Why would an agent quote one price to me and something else to another buyer for the same property?

The language of real estate is ambiguous. This is due mainly to the fact that every buyer interprets information differently. Agents need to make a judgment call on how you are likely to interpret what they say before they say it.

Confused??

How much do you add on to an agent’s price guide? 10%? $50K? $100K? It is a personal thing and varies greatly from buyer to buyer. Usually the amount you add on is a direct result of your experiences in the property market. The agent doesn’t know how much you are going to add on, so he/she is going to quote the lowest figure they can get away with in order to increase the chance that you will think it is within your budget.

Now for the other buyer. The agent may know them better than you. This buyer may have missed out on another property sold by this agent. Maybe the agent has appraised their home and is familiar with their buying requirements. If there is more trust in their relationship the agent can afford to be more honest, hence a different price guide.

So, what is the solution? If you are not dealing with an agent where you have built up a trust relationship, you need to know your market. Do your own research and make up your own mind on the price.

For more information on buying property in Sydney go to www.gooddeeds.com.au.

What does it mean if an agent is quoting $1.3M for an auction property?

If I offer $1.3M will they sell it to me prior to auction?

We have heard this question in numerous forms over the years – so many people get confused by Sydney’s auction price quoting system.

The fact they are quoting around $1.3M really means that they really want more than $1.3M. If the property goes to auction and the best offer they get is $1.3M, they might then sell for that price – but they might not. But for a buyer to buy it prior to auction, they need to make an offer that will entice the vendor to sell before the auction – as all vendors hope to get competition that will give them a price over their reserve. (I am not even going to venture into the area that deals with what price the agent put on their vendor’s agency agreement).

Without having done any pricing research on this property, I would think they’d be thinking at least $1.35M to sell prior to auction. But if there are other interested buyers, this figure can climb. For example, recently we had a client interested in a property that was being quoted as $940K+. I spoke with the agent about an offer and was advised that other buyers had indicated around $1.06M (a big jump, I know, and there were comparable sales to justify this). My clients were very keen on this house and decided to offer just over $1.1M. This would have bought it, had there not been at least three other buyers prepared to pay similar money. In the end, we secured it for $1.125M – and believe it or not, there were two other buyers then prepared to pay more!!

I hope this makes sense? It doesn’t make sense to me half the time…

For more information on buying property in Sydney go to www.gooddeeds.com.au.

Real estate buying stages.

Trying to buy a property in a sellers’ market is no walk in the park. We meet buyers at all stages of the purchase cycle – do you recognize yourself in this list?

1. Optimism – this is fun, you are excited, and nice to selling agents
2. Disappointment – first auction goes 20% over what you thought it would sell for
3. Disbelief – at what people continue to pay
4. Anger – at selling agents for under-quoting, at other buyers for over-paying
5. Resentment – you pack up your toys and stop playing for a while
6. Resignation – that the market is continuing to rise despite your lack of participation, you still want to buy after all
7. Desperation – you try to talk yourself into anything just to get into the property ladder and get your Saturdays (and sanity) back
8. Wisdom – learn from your mistakes and/or get expert help!

For more information on buying real estate in Sydney go to www.gooddeeds.com.au.

Common mistakes by real estate buyers.

Many of our clients come to us after a string of disastrous attempts to navigate the property market themselves. Here are some examples of common mistakes that we come across.

• Giving the selling agent too much information. Putting you at a disadvantage when negotiating.
• Not giving the selling agent enough information. How many people have missed out on a property because the agent did not know they were interested? The art is in knowing what to say and when.
• Panic in a rising market and buy foolishly. As Louis Christopher said last week, “Remember lemons are very hard to sell in bad markets." But we see plenty of them selling at the moment.
• Panic in a rising market and don’t buy at all. Of course the market will level off at some stage, but how much will prices rise before that happens?
• Keep increasing their offer without a counter-offer from the vendor. This is not the way to negotiate with an unrealistic vendor.
• Leave too much time between getting an offer accepted and being ready to exchange contracts. And leaving the door open for another buyer to snap it up.
• Allow the auctioneer to create a rhythm. Before you know it you have bid over your limit.
• Let the fact that other people are bidding confirm what the property is “worth”. Instead of doing your own research.
• Believe what the agent is quoting for a property. Buyers largely determine what property sells for in this market and there aren’t many that tell the agent what they are prepared to spend.

