March 20, 2024 • 25 mins
Unlock the secrets of selecting a real estate agent who doesn't just talk the talk but walks the walk in property sales. This week we navigate beyond the shiny veneer of lofty price quotes and too-good-to-be-true commissions. In a landscape where every dollar counts and the right strategy can mean the difference between a swift sale and a stagnant listing, our conversation zeroes in on the core of what makes an agent truly effective. We strip back the layers of marketing fluff to reveal the questions you must ask to discern an agent's true potential to sell your home, from their marketing acumen to their genuine connection with active buyers.
The housing market's heartbeat is often dictated by the Reserve Bank of Australia's pulse on interest rates, and we dissect their latest cautious commentary. With a magnifying glass over the term 'moderate' and its implications, we scrutinize how the RBA's stance could signal shifts in the property landscape, particularly against the backdrop of a 'two-speed' market.
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Episode Transcript
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Speaker 1 (00:00):
All down, all silent, going, going, going.
Go on, stop the black noise.
Speaker 2 (00:07):
Welcome to the Current Market Insights podcast
brought to you by HarrisPartners Real Estate.
Each episode we chat with realestate author and industry
leader, peter O'Malley, todiscuss the current property
market conditions and provideinsights to assist you on your
property journey.
Speaker 3 (00:30):
Hello and welcome to another episode of Current
Market Insights.
I'm your host, kieran O'Brien,and with me is Mr Peter O'Malley
.
Peter, hello G'day, kieran,great to see you and certainly
welcome back for another week.
There's a lot to talk abouttonight, but I really wanted to
start off this episode by justtackling one of the topics that
we get asked about as agents andthat we have in many ways
(00:52):
touched on briefly, but I reallywant to chat about agent
selection for people looking tosell their home.
I know that when I've thoughtabout home sales, or when, you
know, even prior to getting intothe industry, my considerations
were things like which agentwill get me the best price and
which agent is the cheapest,because you know.
Logically, that seems like thethings to ask.
(01:12):
You're a man with a lot ofexperience.
Are they the right questions toask?
And if they're not, what's abetter angle and what are some
better choices that I could makeas a potential seller to make
sure I get the best deal for me?
Speaker 1 (01:24):
There are questions that need to be asked here, and
how much do you think your homeis worth and what are you going
to charge us in the process?
Who wears the risk of thecampaign is also another telling
question that needs to be posedthere to the real estate agent.
We always suggest to peoplethat they should look at
selecting their real estateagent on process, not price.
(01:44):
It's very tempted to get luredin by the agent that quotes the
highest price.
Sometimes the agent that doesquote the highest price delivers
on that price too.
So it's not to say that theagent who does quote the highest
price has actually got itincorrect.
But whoever on, whatever a realestate agent says your property
is worth, it needs to be backedby evidence that will make
(02:06):
sense to the prospectivepurchases.
At the end of the day, therealtor does not really control
the price.
The process, more often thannot, will deliver the price for
the vendor, and we alwaysencourage vendors to scrutinize
the sales process, becausethat's where success will be won
or lost.
Speaker 3 (02:25):
So you've talked about a couple of things there.
One, I guess my takeaway fromthat is that we all love to be
told what we like to hear.
You know, we love being toldthat we, we look great, or that
you know where we're Lookingradiant, or we don't look tired
for the first time in God knowshow our children are well
behaved my children yeah, that'sa lie you look like you've lost
weight, kieran.
Speaker 1 (02:44):
Thank you, peter.
Your house is worth fourmillion dollars, kieran.
You can come back next week,peter.
Speaker 3 (02:50):
So that's one element is is agents will buy the
listing, and we've talked aboutthat premise before, of
Overinflating a price to get thelisting.
So tell me, though, whatexactly do you mean by the
process is important.
Are we talking about just, youknow, auction versus private
treaty, or are we talking aboutsomething more involved?
And if it is something moreinvolved, then how do we, as a
(03:10):
seller, actually go aboutEnsuring that the process is
front of mind in this, you know?
Are there questions we need toask?
Is there a line of Inquiry oror things we need to know or
obtained from the agent that cantell us whether or not their
process is the one for us?
Speaker 1 (03:25):
Yeah, I think there is.
If, if you were granted thelisting for our home, mr, mrs,
realist, that agent, what areyou going to do after you list
the home?
What's the sale process?
Okay, you're going to put it toauction, or you're going to put
it to silent auction, or you'regoing to run a Private treaty
campaign.
But can we, can we, get a senseof the specifics of that?
Where will it be marketed?
How will it be marketed?
(03:47):
Who will fund the cost of that?
Should we do a video?
Should inspections be byappointment?
Do we open it up for open houseto the entire neighborhood?
You're here tonight pitchingfor our business, but are you
going to be the agent that's onsite?
There's a lot of agents thatwrite a lot of business if you
follow their internet profile,for example but are rarely on
(04:08):
site at the inspections, quitesimply because they've got too
many, too many listings on thego at any one time.
They can't get around to all ofthem on a Saturday.
So the person that sits infront of you and purports to be
the person that's going to sellyour home, he's actually not
there working with the buyers.
Furthermore, give us someconfidence that you're connected
to active buyers in themarketplace.
If the campaign is fullydependent on you advertising our
(04:32):
home and connecting with freshbuyers in the marketplace, that
doesn't give us the confidencethat an agent who's immediately
and already connected withactive buyers in the marketplace
does so.
Can we get a sense?
If you buy a management process, they're the sorts of things
that you should be drilling downto.
Speaker 3 (04:50):
Okay, so we we asked the important questions about
process and I would assume agood agent can come prepared to
answer any of those questionswithout hesitation.
Many listing processes that Ihave seen, and even ones that
I've done myself we usuallybring a pack.
You know, we've got some thingsthat we want our vendors to see
.
What kinds of things will agood agent have with them, and
(05:12):
Are there any things that that apotential seller should look
out for in terms of overlyflashy Distracting?
You know, elements that arethere to make it look really
appealing but not, you know,potentially hide the the absence
of actual Like content.
Speaker 1 (05:26):
I think be wary of things that are superficial and
expensive and look forcontradictions in the agent's
pitch.
So you might get a flyer throughthe letterbox saying we've got
lots of buyers interested inyour area.
Would you be interested in amarket appraisal?
