Brian Cannan: Welcome to Think Tank #10. Today I have a very special guest with me. We're at Raine & Horne Newtown and I have Duncan Gordon. Now Duncan is a 17-year professional real estate salesperson he's been in the same office for those 17 years which is unusual for our industry and he's now a partner for the last five years. Welcome Duncan.
Duncan Gordon: Thanks Brian, welcome to Newtown.
Brian: Thank you very much. Let's get down to the nitty-gritty, we want to talk about the market, and we want to talk about the change in the market in the last six months. How have you found it?
Duncan: Look it's been an interesting market that we've seen in the last six months and certainly a change as you said I've been here 17 years so I've experienced all variety of markets in that time and we've had the benefit over the last probably 10 years I suppose since the GFC of watching the market grow off and on but on that consistent upward trend and particularly the last five years it was just seen it go crazy.
Brian: For last six months how is it?
Duncan: Well the last six months and it is certainly something different than what we've seen over the last 10 years probably in that March, April is where we saw the market peak and basically we saw what was extraordinary seller's market pretty much turned a 180 degrees back around to more in the favour of the buyer or and more of an evenly balanced market. So we've lost a lot of that aggression that we were seeing in the behaviour of the buyers particularly on auction floors they've become much more conservative in their approach and cautious.
Brian: So at your open for inspections how are your numbers?
Duncan: Yeah look and that's what that's probably what's driven the market change is just buyers numbers it's a supply and demand game real estate and the demand is we've seen drop and that's been caused from back there in the early part of the year we saw banks raise their their rates independently we saw APRA tighten their lending criteria for the banks, we saw you know the government raise stamp duty on our overseas buyers and all those things put together pushed a lot of the buyers out of the market particularly the investors, so I'm probably seeing more at the open house more or occupiers and the investors and the investors that we are seeing aren't as motivated to jump on anything.
Brian: Okay so that means have you changed techniques it let's ask about techniques now when you go on list a property now knowing that the market has changed how do you approach that at a listing presentation and not lose the listing?
Duncan: Yeah look I think that a lot of the vendors or potential vendors are out there aware of what's going on the market I mean we only have to read the press in the last month to know that there's you know that there's that there's been a change but my approach always to the owners when I'm talking to them is being very candid about where the market is and if they do want to make a sale that they have to be very we we have to be accurate our pricing and not to have these unrealistic expectations. I mean we are seeing in the market Brian's still some amazing results happening on the auction floor but they are a little bit less happening than what we saw and we you know so that they're a bit fewer and far between so the markets more patchy across.
Brian: So you can't owners getting an idea what's happening in the marketplace and you're basically telling them they're not selling in isolation they're selling in competition but let's see did a market appraisal at the peak of the market in March and now they're thinking about bringing it on the market how do you how do you go around that?
Duncan: You know when it was at the peak of the market anything was possible basically so what I make sure when I'm talking to them that will you know obviously need to be accurately on the price we've got to be comparing it to what's selling today not what sold six months ago or even three months ago because the market's different to that time we must be looking at today's prices and looking at what's on the market that they're going to be competing with so getting an understanding of what other three bedroom homes or whatever two bedroom homes on the market what their price expectations are so it's really drilling down on on what's going on in the market with other properties that have just been sold and what's on the market so we can position their property in the right space price-wise. The other thing that they've also got to be aware of Brian is it if they're buying and selling you know they're gonna be aware that you know that they may not be not get the knockout price for their house but they're probably going to get a better purchase price and the property they're looking at it's all relative if you're buying and selling in the same marketplace.
Brian: So let's talk about the buyers then. You're saying there's less coming through the open for inspections. Are they quality the people coming through?
Duncan: The thing at Raine & Horne Newtown what we're really concentrating on a lot at the moment is buyer work that's paramount if we're going to make a sale execute a sale at the best property price so the buyers are coming through the openings are a variety of from just started looking you know the you know the researchers to the actual buyers so it's getting we have to be have a real understanding of who the buyers are what their motivation is and getting to know them and servicing them you know getting to them before the listing goes live to invite them along so it's really paramount that we get a good understanding of who the buyers are in the market and servicing them.
Brian: So what I'm hearing here is and you and your listing presentation you're talking to the owners about what currently is on the market currently and so let's not worry about the past if you want to sell we've got to be competitive against that and now you're spending a lot more time with the buyers than you used to?
