Property Hub - Investment Insights & Inspiration - Realty Talk: Opportunity in uncertainty + Commercial property confusion

Starting point is 00:00:00 Welcome to Realty Talk, the show that brings together the country's most authoritative and respected property experts. Follow us on all the socials and subscribe for updates and exclusive offers. Realty Talk is powered by Realty.com.au, connecting buyers, sellers and agents differently. Hello once again and welcome to the show. Bushy Martin plays host to three very interesting guests this week, covering commercial property, the risks and rewards, also finance and some often overlooked opportunities. Bushy discusses how commercial property is often misunderstood when he is joined by commercial property buyers agent Steve Polisi. Another guest, Managing Director of EBM Rent Cover, Sharon Fox Slater,

Starting point is 00:00:48 is a landlord insurance specialist whose mission in life is to educate and empower property professionals. Sharon fills us in on some recent changes to insurance that are now in effect and that have been designed to enhance fairness and consumer confidence. And then to close this week's show, more wise words from Bushy as he continues with his 101 negotiation tip series. And this week explains the knockout offer when buying, when and how to use it, and the three conditions that you need to make sure are always in place. But first up, Bushy interviews a man who is a self-confessed property tragic. Now, he's a real estate agent, he's an investor, a shareholder in a finance company, and was the first winner of Australian Apprentice. I'm talking about

Starting point is 00:01:45 Anthony Morello. Bushy talks to Anthony about the opportunity presented in uncertainty. Greetings. Now, it's fair to say that after 18 months of this crazy COVID world, the only thing that we can be certain about is continuous radical uncertainty. So how do we deal with it and where's the opportunity and uncertainty in the days and years ahead? Well, to discuss this, I'm joined by someone who's experienced property from every angle and every circumstance, from professionally as a real estate agent and shareholder of a leading finance company, as well as a personal homeowner and a property investor. In his own words, when it comes to property, our guest knows a lot about a little and a little about a lot.

Starting point is 00:02:33 And he's made a career out of embracing the opportunity that uncertainty creates as the original winner of the Australian Apprentice and now Head of Business Development at the Contreras, where I personally had the pleasure of meeting the mighty Morello. So welcome to Realty Talk, great man. Thanks Bushy, great to be here. It's always a pleasure to see you and to talk all things property and real estate. It is the lifeblood of Australia and I think it will continue to be and continue to grow. Totally agree mate. Now it's a subject that's close to your heart and mine. So around that subject of uncertainty, what continued uncertainty are you seeing in property markets around the country?

Starting point is 00:03:11 Look, it's an interesting conversation and an interesting question because you would have to argue more than ever there's probably a two-speed economy going on. You know, I was advising a client only last week in an area in Victoria, in Melbourne, called Killor Downs. Now, Killor Downs, please, if anyone's from there, please hear me out. It's probably not going to sound politically correct

Starting point is 00:03:36 when I say it up front, but hill of downs was never a very sought after area um it abuts some great areas but hill of downs was sort of the forgotten cousin for a while and i spent i had friends growing um that lived out that way growing up but a very close that my my goddaughter's mother called me and said oh we're looking at this property can you have a look at it for us and you know give us some assistance in in getting ready for it and was quoted you know 715 to 765 and that's probably what it was worth you know somewhere between seven and eight we got a pre-approval through yellow brick road for 840 um the thing sold for 915 right so you know when it comes for and it

Starting point is 00:04:16 was not it was a zoom auction as well you know so you could even you could disagree and say you know once upon a time as an auctioneer that's called over a thousand auctions if you're in front of the property sometimes people do get very emotionally enthralled in it so there's certainly that going on quite a bit right now where family home the family home market you've got a it's a perfect storm there right there's a lack of stock it's a problem number one uh number two is um money's the cheapest it's ever been and i say we love wishy you're a little bit older than me i'm sure you'll agree that you've never seen money this street but i certainly in my lifetime i haven't been my father you know in his 70s said you know this is definitely the cheap look you can

