Property Hub - Investment Insights & Inspiration - Realty Talk: Average buyer hurdles

Episode Date: January 6, 2024

Did you know the average buyer takes 7 months to buy their property, which means they will likely go through the pain of  finance approval at least twice.   Over the next 4 weeks, Bushy has teamed up with Scott Aggett from Hello Haus to help eliminate some of the pain points.  The first installment is in today's show.  Then Bushy will take a critical look at credit cards.  Strap yourself in for a top show - the first one of 2024. NEW – join our Facebook group, The Property Hub Collective: https://www.facebook.com/groups/1857513011165686 Join the Property Hub community on Substack! Sign up to get Australian property news, opinion, and episodes in your inbox: https://propertyhubau.substack.com/ Subscribe to RealtyTalk on the Property Hub channel: Apple Podcasts | Spotify | Google Podcasts | Email Property Hub is a collaboration between Bushy Martin from KnowHow Property, Kevin Turner from Realty, Andrew Montesi from Apiro Marketing and Apiro Media, and Australia’s largest independent podcast network DM Media. Business and partnership enquiries: [e-mail] omnystudio.com/listener for privacy information.

Hi, I'm Kevin Turner and welcome to this week's Realty Talk show. How did you know that the average buyer takes seven months to buy their property, which means they're likely going to go through the pain of finance approval at least twice. Over the next four weeks, Bushy has teamed up with Scott Agate from Hello House to help eliminate some of the pain points. The first installment this week is coming your way. And then Bushy will take a critical look at credit cards. So strap yourself in for a top show, the first one for 2024, in fact.

Welcome to the new year. If this is your first time with us, welcome. You're going to find us on all podcast players and through the Southern Cross Austereo Network. If you like the show, make sure you hit that subscribe button for us, please, and help us continue to bring you the best guests every week. join the conversation anytime on facebook at the property hub collective we'll be back in just a moment as bushy kicks off this week's show property deductions can save you thousands of dollars each year to make sure you maximize deductions you need to work with the most experienced quantity

surveyor in the country bmt tax depreciation is the leading specialist in the industry they've completed over 700 000 tax deduction schedules for residential investment and commercial properties Australia-wide. BMT guarantee to find double your fee in the first full financial year deductions. Call BMT on 1300 728 726 today for an obligation free quote. Realty Talk and your host Bushy Martin. Are you or someone you know looking to buy your next home or investment property? Well if that's the case you're in the perfect place to save yourself a lot of time, money, and stress because the Property Hub has teamed up with Australia's only national performance-driven negotiation service, Hello House. They're going to help

you to get buyer ready without all of the headache and overwhelm. And co-founder Scott Agate joins us to share his team's work of wisdom over a four-part special series that breaks it all down for you into finding, analysing, negotiating, and transacting. And it's based on the unique buy ready course that takes you through 44 micro lessons over three hours of content that distills Scott's and the Hello House team's decades of property buying expertise across thousands of property purchases. Now to set the scene, you may be interested to know that the average purchaser takes seven months to buy their property, which means they go through the pain of finance approval at least twice. They generally miss out on their dream home up to five times

and then out of frustration, they typically end up paying an emotional premium at the hands of a selling agent or they compromise on what they initially set out to buy. And after all of this, a staggering 45% of property buyers report having buyer remorse and feeling emotionally overwhelmed after going to loan. Add to all of this the fact that average buyers miss seeing up to 40% of properties for sale and have never been taught how to approach real estate agents like an expert. So clearly there's got to be a better way and Scott joins us now to help you get buy ready. So welcome to the show Scott. Thanks Bushy, thanks for having me and that's a great intro, you've nailed it. Well it's a big problem that a lot of people think they know a bit

about but often know enough to be dangerous mate and today we're in part one of this four-part series we're going to dig into the art of finding a property because as you and I know when it comes to buying a property most of us buying purchases immediately start scrolling through realestate.com but that's actually the last thing we need to be doing when it comes to securing our next property so to get things underway Scott what are the key things that a property buyer needs to start with when it comes to buying their next property? I think Bushy you should start with finance which you'll know all about i think understanding what your numbers are whether you're in a position to actually trans transact is crucially important before you start out too many buyers that i dealt

with as a real estate agent would come to the table ready to negotiate wanting to buy a property but don't have the capacity to act so i think the crucial thing is it sounds a simple um solution but it really is finance mate to get started i think when you want to build on finance then you've really got to dig in and build yourself some local knowledge i think local knowledge is the next thing that people can do for free and they should really spend a lot of time to understand the nuts and bolts of their local market before they set out and make any um you know wrong steps yeah and i guess the the danger there is spreading yourself too thinly across multiple destinations and locations and and never narrowing down so getting focused on defining that location is