If you're thinking of selling,in your ring up and say, well,
look, your flyer Arrived or youremail arrived at the right time
because we are thinking ofselling, and you said that
(05:48):
you're dealing with a number ofbuyers and the agent maybe to
even build credibility into that, might mention that they've got
three underbidders from theauction around the corner, for
example.
You say so I'm kind ofinterested in selling my
property, let's talk aboutwhat's involved, and then the
agent starts talking to youabout a ten thousand dollar
advertising campaign.
So that's a bit of acontradiction.
(06:10):
I've called you in because youdropped a flyer in my letterbox
or an email, whatever it was,saying that you've got three
underbidders from a couple ofauctions in the neighborhood,
but now you're wanting tenthousand dollars to go and find
a buyer.
I'm now confused as to whatyour real message and wrong
purpose is here.
Speaker 3 (06:26):
Yeah, interesting.
So make sure that their initialmarketing alliance with the
message that they give you inthe living room is Absolutely
because a lot of these flyers, Ihate to say it are a foot in
the door tactic.
Speaker 1 (06:37):
Let me get in the door and then I'll upsell the
client.
Get in the door with somethingthat seems plausible We've got
some under bidders interestedand then, as soon as they're in
the door, start talking aboutrunning a fully fledged Campaign
, which I'm not saying isanything wrong with a fully
fledged campaign, but it's incontradiction to the message.
I've got three under biddersfrom the house around the corner
.
Speaker 3 (06:56):
Yeah, of course.
Of course it doesn't line upand certainly is, or should be,
a bit of a red flag.
Some of the other elements,though, we talk about obviously
price that it will sell for, butwe also have mentioned agents,
commission price.
Now I've heard stories of ofvendors Trying to challenge an
agent on their commission andfinding that, you know, some
will just cut the the commissionprice to get the listing.
(07:17):
Do you think it's it'sreasonable, as a potential
seller, to challenge your agenton the fee that they're charging
?
And and what would you expect agood agent?
You know how would a good agentrespond to a challenge like
that in your experience, youshould great question.
Speaker 1 (07:30):
Kieran.
You should challenge the agenton everything, because the most
powerful time for a prospectivevendor is before they've signed.
Once you've signed, youbeholden to everything in that
agency agreement, whether youlike it or not.
So, no matter what the agentsays, your property is worth
high, lower, about right.
You should challenge it on themand by challenging the agent on
the price that they've quotedfor the property, they will
(07:52):
demonstrate that they haveknowledge or lack of.
Either way, it'll be insightfulfor you as the prospective
seller interviewing the agents.
Conversely, the agents tellingyou that I'm the best agent
because I'll get you the highestprice for your property.
And the moment you startProtting them for a lower fee
and they start capitulating onprice as far as cutting their
(08:12):
own fee to get the listing, thenas a home seller, you've got
every right to be concernedabout the agent's ability to
hold the line on price.
There's an old saying in realestate that if the real estate
agent will quickly give theirown money and way, imagine what
they'll do when they get theirhands on yours.
So at the end of the day,you're employing a realtor not
to get you a sale.
Anyone can sell your home.
(08:33):
You're employing a realtor toget you the best possible price
in the marketplace in the leastamount of time, with the least
amount of risk so effectively asagents.
Speaker 3 (08:44):
We should be viewed more as negotiators than Then
you know how sellers, I guess isa as a category, because our
job is To negotiate on behalf ofour client for the best
possible price and notcapitulate in the face of
pressure.
Speaker 1 (08:57):
That's right you will get.
As a home seller, you will getwhat you tolerate.
And if you allow a real estateagent to come in and say, we
deserve your listing becausewe've got high clearance rates,
well, you're property, yourproperty will probably sell with
that agent because they do havehigh clearance rates, if it is
legitimate claim.
But let me just say this thathigh clearance rates are good
for real estate agents.
(09:18):
High prices are good forvendors.
So what is it you're chasing?
You're chasing the best pricein the marketplace.
Well, you're looking to justclear the property.
We've seen some auction salesin recent times where the
property sold.
They sold that are around thereserve, but we know the buyers
would have paid more.
Speaker 3 (09:34):
Yeah, absolutely I.
I wonder Would it be reasonable, as a potential seller, to
apply the pub test to an agentyou know?
Get a sense of what I actuallyenjoy sitting down having a cup
of coffee or a beer with thisperson and Enjoy their company
enough to trust them to advocateon my behalf, not not.
Speaker 1 (09:54):
Not the pub test, I wouldn't.
I wouldn't say that you shouldlike someone on that basis.
The basis if you're looking forgut, feel, intuition, feel
because you don't feel like youare able to go through all the
nuances of employing a realestate agent.
The trust decision that youshould be doing with a real
estate agent is when I'm not inthe room and the person sitting
in my home tonight Isnegotiating with a buyer.
(10:16):
Do I trust them, both from anintegrity perspective and a
competence perspective, to dothe right thing by us?
Because everyone's going totell you what you want to hear
to your face.
But what is?
What are they going to do?
How are they going to act whenwe're not around?
Now We've all gone into an openhouse in Cognito and asked the
agent a few probing questionsand, before you know it, the
(10:38):
people are getting divorcedthrough under financial pressure
.
They've bought elsewhere.
Whatever it is that that iscausing that respective property
to be on the market and somenovice agent just blurts it all
out.
That is what you need to knowbefore you sign with any agent.
Can they hold the line?
Speaker 3 (10:53):
So, before we wrap up then, are there any Specific
questions?
And I'm putting it on the spota little bit, but is there any
kind of question specificallyother than commission?
You could ask someone to judgewhether or not they are of good
enough or strong enoughcharacter to hold the line on
some of these tougherconversations.
Speaker 1 (11:10):
Yeah, look, I think when you say to, when a real
estate agent says to you, look,I'm valuing your house at 2 to
2.2 million, when a home buyersays, look, the market is under
pressure, the auction clearancerate on the weekend was 50%,
meaning half the properties thatwent to auction failed to sell
and the other properties thatdid sell as being considered
(11:30):
successful auction campaign morethan half of those sold prior
to auction, meaning there wasn'tenough bidders.
So whilst I see that you've gota guide on the home of 2
million, the property around themarket, around the corner on
the market, sold for 1.9 lastweek.
So I think this is overpriced.