Starting point is 00:04:55 can get a home loan for like 1.9 percent now if you're buying up the principal place of residence totally so where the uncertainty lies is people are a little bit like well is this going to continue right and is it going to continue like do i get in now and bite the bullet and pay that 9.15 even though really you know my financial planner or mortgage broker or bank has told me look i shouldn't be spending more than mid-eight or do i bite the bullet get it at 9.15 lock in my interest rate at you know 1.9 or 2 percent for the next you know five years or seven years and at least have that certainty that i know that the property market in that especially that home market is going to grow on and continue to grow so my opinion on it is obviously um you know more

Starting point is 00:05:39 is lost within decision than wrong decision you know you've heard me say this many times bushy and anyone who's read any of read or seen any of my interviews that i've done over the years is that you know what seems expensive today will probably seem cheap in in five or ten years time right like you all have wished you could have bought each of them either side and i know this i own a number of properties um in a row in moody ponds and i bought the first one many years ago for like 380 000 i think when i was like 18 uh i think if you were to buy that property today i'm 35 now you'd be paying one and a half to two million dollars so you know and and once upon a time you know i i'm not i'm not giving kill or downs a hard time but moody ponds was that area

Starting point is 00:06:19 you know for anyone who knows moody ponds it was you know underbelly series one moody valley race course you know damon everett's territory it was it was a rough area area in the 80s and 90s and nobody really wanted to live there port melbourne for those are in you know you look at some of the areas of sydney you know i also own property in sydney and i live in rose bay in sydney and you look at Redfern and you know areas that next to public housing nobody wanted and now you're not going to get into Redfern for anything less than two and a half to three million even for a single fund so to that uncertainty I think it's it's there is a two-speed economy going on with property if it's the family home and you've got the banks are loving good quality borrowing for

Starting point is 00:07:04 family homes because they know people have still got to live somewhere yeah on the investment side yes there is a bit of a challenge now that challenge is generally a lot of the lenders are saying they want you know you'd be to be in a position to pay principal and interest as well but um you know i'll wrap it up in a little bow and say more is lost within decision than wrong decision if you're looking to have a crack especially if it's your the home that you're going to live in then you're better better abiding the bullet getting out of the rent race and getting into the property that you want yeah totally agree mate so it's sort of from your personal side of the equation how do you embrace uncertainty to realize opportunity yeah look i i'm a big

Starting point is 00:07:42 believer in you know a cost benefit analysis right so you know um you know it's it's pretty easy to stare with a calculator or with a financial plan or a mortgage broker and actually work out pretty quickly what does that look like like you know pay an extra 50k or an extra 10 let's call it on what you maybe thought you were going to pay for something if you animatize that over a 25 30 year loan um it's not that much you know you're paying probably an extra 30 40 50 a week that's not a night out right so with the interest rates being as low as they are so um that's one thing number two is like i always look at historical data historical data is very very important right so like you know the the main things i look at you know australia i know right now we you know

Starting point is 00:08:28 we are a migrant country and we will be again like yes we've we've shut our borders but you you know the rest of the world shut their borders as well right now at some point the only way whether it's liberal labor government whether it's right or left-wing they all know that the only way for us to re-stimulate the australian economy is to let people back into australia right and and we've done it in the past we saw you know over the you know i'm old enough to remember 9192 recession we needed to have with paul keating i'm old enough to remember the dot com bust we had in 2000 i'm old enough to remember the gfc i was working in real estate in williams down in Victoria during the GFC and all we do every time it happens is we use foreign investment

Starting point is 00:09:08 as a stimulus number one number two I think Australia is positioned very very well off the back of this pandemic as the land of milk and honey you know and for those who don't understand that reference it was something very very pertinent during the 1950s when we had you know quite a um uh politically incorrect policy by sir robert menzies our prime minister at the time he was a great prime minister but he came up with this concept called the white australia policy so obviously i apologize to the indigenous people that it was that and to anyone who wasn't you know from that they brought the italians and greeks out here under that white australia policy and you know they invested into the country they did the hard work and i think we it's the same