important uh in that context then scotty what what are the key market drivers and what do buyers need to understand about them when they're trying to find a property? I think you want to understand whether the property that you actually want to buy exists. So that's where we start. So what we do is we define for buyers an ironclad five non-negotiable points that they're not willing to budge on. So mine might be, for example, Mermaid Beach, east of the easement, million bucks, knockdown and north through a garden. Now, any agent in my local area knows exactly where that's located and what that type of asset is so whatever you're looking for whatever the budget is wherever it is in the country if you can really think hard and be honest with yourself about what those five

non-negotiables are that's going to save you a lot of wasted days on market in addition to that i might have a couple of nice to have bushy so my nice to haves might be things that i'm willing to trade off that it might be a cul-de-sac location and over 500 square meters of land for example where i'm looking those things i'm willing to let go if i find my dream property so we always start there we define what our buy list is and make sure that we have that honest chat with ourselves. Then we move to determining where they exist. So as you just alluded to just then, the ideal scenario from doing this for three decades is to see buyers get it down to a core area if they can, if it's possible, down to about one to two suburbs. If you have to start

with three or four to begin with, then the goal is to obviously keep narrowing that search to make sure you become a local area specialist and you really understand the drivers determining market value and what the buyer depth is that you're competing against. So once we go through that step and we understand that those properties exist in that location. So the way we might do that is to go into the backend of realestate.com. I might put your filters bushy into the sold section and then put it in time order, for example. So for the last 30 days, I want to know how many of those assets have traded in the last 30 days, how difficult it's going to be to replicate that asset. That's really going to determine what buy deck you're competing against, how hard it is

to find those assets and that really um sets us up when you eventually do get to the offer stage you know how hard you've got to go at the offer so that you don't try and lowball an agent and then end up missing and searching for another month you know two months three months this is all the things that buyers shoot themselves in the foot and it adds to that seven month average well and i think with what you've just shared with us uh there scott now what we see from the finance perspective fairly regularly is that the the buyers are always wanting that property that's just 10 or 15 percent above what their budget is uh which becomes the impossible fill so whereby doing that research you've just spoken about and finding out you know what similar properties of

the same profile in that location have actually sold in and around that exercise is going to be a reality check in that sense so no one's wasting their time yeah and a big thing with buyers that i come across with that bush is they'll look back and say okay well it's november now i saw something sell in august um well just because something sold two three months ago doesn't mean it was potentially an out-of-line sale you're looking for consistency here i want to know that if i look back in the last 30 or 90 days that i can see multiple of those properties that tick your green boxes of your must-haves even if they're not the perfect property for you but if they tick those boxes to get started then you know you're fishing in the right pond yes very good point and removing

the unicorns that people waste their time on yeah they're never going to achieve so selling agents a big part of this whole equation. Tell us about selling agents and the agent relationships when it comes to the buy side. Yeah, I mean, it's crucially important to get on with the agents that you're going to ask and lean on to create opportunities for you both pre and off market and put you in a position when things are on the market that you like. So we spend a lot of time once we've defined that initial search of then going and digging into who the agents are in those areas that have sold property so if you go onto a site like rate my agent or realestate.com and you can see who's sold a transaction or transacted the property in the last 12 months

who's currently got a listing that matches close to that criteria and the job then is to start building relationships with those agents bushy so we'll extract all that agent information create a spreadsheet so all of these things are free and buyers at home can do this themselves in a reasonably quick time frame we get all the information because we want to leave no stone unturned in terms of building those relationships stay top of mind with local agents that's going to create pre and off market opportunities and we know that australia-wide 20 to 40 percent sells free or off market and 60 to 80 percent sells on real estate or domain so you need to be seeing more of the market you want to get there because you're going to have greater vision when you're

building relationship with those agents on more stock to choose from you're going to knock out the vast majority of the buyer competition and those people that you mentioned up front in the stats that have missed five times they've got buyer fatigue they're emotionally invested in the process and of course you get one-on-one with motivated sellers and that's where the goal is in terms of turning the screw hopefully in a negotiation and trying to save yourself money so dealing with agency is a big part of what we do but building that process bushy is one part of it there's another two parts where we find you know both as an agent and then on on the huller house side of the fence watching what people do there's there's another two areas where they'll shoot

themselves in the foot first one is when you create these opportunities with the agent you've to be highly responsive so if they call you on us you know and say i've got your list bushy um here's one at four o'clock this afternoon that i can get you through and you say oh i'm at work this afternoon and i've got golf tomorrow and then kids sport on saturday i can get there at three o'clock saturday afternoon they don't perceive you to be a hot buyer so they're not going to give you opportunities in in future the other thing is once you've seen properties and you like it or dislike it you've got to give them real-time feedback that's going to get them closer to a sale with their seller so you're helping them condition their seller which they're going to get close