Mr Real Estate Agent, how wouldyou handle that with a buyer
(11:51):
who says that the home isoverpriced at a guide of 2
million when you're here tonightsaying 2.2?
See how they answer it.
Speaker 3 (11:57):
Yeah, really good point.
Great topic, peter.
I think it's a really valuableone for any potential sellers.
I know we all in the industrythink about price fee.
That's a common discussion andI know plenty of agents that
have asked potential homesellers well, what do you think
it's worth or how much do youneed to sell?
But at the end of the day,you're right.
There are processes and thereis performance of the individual
(12:20):
agent to maximize the outcomefor a seller, and we need to
make sure that anyone out thereis doing the best they can to
protect their own asset, becausethey only sell it once.
Right, that's right.
Indeed, you only get one chanceto sell it, certainly.
So, moving on, another big dayfor us in real estate, obviously
with the RBA meeting today.
Yeah, there's not much to introhere, peter.
(12:41):
It's what's the statement fromthe RBA today and how is it
going to impact us in property?
Speaker 1 (12:47):
What I thought was good or not a good, but
interesting.
Before the RBA's announcementat 2.30, coming through the
press, we had ANZC Shane Elliottsaid that expectations of
interest rate cuts this year areoptimistic.
That was backed up by WarrenHogan, who we've discussed in
(13:07):
the past, where he's warned thatthe next interest rate change
could be an increase.
Now, if we go to the RBAstatement, I think it's the
third last line there.
Yes, it is the path of interestrates from here that will best
ensure that inflation returns totarget in a reasonable
timeframe remains uncertain andthe RBA board is not ruling
(13:31):
anything in or out.
Speaker 3 (13:34):
That's an interesting language.
Particularly, I'm sure it wasANZ were one of the major banks
who predicted a September cutand in fact maybe in the first
to come out and suggest thatthat was on the cards originally
.
That's an interesting shift inposition, I think.
Speaker 1 (13:49):
Yeah, the article I think it was on newscom this
month here and says Shane Elliotis in disagreement with his own
banks economists over whetherthe RBA of Australia will begin
to cut interest rates this year.
So if you're sitting at homeand you can't quite agree
internally whether rates will goup or down from here, rest
assured at the upper echelons ofone of Australia's top four
(14:13):
banks they can't agree on whathappens from here either.
The RBA are firmly keeping alloptions open to them.
It's data dependent Again.
There's that line that theyused in today's statement.
So they're going to judge itbased on what inflation does.
As we discussed last week, itpushed up a little bit in the US
in last week's announcement forthem.
So the inflation battlecertainly not won.
Speaker 3 (14:35):
So, other than the third last line, which mentions
that they can't rule in or outany future changes, what's your
general sense on the overallmessage itself?
So I know other times we'vetalked about the statements you
can get a general feel of whatthey're trying to portray, even
though they often talk betweenthe lines.
What do you think the generalmessage in this one is?
Is it a slightly optimistictime, is it neutral or is it a
(14:57):
little bit pessimistic?
Speaker 1 (14:58):
When I read it I thought it was a really
interesting but boring by thesame token statement.
They used the word moderate, ora version of moderate,
moderating, moderates.
They use that, I think, 10times in the statement in
different contexts.
So I think from here, whatyou're seeing is the RBA believe
(15:20):
that it's slowly cooling andthat the settings they've got
interest rates at are slowlymoderating the inflation in the
economy, but it's not certainthat it's going to continue that
way, so they are keeping alloptions available.
I saw some well-known economiststhat felt that the RBA could
(15:41):
cut rates at their May 7 meeting.
Keeping in mind that they'reevery six weeks now these RBA
meetings, not every month, Idon't see anything in this
statement today to suggest thatthe RBA are lining up to cut
rates in six weeks, in May,unless there's a massive change
in the numbers.
This tells me that they'regoing to be really, really
(16:02):
cautious about cutting too early.
The other thing that's notbeing mentioned in the
commentary across the board isthat of the advanced economies.
Australia has one of the lowestcash rates of all advanced
economies, so it would be amassive move for the RBA to be
the first central bank to cutrates.
I don't know why that point'snot being made more broadly and
(16:22):
louder, but that for mine is areally big one that the
Australian dollar would have asevere correction if we were to
cut rates first.
Speaker 3 (16:32):
I wonder if the language around the cash rate is
quite deliberate.
It would be potentially tonedeaf to suggest that I'll wear
actually in a very low cashsetting and it's not that hard
compared to other advancedeconomies, while everyone out
there that I know, and certainlymany other people know, are
doing it pretty tough right now.
Speaker 1 (16:51):
Oh, that's right.
Households are doing it toughand the RBA know that, but they
equally know that if they don'twin the inflation battle, it's
going to be even tougher to getthis under control later.
Speaker 3 (17:03):
Interesting to hear that some economists are
predicting a rate cut that early.
I certainly don't get thatsense, despite something that I
myself and many others arewishing for.
What do you think if anythingwill come of this in terms of
relationship to property?
Do you think there's enoughstrength in the language for any
reaction in the market?
What do you think it'll just bebusiness as usual for now?
Speaker 1 (17:24):
In our March newsletter we spoke about the
two-speed property market that'sopened up.
I think that gap's going to getwider where the mortgage belt,
as they call it, will becontinued to be punished by
these interest rate settings andthose that are operating
largely in cash with low debtwill continue to buy and sell
upper-end real estate as thoughthere was basically impervious
(17:48):
to where the interest ratesetting of the day is.
The upper ends of the marketwill only be impacted if the
economy derails.
So in terms of the economyderailing, you'd probably have
to say the immediate risk beingbold at the middle stump is the
iron ore price that's come downvery sharply.
If that continues to fall,that'll have an impact on the
(18:12):
government and will flow throughto the economy, you would think
.
Speaker 3 (18:15):
Yeah, I think that's a good analysis.
I know I said last week that arate holds effectively the same
as an interest rate rise at thispoint for a lot of people.
Speaker 1 (18:23):
Interestingly, today there was an article because
it's the terminal rate, wherethe rate that it's at is
bringing economic activity downand in of its own.
So you're absolutely right.
We're clearly at the terminalrate because it's moderating
without moving.