Starting point is 00:09:50 scenario now like now i think the you know the indian communities and the and the chinese communities they are desperate to get their kids into australia and to shift as much of their cash sitting in those countries to get it over here so there will always be something that will stimulate the australian economy and you'll see for those who don't understand much how it works there's a thing called firb so foreign investment review board they generally got a checklist of about 10 points and you know i saw very clearly during you know 91 92 to re-stimulate the economy they dropped those you know all you need to do is basically have a pulse on some cash so two points out of ten and they let you in then when our economy got strong again

Starting point is 00:10:30 they said no no you need to be able to take 10 out of 10 boxes and you know anti-money laundering and all this and you have to prove everything where the doll every dollar came from then we had the gfc that happened and you saw those rules drop again all you had to tick was three out of the 10 boxes and then once you know the first home buyers were a very good metric for the australian market like if they're getting into the market or not couldn't afford to buy any more you saw tony abbott under a liberal government so it's been labor and liberal have done the same thing so that they both sit in the same camp in this when it comes to this uncertainty and they you know obviously made it um pretty hard for foreign investment again so i think what they'll do

Starting point is 00:11:08 effectively especially with this um oversupply of of new stock is they'll they will encourage to bring you know money in from overseas yeah very good point man i think the uh the next wave actually everyone's sort of worried about uh you know the property dropping off but uh we are the envy of the world mate right now yeah and uh once those borders open and it's not far away once the vaccination levels hit the right levels and look out i think it's going to be a mass exodus to good old oz yeah and the the ongoing opportunity in property is going to be very strong so talking about that that ongoing opportunity in addition to the immigration exercise where are you seeing property opportunities that the covert uncertainty continues to create matt look i think um there's

Starting point is 00:11:55 there's definitely some there was definitely in the early days i think it's come off a little bit now there was some panic selling like everyone was like the end of the world's coming the end of world isn't coming and it didn't come you know human beings are very resilient number one number two australia's biggest advantage is that we are very isolated um it's also our biggest detriment at times but it's also our biggest advantage as well um and i think right now i think the other big piece of it in this uncertainty as well is that there's going to be a lot of um if you are in a position to do it or you're looking if you've ever thought about doing it i think you're going to see a lot of local governments and local councils and state governments being a little

Starting point is 00:12:34 bit more flexible around development too so I do know you know a number of municipalities in Sydney a number of municipalities in the Gold Coast that have you know traditionally you might have been able to only put two on the block now they're saying oh if you want to put three on the block and you know at some point they'll probably say you want to put four on the block so you know I think there are going to be some more development opportunities it's a different caliber of property investor though if you're if one one thing i do give people advice about is that if you're a butcher baker candlestick maker yeah work hard take your money from being a butcher baker candlestick maker and buy real estate but don't go on go ahead first and become a property developer

Starting point is 00:13:15 yeah you know it is something you need to commit to if you're going to do it there's nothing wrong with buying a good solid standard house um there is there is actually i'm going to give a little bit of a plug here there is actually uh a business of a guy that's in the entourage that's quite interesting where the governments um right across the east coast of australia estate and and uh local governments have eased some of the um opportunity for affordable housing is in a thing called um shared rooms so like so what they're doing is they're allowing people to you know buy a block um and they're putting you know for 650k plus land so forget about the land for a minute this company it's called stone horizon they just do it in victoria they do land they just do the

Starting point is 00:14:00 build they build basically a house with nine rooms and they manage it for you and i think we're going to be seeing a lot more of that you know so you're getting a much higher yield for your investment but once again it's the sort of thing you don't just throw yourself in first do your research do your due diligence if you want to you know you can google them if you want to check them out but i think there's going to be opportunities like that and i think you know that's you know it's not going to be conventional real estate anymore and the reality is is that like i look at my portfolio i've got a terribly yielded portfolio like i like the only reason what i bought is i get high capital growth yes you know and i it's funny you know one of my one of our agents josh