Brian: A a lot more time building relationships with them?
Duncan: Building a strong relationship with your buyers and to know you know you've got to know who's the really motivated one who's going to act on it who's who's ready to spend their money who's bidding at auctions who's you know a put offers in on properties whose finance is is approved you know you we want to know because there's a lot of people sitting on the fence at the moment that are just out there tyre kicking and so you want to build that relationship to get those people to those houses that are ready to perform because they're more likely to perform in your house if you're inviting them along and bringing to them than other peoples that they're just responding off the internet.
Brian: You want to know who's ready to make a decision.
Brian: Yes, okay so we now in the marketplace now that you know the owners even though you can say you've got to be realistic in that marketplace they're always a little bit...
Duncan: The other thing that we taught owners too it's not just about the price but never more than that than before has it been important for presentation with property they need to make sure this you know before they had the luxury to just put it out in the market and they'd be all fighting over it now you are as you said in competition you're up against all the other properties so things like styling, coat of paint, decluttering, presentation is really vital that they get that right because you know the buyers are so sensitive with everything at the moment we want to make sure there's as looking the best property in the market and it's offering good value as well.
Brian: Okay so in the marketplace that we're in you're saying that the the owners were here and the buyers had to come to the owners and if not then they competed and pay a little bit more what you're saying the owners are here the buyers are here and as you're negotiating there tends to be a gap.
Duncan: So look we probably saw it before that's right buyers were up here owners were here and that's tip this way now Brian and you know we're still we talk we're selling properties for vendors and there's a lot of vendors still in the market but started to think of selling at the beginning of this year so they're still holding on to you know of some hope that those prices that we're seeing is still going to be be there so it's about trying to get though you know is educating the owners where the market is and also educating the buyers that you know I'm saying to a lot of the buyers who are really holding off is that you know once upon a time you know you were saying that you know you're so over this market and paying these high prices and I'm just going to stop looking away till the market comes down and and now I'm saying to them all, this is your time.
Brian: This is it.
Duncan: This is it, what are you waiting for for it to go back up? So you know it's also sort of pointing that out to your buyers that look this is still offering really good value this property.
Brian: So when we get to that part this bargaining area is there anything you do in particular when it's a bit of a stalemate the buyer won't move the owner won't move how do we get the deal together? A lot of agents are having this issue right now.
Duncan: I'm sure it is you know there might be you know you know only small percentages apart and that's the sort of thing that you've got to start reminding your owners of. It may feel like a hundred thousand but over the price of it it might be only one to two percent so instead of talking in the big numbers you're talking in that you know look the prices you know only 1% or 2% less than what you're after so so there are one things other things that you know I've got a property at the moment where it's a three million dollar property the owner the buyer and the seller are about only about fifty thousand dollars apart at three million but but but they're in a stalemate and I and I've said to the buyer well put it on a signed contract bring it to me with a cheque and I'll give it to the owner and that's going to be a really powerful thing for that owner to consider or not consider to try and turn it away when it's written in front of them there.
Brian: The realisation is there.
Duncan: Absolutely, and you know what are we talking here fifty thousand and three million there's a 1% difference basically and a little bit you know that's but if it's there it's going to be really hard for that owner to say no, you know.
Brian: So you're getting it together.
Duncan: I hope so you'll have to come back and ask me a couple of days.
Brian: I will don't you worry about that. So if the a lot of buyers at the moment need a bit of certainty you know they make offers and the owner goes make offers make offers then they get into that stalemate part where they want to go any further because there's no certainty there so is there any way that you get the owner to show that they're really serious about selling and maybe offering to the buyer on a contract back to them.
Duncan: Well I was going to say well you can do the exact with exact thing I'll flip it on its head and get the owner to sign the contract and and put it back to the buyer might only be ten fifteen twenty thousand or you know or half a percent apart from where they are and and that is it's just as powerful in reverse from the vendor to to this to the purchaser as it is from the purchaser to the vendor.
Brian: Yeah we're finding buyers want that certainty if you did that then they go at least I don't know if I say yesterday I have the property.
Duncan: Even to a degree where are you know once upon a time owners is where you know when the market strong didn't need to counteroffer they didn't need to do those things but even just verbally counter offering but saying if someone's giving you an offer of you know of one point one you know going back and say well look not at $1,100,000 but my owner has told me they will sell it to you at $1,112,000 you know giving them actual that confidence as you said to know that so we're doing more of that is in you know getting talking to your owners saying it's probably worth while giving the counteroffer tell him where you're going to sell that and that's put a number of deals together for us as well.