There are many pitfalls for the unwary and the weary. And it is so easy to get caught up in the general frenzy and lose sight of what represents value for you.

For more information on buying property in Sydney go to www.gooddeeds.com.au.

How to decide how much to pay for a property.

As real estate agents, we have a requirement under the Property Stock & Station Agents Act to undertake a thorough analysis when determining what purchase price we recommend a client pays.

There are a lengthy list of factors we take into consideration in order to comply with the Act. Some of which are:
• A detailed analysis of recent sales
• Assessment of the factors that may affect the price people are willing to pay for this property in the current market.
• Is it a property that will attract buyer interest if you need to sell it in a flat market?
• Is there an obvious way that you can add value?

However, there are also factors that are individual to every buyer. For instance:
• How long have you been looking for? Is this the only property that you have found in 12 months that suits your requirements?
• What is your timeframe – own it for 5 years then upgrade, or is this your 20 year home?
• Are you an investor or an owner occupier?

Sometimes you need to pay a premium for a property that is going to suit your needs better than anything else that is likely to come onto the market in the near future.

Sometimes, however, it is folly to pay a premium for a property that is highly likely to drop in value when the market levels off. Knowledge is power and the more you know about the suburb you are buying in, the better decision you will make.

For more information on buying property in Sydney go to www.gooddeeds.com.au

When not to compete for a property.

Last weekend I saw an auction for a property on a busy road. I was astounded not only at the amount of bidders for this property, but at the crowd of onlookers that the auction attracted. This level of interest from actual buyers and sticky-beaks alike is completely symptomatic of the current strong property market. In a “normal” market or, god forbid, a down market, this auction would be lucky to attract more than one bidder let alone many spectators. During market down times in years gone by we have seen numerous auctions where the selling agent, the vendor, the auctioneer and if they were lucky, one buyer were in attendance.

So, why are people suddenly competing for property on busy roads? Some reasons include a lack of quality stock, fear of being priced out of the market and a general sense of panic amongst buyers. We are also seeing inflated prices being paid for unrenovated properties for the same reasons.

This property sold for $100K over what the agents were quoting. If you are going to compete for a property, make sure that it is a property that will also be desirable to buyers when the market returns to “normal”. Let’s face it, if you are going to pay a premium, you may as well ensure you pay it for a good property, not a bad one.

For more information on buying property in Sydney go to www.gooddeeds.com.au.

Beware the friendly selling agent.

These guys are usually great at their job (these guys are usually, in fact, girls). They are great at lessening your pain threshold when it comes to parting with your money. After all, we buy from those we like.

These are the agents who return your calls, answer your questions with sensible answers, even follow you up after you have inspected a property. These are the agents who are very skilful at encouraging you to make offers, register and bid, even pay more than the asking price.

So here’s a thought, maybe you will save money by persisting with those agents that annoy you, irritate you and generally give agents a bad name. After all, there will be plenty of other buyers who will avoid dealing with them, so possibly you could avoid some competition.

For more information on buying property go to www.gooddeeds.com.au.

Why would an agent say “no offers” during an auction marketing campaign?

Here is a little known fact about auction price quoting. Apart from rare situations where the vendor has instructed the selling agent not to entertain pre-auction offers, there is a very compelling reason for agents to discourage offers. If an offer is rejected, they have to increase their quoted price expectation!! And they do not want to do this for fear of not being able to build interest and create a competitive auction.

To give you an example, an agent is quoting a property at “over $900,000”. You make an offer of $950,000, which the vendor rejects. The agent now needs to increase their quoting to reflect the fact that the vendor will not accept anything up to and including $950,000. Perhaps that will turn other buyers off, so don’t be deterred if you want to make an offer prior to auction.

For more information on property buying in Sydney go to www.gooddeeds.com.au

How to handle auctions.