to a paycheck and in doing so they're fine-tuning in their mind what it is that you're looking for and i'll take you seriously because they know that you're going to be a paycheck for them as well so if you can focus on the agent at that point and realize that you've got to help them do their job to create opportunities for you it's going to make a big difference to the buying journey yeah that responsiveness is absolutely key clearly in all aspects of the exercise so absolutely and you've touched on some of these already but what other rookie errors do a lot of buyers make scott um i think probably the biggest one bushy is taking where the agent has marketed the price as some sort of benchmark as to whether you bought it better or you overspent

um you know agents are fantastic at creating competition through where they position price so it's got nothing to do with market value and so i think you've got to be really careful about where the agent has pitched it and what you perceive a discount to be. For example, we might have a property that's on at $850,000. You may negotiate, Bushy, against me a $30,000 saving and think that you've got a great deal at $820,000. Meantime, I overpriced it by $50,000. So you've overpaid by $20,000 in that instance. So it is really as simple as that. It's just a way to create competition for mass market buyers. So you've got to take that out of the equation and really lean on good analysis and an understanding of how to price property to make sure that you're

paying the right price for any asset. So I think that's the first one. Misleading on price is a big one. A lack of transparency with agencies does make things difficult in Australia. That's one of the biggest complaints we see. The second thing I think is leaning on desktop algorithms. So the likes of real estate and domain constantly push out what your property is worth, track the sale. I did a review of this this morning and I took three properties that I own or have owned previously um you know they're grossly inaccurate on the low side and the high side and then one of them was just the gap was so big something like 40 or 50 percent that there's just no true way of using that as a tool so i think if you're using desktop algorithms and you're printing those

things off or going onto core logic um take it with a pinch of salt you still need that's just a general idea of where things might sit and then you really need to get into the weeds around where price it so i think they're two main ones that i deal with on the price side of things to give of confidence around that i think the third thing is people don't lean on expert skill like if you can put that plan in place to find things pre and off market and stay consistent that's great that's free you can go and deploy that but if you can analyze as good as a valuer and if you can negotiate as good as a as an agent well then you've got a you know a full package there that you're in a good position otherwise i think that's something that you should look to outsource because there's

not many people that would go and spend you know what's the average nine hundred and fifty thousand for a house in Australia and obviously a hell of a lot more than that potentially depending on what you're buying without actually having a clue what you're doing. And even if you bought a property one or two or three times, you're just not playing at the same level as these people that do this on a day-in, day-out basis. So I think reaching out for professional help is another really big thing

that a lot of inexperienced buyers make the mistake of. Yeah, and I think a lot of people make the mistake of confusing cost for value. and if you employ an expert who's going to level the playing field particularly in that negotiation process on a property, then potentially the money that you're going to keep as a result of that exercise is going to be far better than the small coin that you're paying to get that professional

who's, again, doing it on a regular basis and knows the tips and tricks and the ins and outs of what the selling agents are doing every day of the week had to put you in that position. So expanding on that. It's also just landing the property as well, Bushy. The money saving is one thing, but actually securing the first property that you look at rather than having to go through that cycle of spending money on building and pest reports, contract reviews or strata inspection reports. You're spending a lot of money and a lot of heartache missing properties where if you had an expert on your hand, you probably would land the first one at the right price.

So I think, yeah, that's a big part of it that people overlook as well. It's not just the money saving. It's actually securing a property in heavy buyer traffic, which is competitive Australia-wide right now. Absolutely. Most areas are experiencing that and even more so if you're in the investor space where there's buyers, agents and others active in those locations and building strong relationships with the selling agents that we spoke about previously. So we're well worth getting the right team behind you and then making sure you're giving yourself the best chance. Expanding on that then, Scotty, what are some of the other best tips and tricks that you can share when it comes to finding a property? I think one of the best things to do for us is to encourage people

to understand what the buying process is from start to finish. So we really think, and this is why we're talking about this series now, is an educated buyer is going to be a much better buyer. They're going to understand what's coming next and they can act with confidence to move through the buying process because you'll always hear me say this, speed kills in property. I think if you can knock out your buyer competition and you understand what the transaction steps are that are in front of you

so it snowballs really quickly, that is a really big thing that a lot of people overlook they get to that position where they find a property takes so long then get analysis paralysis around the price because they aren't you know emotionally invested and don't understand how to break that down and then unsure what happens next unsure what legal you know aspects they can negotiate in a contract and that really slows them down in that process and of course the agent's using your offer the whole time to attract another buyer that's going to come over the top of you so moving with speed is a big one after you've deployed your pre and off-market strategy. I think another thing that's overlooked with a lot of people is that