Speaker 3 (18:36):
Yeah, exactly, and I know we talked about the
terminal rate last year and howit's incredibly hard to predict
when you hit it, particularlyfor central banks, and they
don't know until they'veeffectively gone past it or
reverted from it.
Yeah, interestingly though,today or yesterday there was an
article released talking abouthow in the last to be honest, I
can't remember the time course,but a recent period a third of
(18:58):
all property sales were cashonly.
Yes, I saw this, and on the EastCoast, great data on this I
think it was from today, maybeand on the East Coast of
Australia, half of thetransactions were done in cash.
Yes, that's just unbelievablefor me, again in a period where
it feels like no one has anycash.
Speaker 1 (19:16):
Yeah, there's certainly a lot of people out
there in cash.
Baby boomers, downsizing, are abig contributor to that.
Selling the family home andthen buying another property for
maybe half the value, forexample, half goes into their
super or becomes their superbecause, let's face it, there
are a lot of people who don'thave as much super as they would
like.
Their super is effectively intheir family home and they're
(19:38):
unlocking their super as theysell it, so it makes a lot of
sense.
Pecsa is the electronicexchange settlement that came
into being about five, six yearsago now and there's some great
data like that coming out aboutthe number of properties that
transact without a mortgageinvolved, and that's
illuminating to get a sense ofwhy there is such little
(19:59):
distress in the property marketat the moment.
Speaker 3 (20:02):
Yeah, it's certainly eye-opening for me.
I mean, I don't think manypeople would have expected that
that was the case.
That so many people could justbuy a house without a mortgage.
It's inconceivable.
Speaker 1 (20:11):
If you are downsizing though you wouldn't want, you
know, and you're at retirementor you're in retirement you
certainly wouldn't want to bebuying another property with a
mortgage.
I know reverse mortgages areout there and they play a vital
role for some people as well,but it does make sense, given
that baby boomers, whatever theydo, in unison they create a
(20:31):
boom and they've had a very goodrun economically over quite a
few decades and now they'reselling down.
So I think demographically itdoes make sense that there's so
much cash transactions comingfrom that side of the economy.
Speaker 3 (20:46):
I don't disagree.
I think it is very logical,like when you break it down, it
does make sense that everyone Iknow of that age group is
certainly may have worked in aperiod where there wasn't forced
superannuation, so they havehad to make alternate
arrangements, particularlythrough self-managed funds.
Now, do you think the socialviewpoint or language around
(21:06):
these cash purchases, though, isskewed because of the
immigration situation at themoment?
I know my first thought waswhen I saw an article about cash
buyers.
My immediate thought was goingto be foreign money.
I didn't even think of thelogical.
Of course it's baby boomersdownsizing.
I just went oh well,immigration is through the roof,
it must be foreign buyers.
Speaker 1 (21:24):
No, I think where the immigration is playing a role
is that the government,understandably, have pursued
skilled migration.
Yeah, so if you're in the UK,asia, america and you are
invited to make your way toAustralia as a skilled migrant,
you're coming here with money.
Now, when you come here, asI've just mentioned earlier,
(21:45):
australia has one of the lowest,if not the lowest, cash rate of
the primary developed economiesin the world, so our currency,
therefore, is very low from ahistorical basis at the moment.
So if you're one of the many,many tens of thousands of
skilled migrants coming intothis country, moving here and
saying, look at this, this is awonderland here in Australia,
(22:06):
and you're coming in with astrong currency relative to the
Australian dollar, you're off tothe races.
Speaker 3 (22:12):
Yeah, absolutely Given the announcement today as
we move into our market wrap forthe week.
Firstly, what has the weeklooked like?
I love that we've been runningthese weekly to get a real sense
of what the trend lines are inproperty at the moment.
We're always touching onclearance rate and the number of
properties out there.
What has the market been likethis week?
And then, what are yourpredictions for the week ahead,
(22:33):
given another RBA, week usuallyhas some impact, with a bad or
good the RBA tried to make nomajor statement in today's
statement, so I don't thinkthat'll have much.
They made a moderated argument,that's right.
Speaker 1 (22:49):
That, and some most assured.
So I don't think the RBAstatement will play much of a
role, to be frank, going forward.
They're clearly just on thesidelines watching intently to
see how it all plays through Inthe week ahead.
If you're looking for a bigplay in any given week, last
year the auction numbers for theweek was about eight to nine
(23:09):
hundred, as we've discussedrelentlessly on this podcast.
This year auction numbers havehovered between 12 and 1300
auctions per week, which is wellup on the norms from last year.
Because Saturday week is east toSaturday and you're not going
to buy rights run an auction oneast to Saturday.
(23:31):
There's a whopping 1600properties going to auction this
week, so that's double the normof what we were seeing last
week, last year, on any givenauction weekend.
That'll be fascinating to seewith the auction clearance rate
Not the manufactured auctionclearance rate on a Saturday
night, but next Tuesday not surewhat day March.
(23:54):
Next Tuesdays must be the 26th.
Is it March?
Yeah, tuesday, march 26th, whenSQM research released those
numbers.
It'll be interesting to seewhat percentage of the 1600 have
sold.
Speaker 3 (24:05):
Yeah, that's a huge number, 1600.
And it my immediate instinct isto think there is no way the
1600 can sell under the hammeron what is effectively a Super
Saturday.
Speaker 1 (24:16):
Well, as we know, for the last five weeks the volumes
have been elevated, Kieran, andthe auction clearance rate has
slowly been drifting from 60% tomid 50s to 52, 53.
And then, on today's numbersreleased by SQM research, the
auction clearance rate for lastweek in Sydney was 50.3%.
(24:37):
So Louis Christopher's callingthat an evenly balanced with
market with an absolute surge insupply coming this Saturday.
So I reckon the market's donereally, really well to absorb
the stock at the rate that ithas, particularly after a
sluggish start to the year.
But yes, there's clearly a rush.
(24:58):
As we touched on last week,there's clearly been a rush from
Vindals to get their propertyto the auction market before
April.
April has its own set ofchallenge, with the Anzac Day,
long weekend, Easter at thestart of the month and then
school holidays in the middle.
Speaker 3 (25:15):
Yeah, look really good.
Recap, Peter.
Certainly a weekend to look outfor.
I want to thank you for takingthe time today.
Some really good topics and wecertainly covered off on a lot.
I look forward to talking withyou next week Likewise.