Starting point is 00:14:39 craig will sell something and i'll own a property around the corner i'll take some i go shit i'm rich and and i remember the particular agent texted me back the other day he said you're only rich if you sell morella that's a good point i'm still poor i'm still cash poor i'm asset rich cash poor so you know it's but the reality is i think um do you due diligence as always number one number two um you know get all your ducks in a row number three be open to opportunities you know um and embrace the uncertainty of it all you know like the reality is is that you can't really go too wrong in australia like you know as long as you you know you're not like once again things to be cautious over like mining towns uh probably steer away from apartments most

Starting point is 00:15:25 apartments for now in boutique apartments yes like you know i just talked to someone buying elwood the other week in a nice you know eight in the block up deco no lifts no pools no tennis school like here's the other thing right now with these new apartments ever i don't know if anyone's listening or watching that own an apartment in a in a new complex you're paying full strata fees and you're not allowed to use your pool or your dentist or or your spa or sauna and i'm like well that doesn't make sense they're like oh we're still maintaining them and uh so i'm like anyway look the only reason why i just helped a client just recently buy a penthouse um and i told him up front i said you know mr x you because he's a well-known australian and uh very successful

Starting point is 00:16:11 and i was surprised he wanted he came to me with the mandate he wanted to buy a nice apartment because he's bought acreage an hour and a half out of melbourne he's got his business in melbourne you know in the cbd and he's like i want to be in an apartment that i've got somewhere to stay overnight so no worries and i said you're not going to make any money on it and then he's see he's in the financial position where he doesn't care so he buys this thing for you know four million and it's worth four million in 10 years time he doesn't care as long as like he goes just get me something that's not going to you know go down and i said well look these sort of apartments you don't really lose you don't really make money you don't really lose money but you know it does

Starting point is 00:16:48 have the lifestyle now he's in a financial position where he doesn't need to worry about whether he's getting capital growth or not if you're a young first-time buyer here you know i'm very cautious like i've got family that have bought an apartment in in moody ponds here and like they bought it it's worth less than what they bought it for now they're a young couple they're looking to have children they now want to buy a house they don't even have the leverage ability out of that apartment to be able to buy a house you know they would have been better off removing their ego buying a house out in like for example kilo downs two or three years ago when they bought the look if they bought in kilo down three years ago when they bought that apartment

Starting point is 00:17:28 off the plan for 650 700 or whatever they bought they bought a little shitty house in kilo downs they probably would have made 400k on the thing now you know what i mean but but young young couple like you know she's my you know they're cutting to my cousin she's in fashion he's a builder like they don't want to go live out and kill or dance but they should have done that they should have just forewent some ego in order to pick up the opportunity right and i think that's really really important to try and educate people around that space as well totally getting out of ego walking before you run uh potentially considering rent vesting if you're in that position where you want to live in a place to enjoy lifestyle but put your money into a location

Starting point is 00:18:09 that's actually going to enjoy the growth correct and horses for courses mate you make some great points there mate um uh really appreciate those quite timely insights morello and thanks again for your time on the show today beautiful my thanks bushy thanks for having me thanks mate so there you have it uh the lesson is really clear here don't tread water in times of uncertainty embrace change find where the opportunity is being crowded and then dive in deep stay with us for more here on realty talk 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

Starting point is 00:18:51 700 000 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. Greetings and welcome. Now in the diverse world of real estate, commercial property is sometimes viewed as risky when really it's just not well understood. Yes, the dynamics of commercial property are different, but they're no more complicated. They just need to be explained simply. And to help us with this, we're joined today by successful commercial property investor, Steve Polisi, a national commercial buyers agent with his company, Polisi Property.

Starting point is 00:19:34 Welcome back to the show, Steve. Thanks for having me again, Bushy. Good stuff, Steve. Now, Steve, there seems to be some confusion around what actually constitutes a commercial property. So let's start off with your definition of what actually a commercial property is. Okay. A simple definition for a commercial property is any type of real estate that has a specific business activity or income generating purpose in the building and the reason why there's sometimes some confusion is because you can have a residential property that fits those kind of marks like a medical center or a vet that's in an existing residential house that is actually a commercial property however yeah good call and that's a distinction that a

