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Speaker 1: Welcome to the Property Pendulum, brought to you by Domain

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Speaker 1: and Fear and Greed, the podcast that tells you which

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Speaker 1: way the property market is going to swing and how

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Speaker 1: to make the most of it. I'm Michael Thompson and

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Speaker 1: I'm joined by Alice Saltz, National Property editor at Domain

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Speaker 1: and one of Australia's foremost experts on all things real estate,

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Speaker 1: known to audiences of course around the country for her

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Speaker 1: work on nine including the Block.

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Speaker 2: Hello Alice, Hello Michael.

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Speaker 1: Alice. Today a bit of a scenario to kick us off.

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Speaker 1: You go along to an open for inspection and you

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Speaker 1: walk in and you are chatting to the real estate

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Speaker 1: agent and he asks you a question either there or

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Speaker 1: he does that the follow up call on the Monday,

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Speaker 1: which is always always good fun. And they ask you

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Speaker 1: the question what's your budget or what's your price range?

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Speaker 1: And you and you are and you have no idea

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Speaker 1: what to tell them. So today we are going to

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Speaker 1: look at what the answer you should be giving is

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Speaker 1: and why on earth they need to know this and

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Speaker 1: what it could mean for the price that you end

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Speaker 1: up paying for that property. So what do you say,

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Speaker 1: Alice when they ask you that question?

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Speaker 2: It's such a conflicted question, because I think the immediate

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Speaker 2: response is this idea of always keep your cards close

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Speaker 2: to your chest. I think everybody thinks that's the right

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Speaker 2: response to have, and of course you can, of course

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Speaker 2: do that. But I guess to me, it's interesting to

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Speaker 2: understand the reason that they're asking it. Really, what the

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Speaker 2: agent is trying to do is remember that they are

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Speaker 2: representing the seller, So their job is to basically bring

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Speaker 2: in as many qualified buyers who are willing to pay

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Speaker 2: the most money to a house to that seller. So

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Speaker 2: what they're trying to do is get an understanding of

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Speaker 2: just how serious you are, and are you even in

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Speaker 2: the ballpark or potentially bidding on this house. That's basically

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Speaker 2: why they're asking it. So at that point, if you

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Speaker 2: don't want to say what your figure is, that's completely fine,

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Speaker 2: and you shouldn't feel fearful of that by any stretch

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Speaker 2: of the imagination. But there are some benefits which we

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Speaker 2: can get to after about sort of being a bit

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Speaker 2: more transparent, I suppose.

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Speaker 1: Okay, So really it is just to make sure that

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Speaker 1: you are actually a qualified buyer, a real potential buyer,

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Speaker 1: rather than just a tire kicker exactly.

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Speaker 2: And hopefully we've got you know, property officionados listen to this,

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Speaker 2: and they do more or less have an idea of

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Speaker 2: what prices are going for when they're walking through the

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Speaker 2: front door of a house, even a ballpark. So if

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Speaker 2: you want to sort of have a poker face, you

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Speaker 2: could always just go with whatever you reckon. It's worth

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Speaker 2: just to say that to get the agent off your

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Speaker 2: back in that first instance.

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Speaker 1: Okay, but okay, just a play Devil's advocate then on this.

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Speaker 1: So you walk in and they say what's your price range?

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Speaker 1: And you get a little bit overwhelmed and you just

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Speaker 1: blurt out somewhere between say, one point two and one

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Speaker 1: point four million. Is that not a little signal to

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Speaker 1: the agent that, okay, this buyer has the potential to

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Speaker 1: go up to one point four million for this place

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Speaker 1: and that straight away. Isn't that the old negotiating tactic

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Speaker 1: that the first person who names a figure loses completely.

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Speaker 2: And I think that's why we can probably expect that

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Speaker 2: a lot of buyers when they are saying that price

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Speaker 2: may not be entirely honest with what they're saying. So

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Speaker 2: I think everybody is playing a game in this situation, Michael,

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Speaker 2: which is why I always like to sort of go

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Speaker 2: in with saying to an agent, well, I saw the

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Speaker 2: house across the road last year sold for one point

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Speaker 2: three and then the agent will say to you, oh, yeah,

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Speaker 2: but that was because it's not as beautiful as this property,

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Speaker 2: or it hasn't got the same orientation or whatever that

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Speaker 2: they'll come back and sort of counter things to you.

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Speaker 2: But I do think cold heart evidence of what prices

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Speaker 2: have sold for in the area you're looking at in

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Speaker 2: a similar time of the market is probably the most

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Speaker 2: you know, telling figure you can present back to an agent.

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Speaker 1: Funnily enough, this all comes back to doing your research,

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Speaker 1: doesn't it. It actually all comes back to everything that

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Speaker 1: we have talked about along the way throughout this podcast

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Speaker 1: about the fact that if you go and do your

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Speaker 1: research and see what the other sales have been in

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Speaker 1: the area, what properties have been selling for, and just

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Speaker 1: get a feel, go along to other actions and see

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Speaker 1: what the vibe and the mood is. Then all of

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Speaker 1: a sudden, when that agent hits you with that question,

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Speaker 1: when you walk through the front door, you have all

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Speaker 1: of the information at your disposal and can kind of

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Speaker 1: be a bit of a show off.