With such high clearance rates at the moment (reported to have been over 70% for three months running), more vendors will be choosing to auction their homes rather than offer them for sale at a price. And competition can be fierce when there is little quality stock out there as well as first home buyers in a rush to buy before the end of September.

We speak to so many buyers about auctions – most hate them – and there are a myriad of opinions on how to best handle them. When bidding for our clients we take into account many variables including who the auctioneer is, who the selling agent is and how clever they are at auction negotiations, how busy the inspections were and what the vibe was, information gleaned from the selling agent about vendor motivations, likely competition levels and, of course, what the property is worth. Here are just a few of our ideas – remember that every auction is different and one technique will not be useful in all scenarios.

Have a clear idea what your budget is and what the property is worth to you. This is the golden rule. Do not deviate from this and you should not get drawn into a bidding war that will result in you overpaying.

Try being the first bidder. This goes against conventional wisdom, which is not to bid until the property is called “on the market”. You have a better chance of controlling the auction if you start it with a strategic bid. But that is the key – this opportunity must not be wasted.

Don’t wait until the property is called “’on the market” to bid. How is it ever going to reach reserve unless people bid?? Seriously, we have seen plenty of properties sell under the reserve at auction after a bit of frantic negotiation between agent and vendor. And not all auctioneers will call the property “’on the market”, so you need to be careful here.

Stare down your opposition. A confident stance can do wonders in out-psyching other bidders and making them think you have bottomless pockets. We see many would-be buyers stop bidding prematurely because they believe the other bidders will stop at nothing.

The highest bidders right to exclusive post-auction negotiation is only a courtesy. The agents and vendors are able to negotiate with any interested party once the property has passed in. They will usually offer the highest bidder the first right of refusal, however there may be other parties suddenly making offers. By leaving the negotiations until after the property has passed in often vendors harden their stance and a good buying opportunity could have passed you by.

For more information check out our website: www.gooddeeds.com.au

Does the Office of Fair Trading protect real estate consumers?

I have long been of the opinion that the Office of Fair Trading (NSW) is a toothless tiger. Many professional and ethical real estate agents spend a great deal of time and money ensuring their compliance with the various Acts under which they operate, while some pretty shoddy ones keep flying underneath the radar.

It is my belief that consumers have some degree of protection from under-quoting of auction price expectations and also dummy bidding but in my opinion this is due to the attention given the topic by the media combined with the fact that large auction-oriented franchises and agents do not want to be made examples of.

I believe that the vast majority of real estate agents wish to do a good job and operate ethically. However, there remain others who do not do their profession proud. If they are doing anything wrong that does not come under the auction umbrella, it seems unlikely to me that they will taken to task by the Office of Fair Trading. Maybe they just don’t have the resources…

The best chance a consumer has is to level the playing field and engage their own professional to act on their behalf – a buyers’ agent of course!!

For more information on how a buyers' agent can help you: www.gooddeeds.com.au

A shameless plug… why use a buyer’s agent?

Here are just a few reasons:

You don’t sacrifice your weekends and family time.
Searching for a home can become all-encompassing and takes over your life!

We have access to unadvertised listings.
Though, to be honest, motivated vendors are those who pay for advertising. Unmotivated vendors want more than their property is worth – however your perfect property might just be owned by such a vendor and this could be the only way you are going to find it…

Selling agents often give us information that they won’t share with the average buyer.
Our lack of emotional involvement means we won’t have a “knee-jerk” reaction. Also, selling agents know that a buyer’s agent understands the sales process and therefore comfortably share information that can give our clients a distinct advantage over buyers who represent themselves.

If you'd like to know more, go to www.gooddeeds.com.au.

Agents have a saying – buyers are liars…

When I tell this to my clients they are all invariably shocked. But aren’t real estate agents the ones you can’t trust? When was the last time you told an agent how much you had to spend, or how much you were prepared to bid to on an auction property. Buying and selling real estate is often a game of bluff – with buyers and vendors agents facing off and second-guessing each other. Just for something different – try being honest with the next real estate agent you deal with and see if that improves the quality of information you get from them.