the perception of buying quickly is a thing in Australia where people almost say it's a badge of honor, right? Like I bought in a week or I bought in two weeks. I don't actually think there's much skill in that. There's a skill in not buying in seven months, but you really need to understand the depth of the market that you're buying into before you race away and spend that sort of money. So if you're doing it alone, I would often say, I'll look back at the many properties I bought over the years for myself and the family, I would look at 50 properties in the flesh before I transacted. I don't know many buyers that would actually physically do the hard yards to do that, but I wanted to know in my local area how hard it was to replicate the

asset, what other choices there were. I wanted to go and walk, bike ride, drive and park outside these houses or near them. I wanted to see the green space near there, how far it was to the station or the shops. I wanted to know those things from each of those particular areas, what the privacy was like the noise traffic flow because then you could make a decision to say actually this pocket i understand is sells for 10 more there's a real premium to that edge of it i can understand why that premium premium doesn't exist on this side of town so i think you've got to go through you know the time and effort and i think anyone can do that if they're serious in four to eight weeks so commitment of four to eight weeks see 50 properties attend every auction that

you can whether it is a property of interest or not because if you're attending auctions you're seeing real-time prices being paid. None of this six weeks or 12-week lagging data. You're also seeing the color of their eyes in terms of how many real bidders there are. Where did the real bidders stop before the guy bid against themselves and took it another $100,000 or $200,000 beyond where they should have? So it's understanding that it's getting comfortable with auctions and knowing what's going to happen when you're under pressure to act if you have to buy an auction as well. So lots of things like that, I think, that go hand in hand when you're looking to buy property to go overlooked yeah and it's investing the time first in the knowledge and the process as you

very well indicate and the devil's always in the detail when it comes to this if it's too easy everyone we're doing well and that's the very reason why we're doing this today so look i really want to thank you for these quite eye-opening insights on finding a property scott and i suggest that anyone who's resonating with your thoughts on this today or is looking for further guidance and assistance on this, reaches out to you and your team at hellohouse.co, that's H-E-L-L-O-H-A-U-S.co, hellohouse.co, by clicking on the link in the show notes.

And keep your eye out because in the next part two session, we're going to deep dive into the art and science of how to best analyse a property. So I'll see you again on the flip side, Scott. Thanks, Bushy. Have a great day. Successful property investment is a game of finance. Do you have the right team and the right game plan? Realty Talk is brought to you by KnowHow Property.

More than mortgage brokers, Bushy Martin and his team of investment architects set you up with a sustainable strategy structured to lower your costs, tax, risk and stress while increasing your capacity for growth. Know How has helped over 1,900 homeowners and investors secure more than $800 million in property wealth. So get set to live more, work less, and live your legacy. Want to know how to invest in your freedom? Visit knowhowproperty.com.au. This is Realty Talk, powered by realty.com.au. Welcome.

Now, this week's Bush Bite, I want to ask you, are your credit cards costing you your next property? And let me start by asking you, do you have a credit card, an interest-free card, some store cards, or something similar? Because currently there are 13 million credit cards in Australia with an average balance of just under $3,000. And apparently about 70% of all adults have a credit card, and many of us have multiple. But what you may not know is that credit cards have a massive impact on how much you can borrow

towards getting your next property. You see, banks don't look at the balance on the card, they look at the limit. And then they assume a minimum payment of 3% per month of that limit, which equates to a whopping 36% interest rate per year. So you may have cards that you've never used or haven't used for years, but they're still severely reducing how much you can borrow for your next property. And as a rule of thumb, for every $1,000 of limit you have on a credit card,

it reduces how much you can borrow by up to $4,000 to $7,000, depending on which lender you're talking to. So a $10,000 credit card limit reduces how much you can lend up to $40,000 to $70,000. Now, this may be enough to actually prevent you from getting your next property. So the bottom line, cancel any unused cards

and reduce the limit to the absolute minimum. And while we're at it, don't go over the limit in terms of your spend in a month and don't be late in making the repayments because they can be red flags and knockout punches to some lenders and some banks. The bottom line, cut your credit cards to the limit. if you want to get your next property.

That's more food for thought on Bushy Martin from Know How Property Finance. Stay tuned for more. Well, that brings us to the end of this week's show. Thanks to Scott Aggett for the first part of his four-part series with Bushy, helping you get buyer ready if you're looking to buy a property.

Make sure you don't miss a single episode of Realty Talk every week. All Bushy's Get Invested podcast also every week, both delivered to you by subscribing to The Property Hub now on your favourite podcast player or wherever you're listening to or watching the show. Also, join the conversation anytime on Facebook at The Property Hub Collective. I want to say thanks to our supporters and content partners, Realty.com.au, BMT, Tax Depreciation, Know How Property Finance, Get Rare Property and Apiro Marketing.

I'm Kevin Turner and on behalf of Bushy and the Property Hub team, we look forward to seeing you again next week.