Speaker 1 (25:26):
Thanks, Kieran.
Speaker 3 (25:26):
And thanks to everyone for listening Current
Market Insights.
We look forward to talking withyou next time.
Speaker 2 (25:31):
Thanks for joining us on the Current Market Insights
podcast Brought to you by HarrisPartners Real Estate, the
podcast providing real estateinsights you won't find anywhere
else.
All down, all silent, going, going, going.
Go on, stop the black noise.
Speaker 2 (00:07):
Welcome to the Current Market Insights podcast
brought to you by HarrisPartners Real Estate.
Each episode we chat with realestate author and industry
leader, peter O'Malley, todiscuss the current property
market conditions and provideinsights to assist you on your
property journey.
Speaker 3 (00:30):
Hello and welcome to another episode of Current
Market Insights.
I'm your host, kieran O'Brien,and with me is Mr Peter O'Malley
.
Peter, hello G'day, kieran,great to see you and certainly
welcome back for another week.
There's a lot to talk abouttonight, but I really wanted to
start off this episode by justtackling one of the topics that
we get asked about as agents andthat we have in many ways
(00:52):
touched on briefly, but I reallywant to chat about agent
selection for people looking tosell their home.
I know that when I've thoughtabout home sales, or when, you
know, even prior to getting intothe industry, my considerations
were things like which agentwill get me the best price and
which agent is the cheapest,because you know.
Logically, that seems like thethings to ask.
(01:12):
You're a man with a lot ofexperience.
Are they the right questions toask?
And if they're not, what's abetter angle and what are some
better choices that I could makeas a potential seller to make
sure I get the best deal for me?
Speaker 1 (01:24):
There are questions that need to be asked here, and
how much do you think your homeis worth and what are you going
to charge us in the process?
Who wears the risk of thecampaign is also another telling
question that needs to be posedthere to the real estate agent.
We always suggest to peoplethat they should look at
selecting their real estateagent on process, not price.
(01:44):
It's very tempted to get luredin by the agent that quotes the
highest price.
Sometimes the agent that doesquote the highest price delivers
on that price too.
So it's not to say that theagent who does quote the highest
price has actually got itincorrect.
But whoever on, whatever a realestate agent says your property
is worth, it needs to be backedby evidence that will make
(02:06):
sense to the prospectivepurchases.
At the end of the day, therealtor does not really control
the price.
The process, more often thannot, will deliver the price for
the vendor, and we alwaysencourage vendors to scrutinize
the sales process, becausethat's where success will be won
or lost.
Speaker 3 (02:25):
So you've talked about a couple of things there.
One, I guess my takeaway fromthat is that we all love to be
told what we like to hear.
You know, we love being toldthat we, we look great, or that
you know where we're Lookingradiant, or we don't look tired
for the first time in God knowshow our children are well
behaved my children yeah, that'sa lie you look like you've lost
weight, kieran.
Speaker 1 (02:44):
Thank you, peter.
Your house is worth fourmillion dollars, kieran.
You can come back next week,peter.
Speaker 3 (02:50):
So that's one element is is agents will buy the
listing, and we've talked aboutthat premise before, of
Overinflating a price to get thelisting.
So tell me, though, whatexactly do you mean by the
process is important.
Are we talking about just, youknow, auction versus private
treaty, or are we talking aboutsomething more involved?
And if it is something moreinvolved, then how do we, as a
(03:10):
seller, actually go aboutEnsuring that the process is
front of mind in this, you know?
Are there questions we need toask?
Is there a line of Inquiry oror things we need to know or
obtained from the agent that cantell us whether or not their
process is the one for us?
Speaker 1 (03:25):
Yeah, I think there is.
If, if you were granted thelisting for our home, mr, mrs,
realist, that agent, what areyou going to do after you list
the home?
What's the sale process?
Okay, you're going to put it toauction, or you're going to put
it to silent auction, or you'regoing to run a Private treaty
campaign.
But can we, can we, get a senseof the specifics of that?
Where will it be marketed?
How will it be marketed?
(03:47):
Who will fund the cost of that?
Should we do a video?
Should inspections be byappointment?
Do we open it up for open houseto the entire neighborhood?
You're here tonight pitchingfor our business, but are you
going to be the agent that's onsite?
There's a lot of agents thatwrite a lot of business if you
follow their internet profile,for example but are rarely on
(04:08):
site at the inspections, quitesimply because they've got too
many, too many listings on thego at any one time.
They can't get around to all ofthem on a Saturday.
So the person that sits infront of you and purports to be
the person that's going to sellyour home, he's actually not
there working with the buyers.
Furthermore, give us someconfidence that you're connected
to active buyers in themarketplace.
If the campaign is fullydependent on you advertising our
(04:32):
home and connecting with freshbuyers in the marketplace, that
doesn't give us the confidencethat an agent who's immediately
and already connected withactive buyers in the marketplace
does so.
Can we get a sense?
If you buy a management process, they're the sorts of things
that you should be drilling downto.
Speaker 3 (04:50):
Okay, so we we asked the important questions about
process and I would assume agood agent can come prepared to
answer any of those questionswithout hesitation.
Many listing processes that Ihave seen, and even ones that
I've done myself we usuallybring a pack.
You know, we've got some thingsthat we want our vendors to see
.
What kinds of things will agood agent have with them, and
(05:12):
Are there any things that that apotential seller should look
out for in terms of overlyflashy Distracting?
You know, elements that arethere to make it look really
appealing but not, you know,potentially hide the the absence
of actual Like content.
Speaker 1 (05:26):
I think be wary of things that are superficial and
expensive and look forcontradictions in the agent's
pitch.
So you might get a flyer throughthe letterbox saying we've got
lots of buyers interested inyour area.
Would you be interested in amarket appraisal?
If you're thinking of selling,in your ring up and say, well,
look, your flyer Arrived or youremail arrived at the right time
because we are thinking ofselling, and you said that
(05:48):
you're dealing with a number ofbuyers and the agent maybe to
even build credibility into that, might mention that they've got
three underbidders from theauction around the corner, for
example.
You say so I'm kind ofinterested in selling my
property, let's talk aboutwhat's involved, and then the
agent starts talking to youabout a ten thousand dollar
advertising campaign.
So that's a bit of acontradiction.
