Property Hub - Investment Insights & Inspiration - Realty Talk: Preparing for the big day - auction

Episode Date: December 30, 2022

Cate Bakos is a buyers agent based in Melbourne.  Melbourne is recognised as the property auction capital of the country.  You need to be prepared because believe me the agents will be and they will make sure the sellers are prepared as well.  So what should you do as a bidder and potential buyer do ahead of the auction day.  Cate Bakos is a buyers agent based in Melbourne and she has some key things you MUST do. RealtyTalk is part of the Property Hub podcast channel, your home for property investment insights, inspiration, and stories from Australia’s top property experts, investors, leaders, and analysts. Subscribe now to get every RealtyTalk episode delivered to you each week for free, and also get full access to Get Invested, the leading podcast for Australians who want to unlock their full ‘self, health, and wealth’ potential and get inspired by the stories of investors, founders, and entrepreneurs. 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.

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 and welcome to another one in our summer series presented by CoreLogic. We're taking you behind the scenes of looking at how the auction strategy works, how it works, maybe you're preparing to go to an auction. You could even be preparing to sell at auction and hopefully this series will help you. Kate Bakos is a buyer's agent out of Melbourne and she's our special guest on this series. You know, you really need to be prepared when you're going to go to

auction because I can tell you that the agent is prepared and the agent certainly has made sure that they've got their seller prepared as well. So what do you need to do as a bidder to be prepared. Kate Baycross is a buyer's agent, as I said, in Melbourne, and she helps many people do this. She's going to give us the key things that you must do. Must do. G'day, Kate. How are you doing? I'm great, Kevin. I love this series. Yeah, thank you. Yeah, it's tremendous to be able to tap into your knowledge because I know you're helping a lot of people do this on a regular basis and having to bid for them. So you've got a lot of confidence in this area and we trust your advice. So what are the things that we should be doing? You know, I know we should be looking at

contracts and doing that sort of stuff um so walk us through your top five or six well first and foremost when you buy at auction there's no cooling off you can't change your mind so once the hammer falls the property is yours so you need to be very very careful that you are buying exactly what you think you're buying and sometimes it's the invisible things that can catch buyers out so we always always get a contract review performed by a legal rep whether they're a conveyance or a solicitor, it's the client's choice, but to have that legal set of eyes run over the contract and provide a written statement of exactly what's in the particulars and what sorts of special conditions or other conditions might apply gives the buyer an enormous amount

of knowledge. And things like easements, covenants, caveats, they can make or break a happy purchasing experience, particularly if you didn't know that they were in the contract. So the first thing we always suggest is getting a legal review and then when you're going along to auction you obviously need to be confident that you've got the right dollars for the property nobody wants to overpay and nobody wants to miss out for a price that they could have paid because they didn't have enough knowledge about price i know we talked a couple of weeks ago about comparable sales analysis and that's where that particular part of the due diligence is really important and then next thing that they have to make sure they're doing is preparing for what happens if they win

so the agent will be calling for a certain number of days settlement they'll be calling probably for a 10 deposit on the fall of the hammer if there's any variations to that the buyer has to be able to negotiate that long before auction day and most of the time when we do have variations that we're requesting the agent isn't in a position to just make that judgment call and accept the conditions they need to run it past the vendor and the vendor solicitor and we all know that most solicitors close at five o'clock on a friday so you really need to get this stuff done out of the way long before the auction and then we talk about deposit and i get a lot of young buyers whether they're you know millennials gen wise they don't necessarily walk around with a

checkbook um in their in their bag a lot of them haven't used checks before we're in a very electronic world now and EFT is quite acceptable for them. But not every single auction will accept EFT and not every single buyer can transfer the full 10%. So there's lots of things that you have to plan for behind the scenes. And that could even include lifting your transfer limits on your bank account so that you are in a position to purchase that property and not be in breach of contract. We discussed yesterday, sorry, last week in the show about ways to figure out how many buyers or potential bidders there are. Another great way, I mean, you've always got to get a building and pest inspection done, but it's always good to ask the agent, has anyone else

had one done as well? Yeah, for a couple of reasons. It obviously does give you a really good idea of who's serious about the property because let's face it, no one spends six or $700 unless they are serious about this and also if a building inspection has been done recently by an independent building inspector you might be able to pick up a report for half price you'll have it at your fingertips very quickly it could be a convenient way of going about things so it's a critical question to ask and it gives you a lot of good information as does are there any buyers agents on the property you know you've got a buyer's agent you've got someone who's paying for a buyer's agent. So you've got another committed buyer. That's a good one. I've never

really thought of that, Kate, but that's such a good point. And of course, buyer's agents are becoming more and more the norm now. So we're going to see a lot more of them coming into the sphere. Another important consideration too in being prepared is to work out the pricing structures or where you're prepared to go with your bidding to have that upper limit. How often do you see people set a limit and then go over it kate yeah my best guess is that 10 to 20 percent of people have a fan plan they have a very strict quirky walk away figure that absolutely means that they're out of the game but then maybe 70 percent of buyers have a vague limit and so for example let's say we're talking about a 1.2 million dollar house and the final price that it sells for is

let's say, one, two, four, five. So if you've got a few buyers that are satisfied that it's a circa 1.2 property, what happens when it's down to the last two bidders or the last three bidders? There's a hundred people in the street all staring at you. The auctioneer is holding a gavel and he's yelling at you and you haven't strategised where to stop

and you're asking your partner on the run. The auctioneer is yelling at you saying, we're out of time, first, second, third, final call, are you in, are you out? It is the most stressful thing a buyer can put themselves through and I would arguably say about 70% of people put themselves in that position. One last question before we go.

Another thing that you should be prepared for if you're going to put this property into your portfolios to get an accurate rental appraisal, most agents will have one. Do you suggest that you get another one on top of that, Kate? I always recommend that you've got to be satisfied that it's independent and it doesn't mean that a property manager in the same office

as the selling agent won't give you a strong and accurate rental appraisal. But if your ability to purchase this and bankroll it in terms of the cash flow implication is contingent on the rent, it's very, very easy to get a second opinion and I'll be very disappointed if someone didn't go to those lengths to ask one more person for an appraisal when it's such an easy task. And if you've got a discrepancy, you can then get a third opinion. But you absolutely need to make sure that you've got an accurate appraisal.

And I say to people all the time, don't ask the sales agent. As fantastic as they are and as much as I know about their campaign, very few of them actually understand market rentals and they're not the right person to ask. They've got a vested interest in helping the vendor and they're not there to give you an accurate rental appraisal. next week with kate we're going to talk about negotiating before the auction many people leave the negotiation up to on the auction day and as you've already heard that's a very stressful thing to do so what can you negotiate prior to auction that's what kate's going to tell us next time when she comes back kate we look forward to talking to you next week thank you sounds great see you soon miss something in this week's show or want to catch up on past shows do it anytime

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