Brian: Excellent, so let's recap on that you you're talking about the owners when you go the listing presentation that they've got to be price realistic in this marketplace don't look at what happened three months ago or six months ago where we're showing them what properties have sold currently so you're using the current...
Duncan: Real time.
Brian: Real time, I like that yeah, real time and then with the buyers you're spending a lot more time with your buyers knowing who they are what they want and are they ready to make a decision.
Duncan: And servicing them being in touch building that relationship and firing them along private appointments not waiting for the open homes all those things will help you get over the line because a buyer is just like any consumer out there they want to buy us someone that they like someone they can trust someone that's value adding to them and that's that person is speaking the phone up and ringing them because once upon a time the poor old buyer, he was just neglected and he was left he was left out out there on his own.
Brian: That wasn't long ago was it?!
Duncan: No it wasn't long ago, it was only a few months ago.. how it has tuned, but it's still you know I mean this is a part of the market it had to change you had to bring itself back and as I remind a lot of vendors too is when I'm sitting with them is that you bought this house ten years ago you know it's doubled in value it's gone from eight hundred to one point six we might be talking 1.5 now but if you look over that period of ten years you've still done pretty well out of it you know.
Brian: Tax free.
Duncan: Tax free absolutely so I mean there's also things like that you've got to remind them that you know and also I mean I don't want to be the pessimist but you know we don't know quite know where this markets going to go in the short turns you know in and I've seen markets before it takes a little while before they find the floor we might be looking in six months time it could be in a little bit softer spot than what it is today I mean I'm certainly confident that there is a floor and it's not going to you know fall through it I think we're going to plateau and go along but I think also owners need to be aware of that as well that if they're looking you know I've had a few owners say oh look I'll take it off the market and put it back on in six months you know I say well you know that might not be such a great idea you know if you're going to hold it for you know because I think what'll happen is once it once it stabilises it'll be stable for a couple of you know we've lost boom we saw was ended in 2003, 2000 - 2003 we probably saw negative to no growth in 2004, 5, 6, 7 and then in 8 when the GFC hit that's when it started so that was five years where you know anyone who bought into 2003 and sold in 2007 really didn't make any money you know that's just the cycle of the market and that's what we're with we're going through again now.
Brian: And the other part of what I'm just recap is also that negotiation techniques you know you negotiate when you get close if they're that you talk about the percentage rather than the price I think that's that's everyone should take that away and the other parties either side put it on contract.
Duncan: Got to be very proactive at that point that's where you want to go you just don't want to let it sit and go oh well there's me said that because the next buyer that comes along there might be a little while and it might be at a lower price and again that's what you've got to be having these discussions with your vendor you know so it's about really trying to put those two people up those and doing those little little little things that in can make all the difference.
Brian: Yeah spend that time explaining to them.
Duncan: And understanding what's on the weekend did you know that what you know that price is not bad another one just sold in the week another 3-bedroom home for you know $50,000 less than that or $10,000 but trying to get us gain as much evidence as you can to substantiate what you're trying to do.
Brian: It almost sounds like you're working a bit harder than you were before.
Duncan: Oh no I've always worked hard Brain. No look I think that for agents out there yeah absolutely I think that's there's so much more involved you know I mean I think anyone that entered the real estate market in the last 5 to 7 years is probably getting a bit of a shock you know because they've probably never seen how much has to go into this job and I think that you know that for you know the rest of the public out there to understand what an agent actually has to do is a lot of work to put these deals together.
Brian: Yes so what I'm hearing from that is that you know a few months ago we were working on one side of the equation more than the other now you got to work on both sides of the equation, vendor on buyer together get the deals together.
Duncan: Well, you're a deal maker you're not an order taker and you know and that's that's what a lot of and this is a sort of market that will you know will work the good agents out from the bad agents and who and who wants to be into it I mean it's not all you know fast cars, coffee shops and nice-looking suits and dresses it there is a lot of hard work that's got to go into it to be successful and and to achieve your your vendors the right results.
Brian: Excellent, thank you very much for today I think it's a great insight to anyone that hasn't been in real estate for a while people who have been in real estate for a while I think it's a good reminder for them all. Duncan thank you very much.
Duncan: Thanks Brian, thanks for coming in good to see you.