(06:10):
I've called you in because youdropped a flyer in my letterbox
or an email, whatever it was,saying that you've got three
underbidders from a couple ofauctions in the neighborhood,
but now you're wanting tenthousand dollars to go and find
a buyer.
I'm now confused as to whatyour real message and wrong
purpose is here.
Speaker 3 (06:26):
Yeah, interesting.
So make sure that their initialmarketing alliance with the
message that they give you inthe living room is Absolutely
because a lot of these flyers, Ihate to say it are a foot in
the door tactic.
Speaker 1 (06:37):
Let me get in the door and then I'll upsell the
client.
Get in the door with somethingthat seems plausible We've got
some under bidders interestedand then, as soon as they're in
the door, start talking aboutrunning a fully fledged Campaign
, which I'm not saying isanything wrong with a fully
fledged campaign, but it's incontradiction to the message.
I've got three under biddersfrom the house around the corner
.
Speaker 3 (06:56):
Yeah, of course.
Of course it doesn't line upand certainly is, or should be,
a bit of a red flag.
Some of the other elements,though, we talk about obviously
price that it will sell for, butwe also have mentioned agents,
commission price.
Now I've heard stories of ofvendors Trying to challenge an
agent on their commission andfinding that, you know, some
will just cut the the commissionprice to get the listing.
(07:17):
Do you think it's it'sreasonable, as a potential
seller, to challenge your agenton the fee that they're charging
?
And and what would you expect agood agent?
You know how would a good agentrespond to a challenge like
that in your experience, youshould great question.
Speaker 1 (07:30):
Kieran.
You should challenge the agenton everything, because the most
powerful time for a prospectivevendor is before they've signed.
Once you've signed, youbeholden to everything in that
agency agreement, whether youlike it or not.
So, no matter what the agentsays, your property is worth
high, lower, about right.
You should challenge it on themand by challenging the agent on
the price that they've quotedfor the property, they will
(07:52):
demonstrate that they haveknowledge or lack of.
Either way, it'll be insightfulfor you as the prospective
seller interviewing the agents.
Conversely, the agents tellingyou that I'm the best agent
because I'll get you the highestprice for your property.
And the moment you startProtting them for a lower fee
and they start capitulating onprice as far as cutting their
(08:12):
own fee to get the listing, thenas a home seller, you've got
every right to be concernedabout the agent's ability to
hold the line on price.
There's an old saying in realestate that if the real estate
agent will quickly give theirown money and way, imagine what
they'll do when they get theirhands on yours.
So at the end of the day,you're employing a realtor not
to get you a sale.
Anyone can sell your home.
(08:33):
You're employing a realtor toget you the best possible price
in the marketplace in the leastamount of time, with the least
amount of risk so effectively asagents.
Speaker 3 (08:44):
We should be viewed more as negotiators than Then
you know how sellers, I guess isa as a category, because our
job is To negotiate on behalf ofour client for the best
possible price and notcapitulate in the face of
pressure.
Speaker 1 (08:57):
That's right you will get.
As a home seller, you will getwhat you tolerate.
And if you allow a real estateagent to come in and say, we
deserve your listing becausewe've got high clearance rates,
well, you're property, yourproperty will probably sell with
that agent because they do havehigh clearance rates, if it is
legitimate claim.
But let me just say this thathigh clearance rates are good
for real estate agents.
(09:18):
High prices are good forvendors.
So what is it you're chasing?
You're chasing the best pricein the marketplace.
Well, you're looking to justclear the property.
We've seen some auction salesin recent times where the
property sold.
They sold that are around thereserve, but we know the buyers
would have paid more.
Speaker 3 (09:34):
Yeah, absolutely I.
I wonder Would it be reasonable, as a potential seller, to
apply the pub test to an agentyou know?
Get a sense of what I actuallyenjoy sitting down having a cup
of coffee or a beer with thisperson and Enjoy their company
enough to trust them to advocateon my behalf, not not.
Speaker 1 (09:54):
Not the pub test, I wouldn't.
I wouldn't say that you shouldlike someone on that basis.
The basis if you're looking forgut, feel, intuition, feel
because you don't feel like youare able to go through all the
nuances of employing a realestate agent.
The trust decision that youshould be doing with a real
estate agent is when I'm not inthe room and the person sitting
in my home tonight Isnegotiating with a buyer.
(10:16):
Do I trust them, both from anintegrity perspective and a
competence perspective, to dothe right thing by us?
Because everyone's going totell you what you want to hear
to your face.
But what is?
What are they going to do?
How are they going to act whenwe're not around?
Now We've all gone into an openhouse in Cognito and asked the
agent a few probing questionsand, before you know it, the
(10:38):
people are getting divorcedthrough under financial pressure
.
They've bought elsewhere.
Whatever it is that that iscausing that respective property
to be on the market and somenovice agent just blurts it all
out.
That is what you need to knowbefore you sign with any agent.
Can they hold the line?
Speaker 3 (10:53):
So, before we wrap up then, are there any Specific
questions?
And I'm putting it on the spota little bit, but is there any
kind of question specificallyother than commission?
You could ask someone to judgewhether or not they are of good
enough or strong enoughcharacter to hold the line on
some of these tougherconversations.
Speaker 1 (11:10):
Yeah, look, I think when you say to, when a real
estate agent says to you, look,I'm valuing your house at 2 to
2.2 million, when a home buyersays, look, the market is under
pressure, the auction clearancerate on the weekend was 50%,
meaning half the properties thatwent to auction failed to sell
and the other properties thatdid sell as being considered
(11:30):
successful auction campaign morethan half of those sold prior
to auction, meaning there wasn'tenough bidders.
So whilst I see that you've gota guide on the home of 2
million, the property around themarket, around the corner on
the market, sold for 1.9 lastweek.
So I think this is overpriced.
Mr Real Estate Agent, how wouldyou handle that with a buyer
(11:51):
who says that the home isoverpriced at a guide of 2
million when you're here tonightsaying 2.2?
See how they answer it.
Speaker 3 (11:57):
Yeah, really good point.
Great topic, peter.
I think it's a really valuableone for any potential sellers.
I know we all in the industrythink about price fee.
That's a common discussion andI know plenty of agents that
have asked potential homesellers well, what do you think
it's worth or how much do youneed to sell?
But at the end of the day,you're right.
