Sydney Property Muppets
36. Exclusive Buyers Series - Negotiating before auction!
Welcome to the Sydney Property Muppets podcast. My name is Kurt Lothar, I'm the real estate agent and with me, forever is. - Which stuck with me, Chris, the buyer's agent. - Oh, Chris, always lovely to have you here in your place. - I'm really enjoying this series of exclusive series on a buyer's negotiation journey. There's a number three in the, but you don't have to listen to an order, but this is number three and today we're gonna focus on. - Before auction, so. - Before auction, what do you mean before auction? - Before auction, so negotiating before auction. Sort of the points we're gonna give. - Fun stuff. - Yes, the fun stuff. So why is the seller or agent prepared to sell pre-oction? So first point is gonna be about other buyers. Second point is, is the vendor desperate? The third point is does the agent want a quick sale? - Yeah. - And then a couple of other points, we'll touch on a 66W and properties purchase pre-oction, typically going over, according to Chris. - Yeah, I just stuck on a 66W, always makes me think of Star Wars order 66. - I've never seen Star Wars, so. - Oh my God, I think I've done. All right, so why, first point, why is a seller prepared to sell before an auction? What's some characteristics? Is it typically there's other buyers? Typically there's no other buyers. - So we'll just say there is buyers before here. - So why wouldn't you wait to the auction? - Probably multiple factors. You've got to take into account your property. So if your property is on a main road, if there is some faults about it, and it's obviously it's been let known to the buyers, but the buyers still want it, you probably still don't want that lingering too long, 'cause it could still be perfectly fine, but we're all humans and we start to build up doubts. - So that might be something why you want to go early? - I had one, actually, I went to it before, I had one where the agent had guided. What was probably thought to be a reasonable price, was a bespoke property over in Putney, guiding on 3.7. End up selling an auction above 4.4, we actually secured an auction. We did a pre- auction off of a significant number between those two points. So you somewhere doing that 700K mark and quite sizable, and was rejected, and you go, "Geez, we're offering a significant amount." But I think what he could see as an agent was, he hadn't loaded the guide price, but just because it hadn't been any similar for so long, all these buyers that come out the woodwork, and he was like, "I'm in a great position to go to the auction." So you just don't know what's going on. - And that's why the agent earns their craft, because I don't think a lot of people realize the pressure on the ain't. It's very easy once a sale's done, and the sale's gone through, and it's over the price, or wherever it, wherever it is. But we are making that decision. - And they're called. - Because you run the risk, if you do end up going to auctioning, you've had all this interest, is was it best to sell it beforehand? We had one in Edinburgh that sold a couple of years ago, where we were guiding 3.7, the house was dilapidated. I can't even say that word. And we were guiding 3.7. Nothing could be built in front of it. We had so much interest, we were like, damn it, we needed to move the guide up. We moved it up to 4.1. We still had interest, and it's like, do we secure it now? Do we not? The vendor's expectation now had grown to we're trying to contain it, because it was just being like, look, we don't want to disappoint you, or get your emotions over it. They were still probably another half a million dollars long now because of all the excitement that had happened. We still then was like, no, do you know what? We are going to sort of take that little bit of a risk. And we have 17 registered bidders, and someone down the front that just wanted it, wouldn't let it go. And it did end up something for 5.3 as well. Crazy. Now, there's no way we could've guided 5.3. There's no way we could've guided it. Well, if there's no way you could've got that offer pre-oxy. No. Even with a couple of serious biasing, we had serious bias, you know. It's the fact that when you're in an auction, let's be honest, the emotion, the people there. And they're also having an eyeball, which I've talked to the previous episode about. We had a couple having almost a domestic on the front lawn. The whole neighborhood was there. It was Castle Craig, one of those little niche, sort of, together. So what about the scenario? You've sort of painted this picture. You've got two buyers, saying, one's significant. You know their budgets. They're still enough to tell you exactly where their budgets are. You know the two buyers are going to come to the auction, and they're quite a far apart. Yeah. Right? So if you were to go to auction, you know, the one's going to stop down here, and the other one's got pockets up to here, but no one's going to push them up. So that seems to me pre-right for a pre-octioned scenario. So once you've learned, you're going through the campaign, I'll use this example. We sold something in Chatswood, which the owner wanted in probably the number starting with a five, five million. Property was genuine value was probably around, if you sold it for 4.5 or 4.6, I think it would have been a great deal. Both value, both parties. We ended up having someone around the 4.4, or someone around the 4.5, and someone up near the 4.8 million. Yep. And for us to go to auction, trying to make up... Trying to get that 4.8 to put a 4.8 in auction when there's the next bid's 300k less, 250 less is challenging. So it's not always a position of weakness in terms of you trying to avoid, like, you know, the main road or the faults with