Starting point is 00:20:15 lot of people don't get and and the the average punter generally reflects on commercial as cbd office or maybe a warehouse in the in the burbs but when it gets down to that level way they're probably not seeing it that way so thanks for that clarification now can you give us a rundown on what are the main types of commercial property yep so you mentioned a couple there so the main types obviously retail office and industrial so things like warehouses it can be anything though it could be a cinema or a theme park or a hotel or a car wash center and things like that but the key ones industrial office retail they're the main ones most people talk about yeah okay and there's a lot of myths that tend to surround this commercial property area so can you run through what some of

Starting point is 00:21:03 those are for us yep so the first one is high vacancy so if you lose your tenant you're going to be out of a tenant for years at a time which can be true if you buy a bad one but that's similar to buying a residential property in a mining town for instance if you lose that tenant it could be a long time as well so that one's normally a bit unfathomed the other one is lack of capital growth so people will say you don't get capital growth out of commercial again completely false if that was the truth you'd be buying the commercial warehouses and things like that in the same same price as 20 years ago in sydney and melbourne and things like that that one comes mainly from offices don't grow as much so for instance as an industrial or freestanding building much like a

Starting point is 00:21:44 high density apartment won't grow the same as a house so you do need to compare apples and apples with that one and then the other one is people will say that there's no value add techniques and they're normally residential investors because they're used to renovating a property and getting the equity uplift that way again you can still do that a little bit harder for like an industrial or an office but if you own a retail space you can obviously freshen that up and and get some value that way but you can also there's much more creative ways to deal with commercial you can add solar panels telecommunications on top advertising space atm machines subdivide the tenancies quite easily things like that so there are quite a lot of value

Starting point is 00:22:23 techniques as well yeah one of the things that interests me and correct me if i'm misreading this steve but my understanding is that the the actual rental or the lease negotiated on the property for certain types of commercial property actually can effectively directly impact on its value which is which is something that doesn't happen in the residential sphere is am i correct in saying that yeah in some somewhat so like the yield is generally an indicator for the price it's not like residential where you just look at the house it's it's based on the return you get it's called cap rate so capitalization rate which is effectively the net yield on the property will value it but different types of properties and different tenancies as well like obviously if you have a

Starting point is 00:23:05 medical tenant or a McDonald's, that's going to obviously sell much also, you can increase the value that way as well. Yeah, okay. Now that's great. Well, certain areas of commercial have copped a fair bit of a bollocksing in the press in recent times, particularly the CBD office space that I've spoken about. So given the interesting times that we're in, can you conclude with a commercial property market update flowing on from the long tail of COVID that many parts of the country you're currently experiencing yep so cbd is obviously struggling with people working from home quite a lot in lockdowns and admittedly i never really liked office cbd i thought it was a little more one-dimensional because it's you can always build a higher tower next door and kind of

Starting point is 00:23:43 price it out so i've always tried to focus on a land component when buying um so cbd offices are kind of shrinking however a lot of businesses are doing the hub and spoke model so they're actually doing like little satellite offices around the city so the the smaller office buildings will actually do quite well um retail in the cbds is obviously struggling however suburban retail is actually thriving at the moment so all the people at home some local cafes are doing really well obviously we're talking outside of lockdown but um inside of that suburban retail is actually thriving um and industrial is the tightest vacancy we've seen ever so most of the vacancy rates are 1.2 to 2.5 percent around australia and that's the e-commerce boom is a big driver for that

Starting point is 00:24:25 obviously. Yeah, interesting. So there's a lot more opportunity there than people probably realise in the current sphere of things, particularly those that have been focusing on residential without really recognising the opportunity that commercial brings to the space. So look, really appreciate those eye-opening insights, Steve, and we appreciate your time on the show today. No worries. Thanks, Bushy. Thanks, Steve. Well, there you have it. If you're interested in knowing more about commercial property opportunities, grab yourself a copy of Steve's recently published book commercial property investing explained simply or reach out to steve's team at policyproperty.com stay with us for more here on realty talk property depreciation

