Go behind the scenes of Ep 2 of Location Location Location Australia with Veronica's blog.
It is possible not to be picky enough!
It is great to have an open mind and see the potential in every property, though sometimes this could end up in confusion and inactivity.
Ultimately Dana and Kev found a home with the perfect combination of location, period charm and modern floor plan. But I wonder what would have happened if we had not found such a good match for them.
From the outset they said they did not want to do any major renovations and the Rose House could have scared them off as it didn't have the floor plan they wanted. But they had a very open mind and could certainly see that the renovation required wasn't as daunting as it may have appeared on the surface. The reason was that the building envelop and roofline lent itself to an internal reconfiguration of the rooms and they would not need do any actual construction.
The house in Fullarton showed them that a more prestigious suburb could be within their reach. But there would have been some compromises in terms of the culvert and the imposing hospital building to the rear.
When Kev saw the Edinburgh Hotel across the road from the third house has was already moving in and when he saw the low maintenance garden he was truly sold. Since this property was in a much lower price range than the other two, I was expecting
Different types of agents
In my experience agents typically fall into one of two categories. The first, and most common, are the deal doers. These are agents who jump to action when they have a buyer on the hook. They won't let a deal pass them buy. They are opportunistic and often charismatic. They thrive on a sale and know that the only way they get paid is to sell, sell, sell, and they never lose sight of this.
These agents are able to understand their vendor's motivation and are able to find out their bottom line. They are very focussed on managing their vendors price expectations (otherwise known as conditioning) so that they can get a deal together in a timely fashion once they have identified a buyer.
The more skilled agents in this category will be very charming and persuasive and you will want to buy from them, even if the property they are handling isn't ideally suited to your needs.
The less skilled "deal doer" agents will resort to playing games and being a bit liberal with the truth. So you are unlikely to trust these guys as much and will probably not want to buy from them unless they happen to be selling a property that really suits you.
Regardless of their skill level, a quick sale is a good sale in their eyes. So negotiate hard and decisively, preferably with a signed contract and a walk-away price.
The second group are process oriented. Often inexperienced, they will be lead by their owners, who generally don't know how to negotiate either. They couldn't manage their way out of a wet paper bag so the chances of them having their vendor's price expectations under control are less than nil. Not only that, but quite often they haven't even worked out that without covering this crucial base they are less likely to get a sale. And they don't have the skills to close the gap between a buy at a low price and an owner at a high one.
Typically these people follow a very rigid step by step process and aren't able to roll with the punches. They don't think on their feet and won't know how to handle a curve ball. C follows B follows A and don't get the order wrong! So now is not the time to get creative with your offer and try to negotiate on things like inclusions, settlement periods and lease-back arrangements. Whatever you do, don't confuse these poor souls!
Generally those who are the worst negotiators will give you the least information. They don't know how to use information to get an outcome. So buyers get frustrated with them and sometimes even give up in disgust. Or they dig their heels in and nobody gets anywhere.
These are the sorts of agents you have to give a low offer to as they won't know how to sell a decent offer to their vendor. By starting off at a figure less than you are prepared to go to you will be conditioning the vendor (because we know the agent hasn't been) and allowing our friend to look like he is negotiating. So when you finally get to the point of submitting your final offer, the vendor is better prepared to recognize it for what bit is and hopefully accept it.
You might get the feeling that I detest dealing with these "box ticker" agents. And you would be right. But we always keep our eye on the prize and act accordingly in our negotiations.
The story behind the auction
When we found the Clarence Gardens property for Dana & Kev, we were confronted with a pretty poor combination of a selling agent (let's call her the lister) who was managing her very first auction campaign and her manager (let's call him the boss), who was a typical box ticker and providing the lister with all his misguided instruction. In this case the lister's natural instincts were to get a deal together and she was pretty good at working with us while still representing her vendors. The boss, however, was the complete antithesis. In fact I don't think I have ever got less information out of an agent.
I often write about auction quoting practises and in over a decade of auction experience I had never come across an agent who completely refuses to quote any price at all. But now I have. When I asked for some sort of indication of the vendor's price expectation he passed me a sheet of recent sales in the suburb ranging from $248K to $825K with a look on his face that seemed to say "there, that should help".
Well, of course we had done our own research and we were fortunate enough to have three relevant recent sales in the street to compare. So we had a very good idea on what price we should be paying. But the main concern for me at this stage in proceedings is that if this agent shares no information with buyers, how the hell is he getting information from buyers? And if he isn't getting information from buyers about what they think the property is worth, then how can he be advising the vendors in relation to setting their reserve price? And given the fact that most owners think their house is better than their neighbours and therefore worth more, this could pose a problem.
In these circumstances it is often better to go to auction as at some stage the agent will be forced to divulge the vendor's sell price. But Dana and Kev were very keen to try to secure this property prior to the auction so we decided on a two-pronged approach. The plan was to make a low but decent offer to see if the vendors would come back with a counter-offer. At the very least it would serve to condition the vendor and provide some of the market feedback that was probably lacking from the agent. If the offer was not accepted (which we didn't expect) or a reasonable counter-offer given, then we would go to auction. And from the non-communicative agent we got neither an acceptance nor a counter-offer so to auction we must go!
I had a lot of fun during the auction forcing the agent to give us a price, then drop that price, then drop it again until we struck a deal. I felt like a mother bear protecting her cubs and spared no mercy with the box ticker. Since neither of the two other registered bidders made a bid, onlookers may have thought we were bidding against ourselves. But we knew values and we knew what a good buy was and both Dana and Kev were delighted with the result. They got the property for a very reasonable price, effectively getting the pool for free when you compared it with those recent neighbouring sales.
If you would like to read more of Veronica's insights on the property market, particularly in her own backyard of inner Sydney, go to Veronica Morgan’s blog.