the property. Sometimes it's the position of the buyers and where they've revealed their cards and your gut instinct, that sometimes it's best. Do you know what we need to wrap this up beforehand? Yeah, it makes sense, right? To make it have an auction. If no one's going to push them to the highest amount, but you know, the amount's there. And you're also, again, we always say, you are on the side of the vendor that's who pays your fee or your salary in the end of the day. You're doing the right thing by them. But it can be, if you think about the buyer's side, geez, it's hard to know if you're in that situation. Are you either one at the lower level or the one at the top? And sometimes as well, I think to help buyers as well, just say you are at the top and somehow you managed to find out you're the one that paid 100, 200 or 10%, 15%, 20%, more than the next bid up, please know that you're not just versing the other bidders. You're also versing the agent and the vendor and just say that buyer only put in 4.6 and that was going to be the top, they might have been like rental market. - Correct. So that's beautiful for our next episode, actually we're going to talk about counter offers against the vendor, exactly, you're talking about there. So in this point though, so there are times where agents want a quick sale. You know, and I mentioned this once or twice, maybe not strongly, but you know, the simple way of putting it is if an agent does a full-blown, four-week, five-week auction campaign, every property, even with the best team in the world, they're probably going to sell between 40 and 50 properties each year, give or take. If they are selling prolific and they're talking about that playbook of knowing everyone's strengths and where they go to is, there are some agents who will sell 90% of their properties they will be in charge of, pre-oxygen, pre-market, off-market, they can sell typically between 100, potentially up to 100 to 150 properties. So even if they've sold all those properties, they're just a little bit less, which is bad for the vendor, their commission self-interest, they ever cheat a lot more. - So I will make a couple of notes on that. You are talking about also some of the cream of the crop, but also that's why I always speak about not to always base if you're a potential vendor going to sell your property on how many properties an agent is selling because you don't know the individual circumstance of each of those properties. - Yep, the quick start, that's probably the one thing I very much dislike about the industry and being in the industry is when you go to some trainers and they talk about trying to-- - I'm smiling as I see this, but go on. - Yeah, trying to get offers, trying to get offers early, they always talk about even when you're working on a property, getting, having your lead agent or your lead generator, basically trying to bring in more and more and more business, because unfortunately if you don't have business coming in, then as soon as you sell the properties, you're out of a job basically, and until you find, so there's this balance for agents as well, trying to be like bringing the properties in and making sure properties are selling and some agents unfortunately are all about just bringing as many properties in, because Chris, what I will say as well, a lot of people don't realize 70% of the work is also done beforehand before a property even hits the portals, just getting the property ready, your marketing team, your pre-market going through we do a five-stage campaign, so the different stages we run through three stages before we even hit globally on REA and main, lots of work is done there. I'm very ethical, and make sure we push it and get as much money out as you can. - You do that last 30%. - Last 30%, even, man, we talk a joke about turning the purchases upside down and letting the coins drip out. - Yep. - So-- - That's what you're there to do. So next, you know, following on from that, this is probably good to capture as well, talking about statistically, offers done before auctions, offering accepted before auctions statistically achieve that five to 10% of the market comparable on average, but it's only statistically. That does mean there are people who spend above that level. - Yeah. - Pre-oxy, and offer, spend above. So it doesn't mean just because you do pre-oxy off a high five, you've done the greatest thing in the world, and you've got it. There are times, and I've seen it before, where people have paid over and over and over above, whatever it been, it's just about an auction. But they're high-firing into it because they've got it in their game. Well, if you go into auction, you probably would have saved sometimes $500,000, and you're a five-meter of property, or 10-meter of property significantly. - And it also depends where the market's up to in terms of the interest rates, how many buyers that demand the supply. And there's all these other factors to take into account. - To consider. - Yeah, definitely. - Now, if you do purchase beforehand, in Sydney, you are more than likely, and I reckon it's gonna be coming around the country more and more. - Isn't it? - But at the moment, in Sydney, a 66W, which basically means in a standard contract, that's not for auction, there is a five-day, a five-business-day calling-off period to give you a chance to think about it. However, if you were purchasing before auction, - You're basically-- - Not in nine times out of-- - Even higher. - Yeah, even higher. - Pretty much you're going to sign a 66W in a five, depending, again, we're talking about 10K radius from the CBD of Sydney. - To waive your, to waive the calling-off period for the property. - And the 66W is basically formed from yours, so they're saying you waive those things. Every