There are processes and thereis performance of the individual
(12:20):
agent to maximize the outcomefor a seller, and we need to
make sure that anyone out thereis doing the best they can to
protect their own asset, becausethey only sell it once.
Right, that's right.
Indeed, you only get one chanceto sell it, certainly.
So, moving on, another big dayfor us in real estate, obviously
with the RBA meeting today.
Yeah, there's not much to introhere, peter.
(12:41):
It's what's the statement fromthe RBA today and how is it
going to impact us in property?
Speaker 1 (12:47):
What I thought was good or not a good, but
interesting.
Before the RBA's announcementat 2.30, coming through the
press, we had ANZC Shane Elliottsaid that expectations of
interest rate cuts this year areoptimistic.
That was backed up by WarrenHogan, who we've discussed in
(13:07):
the past, where he's warned thatthe next interest rate change
could be an increase.
Now, if we go to the RBAstatement, I think it's the
third last line there.
Yes, it is the path of interestrates from here that will best
ensure that inflation returns totarget in a reasonable
timeframe remains uncertain andthe RBA board is not ruling
(13:31):
anything in or out.
Speaker 3 (13:34):
That's an interesting language.
Particularly, I'm sure it wasANZ were one of the major banks
who predicted a September cutand in fact maybe in the first
to come out and suggest thatthat was on the cards originally
.
That's an interesting shift inposition, I think.
Speaker 1 (13:49):
Yeah, the article I think it was on newscom this
month here and says Shane Elliotis in disagreement with his own
banks economists over whetherthe RBA of Australia will begin
to cut interest rates this year.
So if you're sitting at homeand you can't quite agree
internally whether rates will goup or down from here, rest
assured at the upper echelons ofone of Australia's top four
(14:13):
banks they can't agree on whathappens from here either.
The RBA are firmly keeping alloptions open to them.
It's data dependent Again.
There's that line that theyused in today's statement.
So they're going to judge itbased on what inflation does.
As we discussed last week, itpushed up a little bit in the US
in last week's announcement forthem.
So the inflation battlecertainly not won.
Speaker 3 (14:35):
So, other than the third last line, which mentions
that they can't rule in or outany future changes, what's your
general sense on the overallmessage itself?
So I know other times we'vetalked about the statements you
can get a general feel of whatthey're trying to portray, even
though they often talk betweenthe lines.
What do you think the generalmessage in this one is?
Is it a slightly optimistictime, is it neutral or is it a
(14:57):
little bit pessimistic?
Speaker 1 (14:58):
When I read it I thought it was a really
interesting but boring by thesame token statement.
They used the word moderate, ora version of moderate,
moderating, moderates.
They use that, I think, 10times in the statement in
different contexts.
So I think from here, whatyou're seeing is the RBA believe
(15:20):
that it's slowly cooling andthat the settings they've got
interest rates at are slowlymoderating the inflation in the
economy, but it's not certainthat it's going to continue that
way, so they are keeping alloptions available.
I saw some well-known economiststhat felt that the RBA could
(15:41):
cut rates at their May 7 meeting.
Keeping in mind that they'reevery six weeks now these RBA
meetings, not every month, Idon't see anything in this
statement today to suggest thatthe RBA are lining up to cut
rates in six weeks, in May,unless there's a massive change
in the numbers.
This tells me that they'regoing to be really, really
(16:02):
cautious about cutting too early.
The other thing that's notbeing mentioned in the
commentary across the board isthat of the advanced economies.
Australia has one of the lowestcash rates of all advanced
economies, so it would be amassive move for the RBA to be
the first central bank to cutrates.
I don't know why that point'snot being made more broadly and
(16:22):
louder, but that for mine is areally big one that the
Australian dollar would have asevere correction if we were to
cut rates first.
Speaker 3 (16:32):
I wonder if the language around the cash rate is
quite deliberate.
It would be potentially tonedeaf to suggest that I'll wear
actually in a very low cashsetting and it's not that hard
compared to other advancedeconomies, while everyone out
there that I know, and certainlymany other people know, are
doing it pretty tough right now.
Speaker 1 (16:51):
Oh, that's right.
Households are doing it toughand the RBA know that, but they
equally know that if they don'twin the inflation battle, it's
going to be even tougher to getthis under control later.
Speaker 3 (17:03):
Interesting to hear that some economists are
predicting a rate cut that early.
I certainly don't get thatsense, despite something that I
myself and many others arewishing for.
What do you think if anythingwill come of this in terms of
relationship to property?
Do you think there's enoughstrength in the language for any
reaction in the market?
What do you think it'll just bebusiness as usual for now?
Speaker 1 (17:24):
In our March newsletter we spoke about the
two-speed property market that'sopened up.
I think that gap's going to getwider where the mortgage belt,
as they call it, will becontinued to be punished by
these interest rate settings andthose that are operating
largely in cash with low debtwill continue to buy and sell
upper-end real estate as thoughthere was basically impervious
(17:48):
to where the interest ratesetting of the day is.
The upper ends of the marketwill only be impacted if the
economy derails.
So in terms of the economyderailing, you'd probably have
to say the immediate risk beingbold at the middle stump is the
iron ore price that's come downvery sharply.
If that continues to fall,that'll have an impact on the
(18:12):
government and will flow throughto the economy, you would think
.
Speaker 3 (18:15):
Yeah, I think that's a good analysis.
I know I said last week that arate holds effectively the same
as an interest rate rise at thispoint for a lot of people.
Speaker 1 (18:23):
Interestingly, today there was an article because
it's the terminal rate, wherethe rate that it's at is
bringing economic activity downand in of its own.
So you're absolutely right.
We're clearly at the terminalrate because it's moderating
without moving.
Speaker 3 (18:36):
Yeah, exactly, and I know we talked about the
terminal rate last year and howit's incredibly hard to predict
when you hit it, particularlyfor central banks, and they
don't know until they'veeffectively gone past it or
reverted from it.
Yeah, interestingly though,today or yesterday there was an
article released talking abouthow in the last to be honest, I
can't remember the time course,but a recent period a third of
(18:58):
all property sales were cashonly.
Yes, I saw this, and on the EastCoast, great data on this I
think it was from today, maybeand on the East Coast of
Australia, half of thetransactions were done in cash.
Yes, that's just unbelievablefor me, again in a period where
it feels like no one has anycash.
