fletcher. 

Veronica Morgan: Until next week, don't be a Dumbo. 

Chris Bates: Me again. We're looking forward to spending more time with you and uncovering what's really going on in the world of real estate. Please subscribe. Be sure to send us a message, leave an iTunes review and tell your friends. 

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

Veronica Morgan