state has these. They're just not called a 66W, only in New South Wales and referred to as that. But just something to get your head around. - And it can be used as a negotiation tactic as well, in terms of if you, like, if this is after auction for, if this is after auction. But before auction, basically, 66W will be required. - And it is a point of maturity of a buyer, and I think an agent will gain respect of you if you're aware, hopefully, if I'm listening and watching this podcast, you become more aware of these things. So instead of waiting for the agent to say, "Do you have a 6W or do you know "and you look and dump it again?" I don't know what you're talking about. If you lead with and you listen, "Hey, I listen to Sydney probably your mum, "it's got a great tip and maybe I'd say that, "but you just, but you'd go, "I know Kurt, this is three days from the auction. "I love us when we're doing this with a 66W. "Kurt, your thought of that buyer is, "I'm sure it's going to elevate because you're like, "Oh, they know they're, I'm going to sign a swear, "they know they're shit." - Well, I'm not worried about having to try and, like, if you come to me and you don't want to put a 66W before auction, I don't take this serious. - Yeah, you're quite brutally. - I understand, but my point is, well, if you say to somebody, you'll be signed with a 66W, and they look at you, dump found, and then you explain what it is, and they get really scared, I'm sure you think, not that you think less of them as individuals, but you probably have some alarm bells going, "Oh, I'm going to have to hand hold." This buyer might go, "Am I a?" - Yeah, now, even if you're the only buyer on it, because we're going to auction, we're still playing with our Trump card, that we're going to auction, when someone asks, "Do we have interest on the property?" People coming to the property means there is interest in the property. And the other thing, so even though it's not a 66W, at auction, you were buying under a 66W condition. So if you're in that situation, you're a few days out as an agent, and you've got someone who's a bit uneducated, or you can just say, "Just come to auction." - Yeah. - Yeah, if there's a time of 66W, you have to get a 66W. You can just come, and we've got you by the jugular. All right, anything else on? So jump back and forth, I did jump forward one point. - No, I think that's probably, I think that's probably a great way to round it out, that before auction, if you are going to purchase, you're gonna require a 66W. Whether you buy that auction before or after, the main thing is, you've got your set price that you're gonna-- - How are you going with that? - You've got your set price. So-- - So I don't think we're a repeat, man, that's boring, but I think it's such a big point to hammer home, that people don't do, they don't have that set price. And we see them, when they go through negotiate, and you see them, they're making it up as they go. - Yeah. - All right, beautiful. - Perfect. - Nice one, okay. So now, we've been doing a very cool episode, we're just gonna throw up a different one today. So this is the, this is Riddles. - The Riddles. - The Riddles. So Kurt's got three Riddles, long enough to crack at them, and see if I get them, if I get them, I get a point each. - Correct. - And vice versa, I'm gonna throw it back to you. So do you wanna kick us off then? - I do wanna kick us off, okay. Riddle one, I have branches, but no fruit, trunk or leaves. What am I? 10 seconds. Government body. - Oh, do you know what? I'm gonna give it to you. - A bank. - What is it? - A bank. - A bank. Oh branches, oh my God. - They're very generous. Are you giving us great? - Question, I'll take that. - Question two, what five little word becomes shorter when you add two letters to it? - What part? - Short. - Correct. - Yeah. I didn't think that, that's too obvious. No, I got that one there, now I'm scoring it and doing well. - What goes up that never comes down? - What goes up that never comes down, what goes up? Years? - Your age. - Oh. - I know what, I'm not gonna get into it after I was a bit generous with my first. - Okay, so what month of the year is 28 days? - There we go. - No, all of them, all of them. - No points. - No points. - Oh, come on. - No, they're not looking at you. - As soon as I started saying it, I was like, "No, I've jumped way too quickly." - Well, it has to be broken before you can use it. - Silence? - Oh, no. 'Cause you can't use silence. - In negotiations, you can. - Yeah, yeah. No, you can't, no, no, no. An egg? 'Cause you gotta use the egg, come on. - I'm gonna use it. - No, you're not, you're not. What is full of holes, holes, but still holds water. - Sponge. - Damn. - That's one to you two to me, I'm gonna say. - I'm taking them, I'm taking them. - You know, I'm personally taking them. You can take it all you want. I'll hold both of you to it. Very good. - I'll give you this win. I'll give you this victory. - So thank you, Aaron, being involved or included. Please keep the comments and questions coming. If you know somebody, let's describe them. They're 25 to 30 and buy it to buy their first home. This series is perfect for them. So you know that person at barbecue, you chat with them and they talk to their buying a property. You've been nuts in my work, you're killing in your ears right now, not to forward this to them ASAP. I was gonna say, and even if you've got a grandparent or a dad or mum that's in their 60s that have lived in the same property their whole life, the real estate industry has changed a lot. And it also may be worth giving them this for them to sort of just start wrapping their head around the industry. - Very good. All right, thank you for the Sydney property, Muppets. See you next time. Thanks, drop 'em by.