Starting point is 00:25:08 is the natural wear and tear of a building and its assets property investors can claim depreciation as a tax deduction each financial year depreciation is a non-cash deduction this means you don't need to spend any money in order to claim it. On average, BMT tax depreciation find residential investors almost $9,000 in first full financial year deductions. Call BMT on 1300 728 726 today for an obligation free quote. Now it's safe to say that the insurance and real estate industries are highly regulated, which is actually good because it provides a framework that ensures that everyone's actually doing the right thing. And to further enhance this framework, the Royal Commission into misconduct in the banking, superannuation and financial services industry

Starting point is 00:25:53 suggested a host of changes to enhance fairness and consumer confidence, which now includes changes to the insurance industry that have just come into effect. So to reveal what these changes are and what it means to you, to property managers and related industry professionals, we're joined by Managing Director of EBM Rent Cover, Sharon Fox Slater, a Landlord Insurance specialist whose mission is to educate and empower property professionals. So welcome back to Realty Talk Sharon. Thanks very much for having me on board Bushy. You're right there have been a substantial number of changes that are predominantly out of the Hayne Royal Commission and they do flow through to anybody who's distributing predominantly retail products which are things like house

Starting point is 00:26:38 insurance, car insurance and of course landlord's insurance. So there are laws around design and distribution. This means that insurers have actually had to document their thought process on the design of products and who their intended marketer are. They then have to actually produce a target market determination. It's not meant to be a client-facing document, but it will be found on most insurers' websites. And anyone that's distributing the products need to actually make sure that the clients that they're selling to fit within that target market. So that's obviously a big change it does apply to real estate agents that are dealing in landlord insurance products there is then updated anti-hawking laws which is around how and where you can actually sell

Starting point is 00:27:26 insurance products there's changes to protect vulnerable consumers there's changes to complaints which are now called an expression of dissatisfaction and then there's changes around claims so that's just sort of high level the ones that will affect our real estate partners but all up there are around 67 changes to legislation or new pieces of legislation so it's a lot that's pretty significant and in normal course of events people outside of insurance would assume that it's not actually impacting on them but that's not the case so can you sort of talk us through who these changes will impact moving forward? Absolutely.

Starting point is 00:28:11 So the changes are designed to protect consumers and are sort of putting more onus back onto the insurers to take responsibility for decisions that consumers make. So a lot of people end up with products that are not really suitable for them, but a lot of people are not educated enough to make the right sorts of decisions. So it's effectively enforcing the insurers to make sure people are getting the right products for what they actually need.

Starting point is 00:28:40 Now, you could argue that, well, isn't that easy when it comes to landlord's insurance because you have to have a rental property? But there are different types of landlord's insurance products out on the market, or you could have a long-term investment, or you could have short-term. So, again, you've got to have the right sort of insurance to protect you. and so that then flows through obviously to property managers or anyone that's arranging landlord products on behalf of their landlords yeah very good point and that that's something that a lot of property managers wouldn't realize so how do these changes impact them and what do they need to be doing about it that's perhaps different to what they're doing currently so effectively they need to make sure that their clients if they're taking out insurance fit within

Starting point is 00:29:28 the target market that the insurer has designed. So they need to look at the target market determination, which they find on their website, and make sure that they're asking appropriate questions to make sure that it's right for their landlords. So I obviously can't talk about what other people are doing, but I can talk about what we've done. We've tried to make it as easy for everybody as possible. So what we've done through our application and quote process is that we're asking now specific questions that will knock people out of the process if they don't fit within the target market so you could go to our website and say i would like a quote and then these questions will pop up those questions are designed to ensure that people don't get the wrong

Starting point is 00:30:13 products yeah perfect so property managers are able to access that and use those questions when they are quizzing landlords is that what you're suggesting absolutely absolutely and if they call through and speak to somebody on the phone they'll ask those same sorts of questions they'll find when they actually complete our application process if it's a hard copy application the questions are on there as well so we've put them everywhere to ensure that it's as easy as possible for everyone yeah brilliant well that's it's certainly something that uh you know most people would think well that's a financial services or an insurance issue so it's not going to impact on me but quite clearly that's not the case so if we are semi-related or referring people to a landlord