Speaker 1 (19:16):
Yeah, there's certainly a lot of people out
there in cash.
Baby boomers, downsizing, are abig contributor to that.
Selling the family home andthen buying another property for
maybe half the value, forexample, half goes into their
super or becomes their superbecause, let's face it, there
are a lot of people who don'thave as much super as they would
like.
Their super is effectively intheir family home and they're
(19:38):
unlocking their super as theysell it, so it makes a lot of
sense.
Pecsa is the electronicexchange settlement that came
into being about five, six yearsago now and there's some great
data like that coming out aboutthe number of properties that
transact without a mortgageinvolved, and that's
illuminating to get a sense ofwhy there is such little
(19:59):
distress in the property marketat the moment.
Speaker 3 (20:02):
Yeah, it's certainly eye-opening for me.
I mean, I don't think manypeople would have expected that
that was the case.
That so many people could justbuy a house without a mortgage.
It's inconceivable.
Speaker 1 (20:11):
If you are downsizing though you wouldn't want, you
know, and you're at retirementor you're in retirement you
certainly wouldn't want to bebuying another property with a
mortgage.
I know reverse mortgages areout there and they play a vital
role for some people as well,but it does make sense, given
that baby boomers, whatever theydo, in unison they create a
(20:31):
boom and they've had a very goodrun economically over quite a
few decades and now they'reselling down.
So I think demographically itdoes make sense that there's so
much cash transactions comingfrom that side of the economy.
Speaker 3 (20:46):
I don't disagree.
I think it is very logical,like when you break it down, it
does make sense that everyone Iknow of that age group is
certainly may have worked in aperiod where there wasn't forced
superannuation, so they havehad to make alternate
arrangements, particularlythrough self-managed funds.
Now, do you think the socialviewpoint or language around
(21:06):
these cash purchases, though, isskewed because of the
immigration situation at themoment?
I know my first thought waswhen I saw an article about cash
buyers.
My immediate thought was goingto be foreign money.
I didn't even think of thelogical.
Of course it's baby boomersdownsizing.
I just went oh well,immigration is through the roof,
it must be foreign buyers.
Speaker 1 (21:24):
No, I think where the immigration is playing a role
is that the government,understandably, have pursued
skilled migration.
Yeah, so if you're in the UK,asia, america and you are
invited to make your way toAustralia as a skilled migrant,
you're coming here with money.
Now, when you come here, asI've just mentioned earlier,
(21:45):
australia has one of the lowest,if not the lowest, cash rate of
the primary developed economiesin the world, so our currency,
therefore, is very low from ahistorical basis at the moment.
So if you're one of the many,many tens of thousands of
skilled migrants coming intothis country, moving here and
saying, look at this, this is awonderland here in Australia,
(22:06):
and you're coming in with astrong currency relative to the
Australian dollar, you're off tothe races.
Speaker 3 (22:12):
Yeah, absolutely Given the announcement today as
we move into our market wrap forthe week.
Firstly, what has the weeklooked like?
I love that we've been runningthese weekly to get a real sense
of what the trend lines are inproperty at the moment.
We're always touching onclearance rate and the number of
properties out there.
What has the market been likethis week?
And then, what are yourpredictions for the week ahead,
(22:33):
given another RBA, week usuallyhas some impact, with a bad or
good the RBA tried to make nomajor statement in today's
statement, so I don't thinkthat'll have much.
They made a moderated argument,that's right.
Speaker 1 (22:49):
That, and some most assured.
So I don't think the RBAstatement will play much of a
role, to be frank, going forward.
They're clearly just on thesidelines watching intently to
see how it all plays through Inthe week ahead.
If you're looking for a bigplay in any given week, last
year the auction numbers for theweek was about eight to nine
(23:09):
hundred, as we've discussedrelentlessly on this podcast.
This year auction numbers havehovered between 12 and 1300
auctions per week, which is wellup on the norms from last year.
Because Saturday week is east toSaturday and you're not going
to buy rights run an auction oneast to Saturday.
(23:31):
There's a whopping 1600properties going to auction this
week, so that's double the normof what we were seeing last
week, last year, on any givenauction weekend.
That'll be fascinating to seewith the auction clearance rate
Not the manufactured auctionclearance rate on a Saturday
night, but next Tuesday not surewhat day March.
(23:54):
Next Tuesdays must be the 26th.
Is it March?
Yeah, tuesday, march 26th, whenSQM research released those
numbers.
It'll be interesting to seewhat percentage of the 1600 have
sold.
Speaker 3 (24:05):
Yeah, that's a huge number, 1600.
And it my immediate instinct isto think there is no way the
1600 can sell under the hammeron what is effectively a Super
Saturday.
Speaker 1 (24:16):
Well, as we know, for the last five weeks the volumes
have been elevated, Kieran, andthe auction clearance rate has
slowly been drifting from 60% tomid 50s to 52, 53.
And then, on today's numbersreleased by SQM research, the
auction clearance rate for lastweek in Sydney was 50.3%.
(24:37):
So Louis Christopher's callingthat an evenly balanced with
market with an absolute surge insupply coming this Saturday.
So I reckon the market's donereally, really well to absorb
the stock at the rate that ithas, particularly after a
sluggish start to the year.
But yes, there's clearly a rush.
(24:58):
As we touched on last week,there's clearly been a rush from
Vindals to get their propertyto the auction market before
April.
April has its own set ofchallenge, with the Anzac Day,
long weekend, Easter at thestart of the month and then
school holidays in the middle.
Speaker 3 (25:15):
Yeah, look really good.
Recap, Peter.
Certainly a weekend to look outfor.
I want to thank you for takingthe time today.
Some really good topics and wecertainly covered off on a lot.
I look forward to talking withyou next week Likewise.
Speaker 1 (25:26):
Thanks, Kieran.
Speaker 3 (25:26):
And thanks to everyone for listening Current
Market Insights.
We look forward to talking withyou next time.
Speaker 2 (25:31):
Thanks for joining us on the Current Market Insights
podcast Brought to you by HarrisPartners Real Estate, the
podcast providing real estateinsights you won't find anywhere
else.
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If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
The Nikki Glaser Podcast
Every week comedian and infamous roaster Nikki Glaser provides a fun, fast-paced, and brutally honest look into current pop-culture and her own personal life.