Starting point is 00:31:00 insuring insurance specialist like ebm rent cover then they certainly need to be making sure as i understand that they're not giving advice and that they are purely just asking the questions have been point them to you to actually cover that off is that is that correct the easiest way is do not talk in any detail about products just give it to the experts to do yeah i love it not very good advice well um i really thank you for making us aware of these subtle but quite significant changes sharon and thanks again for your generous time on the show today no problem at all thank you thanks sharon well it's clear that the devil's in the detail here with the recent legislation changes, so to ensure that you're not stepping on insurance landmines

Starting point is 00:31:45 that you don't even know are there, reach out to the team at EBM Rent Cover and they'll guide you through what you can and can't do. You're watching Realty Talk, your trusted voice for all things property. Hi and welcome. In this week's Bush Bite, we continue our special series on the art in the science of negotiation, given the critical importance of your ability to negotiate in all aspects of your life, and especially in the current hotly contested property seller's market. Now, over the last few weeks, we've discussed how you may need to change your outlook, to build good rapport by using mirroring and labelling techniques, and the perceived power position, which you may actually feel is tipped against you. We discussed why cash is king,

Starting point is 00:32:33 how to know the prevailing conditions and that negotiation starts with hello. This week we delve into the advantages of the knockout offer. So the next tip to consider in an overheated seller's market such as we've got today where there's many more buyers than sellers is to consider making what's called a knockout offer. A knockout offer goes in fast for a quick mouth-watering sale at a very enticing price. It's an offer that the seller is likely to accept as it could be more than they would have expected to get so quickly. It gets the whole process of selling that property over and done with for a good outcome. Now not all sellers will accept the quick offer but many would if they don't want a long protracted sales process. However before contemplating this move

Starting point is 00:33:22 ensure the following three conditions are all in place. Firstly you've done your homework on the area and the property with the assistance of detailed property research reports like CoreLogic, buyersbuyers.com.au or RiskWise. Secondly, you know what the true value of the property is, which is often not the agent's advertised listing price or range. And it's got to be based on properties that have actually sold recently around the area. And thirdly, you're going to be holding the property long term and understand that paying an extra $10,000 to $20,000 plus or more now will be worth a lot more to you in the future. If all of these factors are in place, then consider putting in a knockout price up front and early. This will be attractive to the selling agent who's

Starting point is 00:34:12 often looking for a quick sale so they can get paid and move on to spending their time on their other listings. A knockout offer also puts the competition at bay and should get the seller's attention. Over the years I've seen many buyers who are afraid to put in an early knockout offer or bid if it's at an auction. They wait for the competition to build over time and ultimately they can end up paying more than the price they would have done had they offered a knockout offer right from the start and if you're not confident to do this an independent buyers agent acting on your behalf can do it for you. So know the value of how much you're able and prepared to pay for the property and consider making a knockout offer, particularly in a seller's market where many buyers

Starting point is 00:34:58 are competing for fuel properties. This may just blow the competition out of the water and secure the property sooner rather than later. And long term, it could be a good deal. Certainly it can be better than a long, drawn out, emotional, frustrating process. So to summarize the key points from today's discussion on making a knockout offer, remember that it takes confidence and audacity to make a knockout offer. However, under certain circumstances, you could end up paying a really good price long term. Now, some people are wary of this tactic, but it may be worth considering, particularly in an overheated seller's market. In next week's Negotiation Special, Bushbite will reveal how negotiation is a lot more than just the price.

Starting point is 00:35:48 That's more food for thought. I'm Bushy Martin from the Get Invested podcast. Stay tuned for more. Well, that's it for another week. Thanks to Bushy's guests this week, Sharon Fox Slater, Steve Polisi and Anthony Morello. Catch more of Bushy at his very popular Get Invested podcast. and watch out for us in your inbox next week. See all of our shows, of course, for property investors,

Starting point is 00:36:14 for buyers, sellers, agents and brokers at realty.com.au. I'm Kevin Turner. Thanks for your company. We'll see you next week. Miss something in this week's show or want to catch up on past shows? Do it anytime at realty.com.au where we connect buyers, sellers and agents differently.

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