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Speaker 2: Enjoy that moment, absolutely, Michael. But I think also I

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Speaker 2: think that can just give you as a buyer potential

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Speaker 2: by confidence in whatever it is that you're going to

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Speaker 2: potentially transact and having those comparable sales or understanding how

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Speaker 2: much stock is on the market you're looking at. You know,

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Speaker 2: if there's only one house in that suburb up for sale,

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Speaker 2: there probably aren't that many options around. However, if there

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Speaker 2: are auction boards on every fifth house in that street

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Speaker 2: and you're seeing a clearance ration in that area sort

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Speaker 2: of taper off or something, again, you really can feel

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Speaker 2: quite confident, I suppose about the market conditions. Having said that,

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Speaker 2: an agent will undoubtedly respond to you and say, well,

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Speaker 2: there's a reason why this house doesn't qualify to that

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Speaker 2: price that you're trying to connect it with. And that's

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Speaker 2: obviously their job. Again, they're representing the seller and they're

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Speaker 2: trying to get the best price they can for that property.

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Speaker 2: But remember you were always in control of that offer.

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Speaker 2: And I guess, yeah, even if you say something, it

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Speaker 2: doesn't it doesn't necessarily mean you have to sort of

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Speaker 2: bind yourself to that.

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Speaker 1: Okay, what about though, when you are binding yourself to it?

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Speaker 1: And this is a slightly different scenario. Isn't it that

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Speaker 1: when maybe you've actually been you've been to a couple

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Speaker 1: of opens, you you've been through the house a few times,

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Speaker 1: and you have had conversations with the agent, so you're

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Speaker 1: well past that point of discussing price guides. They know

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Speaker 1: that you are an interested buyer, and then you get

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Speaker 1: a call from them saying, potentially, look, we've received an

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Speaker 1: offer from another party. What's your best offer.

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Speaker 2: This is when it gets interesting because an agent will

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Speaker 2: often say that if it's an expression of interest campaign

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Speaker 2: on this particular property, and they will also say it

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Speaker 2: in the case of a price of a house rather

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Speaker 2: that receives an offer prior to auction. And that is

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Speaker 2: why it's in your interest at times to be honest

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Speaker 2: with that agent, because if the agent thinks you're a

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Speaker 2: serious buyer, they'll call you and say that house you're

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Speaker 2: interested in bidding it on the weekend has had an

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Speaker 2: offer on it. It's a serious offer. Give me your

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Speaker 2: best offer. And that's when you've got to be ready

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Speaker 2: to go and make that very sort of decision of

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Speaker 2: do I say or do I go? Now? I think

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Speaker 2: you also need to think about you need to think

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Speaker 2: about the amount you can offer, and also think about

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Speaker 2: other ways into that negotiation, like are there extra things

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Speaker 2: you can tinker with to set yourself apart is that

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Speaker 2: saying here's my offer, it's unconditional, here's my offer. I'm

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Speaker 2: willing to negotiate with the seller's terms around settlement. Here's

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Speaker 2: my offer. I'm willing to, you know, to throw an

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Speaker 2: extra for the furniture in the house as well, you know,

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Speaker 2: like work out. I guess what's going on in the

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Speaker 2: mind of the seller to understand why they're so keen

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Speaker 2: to get that offer prior to auction or with it

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Speaker 2: with that hard deadline.

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Speaker 1: There's a few things in that that I want to

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Speaker 1: ask you about, but one of those is about kind

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Speaker 1: of the environment that we are in at the moment.

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Speaker 1: Is it the case that sellers might be more willing

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Speaker 1: to take an offer prior to auction because because there

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Speaker 1: is so much more kind of stock on the market,

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Speaker 1: and so that they're suddenly not so convinced that there

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Speaker 1: is going to be an absolute bidding frenzy if it

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Speaker 1: does go to auction, so they're a little bit more

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Speaker 1: open to receiving those offers in advance.

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Speaker 2: In some parts of the country, definitely, and in some

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Speaker 2: parts it's not the case. So, you know, just very

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Speaker 2: recently on the weekend, just going actually, we saw there

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Speaker 2: was a house that, you know, it was a lovely

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Speaker 2: renovated how this house had five very heated, hot registered

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Speaker 2: bidders on it. Someone made an offer prisal auction. The

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Speaker 2: agent got everybody sort of said what do you want

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Speaker 2: to do? The vendor said, no, we want to enjoy

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Speaker 2: our moment in the sun. And they clearly felt confident

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Speaker 2: about what they were taking to market for whatever reason

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Speaker 2: it could have. In this case, it was beautifully renovated,

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Speaker 2: but it could have also been just a great first

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Speaker 2: home buy a house, or it could have been a

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Speaker 2: great downsize or retreat style property. And so they decided

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Speaker 2: to take that property to auction. And I think for

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Speaker 2: a lot of sellers, they've also invested in the marketing costs,

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Speaker 2: they've invested in styling the house to sell it. They

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Speaker 2: also know that the competition that can take place at

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Speaker 2: an auction can really work in their favor. Having said that,

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Speaker 2: I can pretty much guarantee that had they not had

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Speaker 2: five registered parties on that auction or that deeply interested,

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Speaker 2: they would have accepted that offer. Prisal auction, So they

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Speaker 2: had that knowledge that the agent had been able to

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Speaker 2: sort of flesh out from those potential buyers, and in

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Speaker 2: the end they took it to auction and ended up

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Speaker 2: going some five hundred thousand over the offer of what

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Speaker 2: that person had made midweek. And the interesting thing wasn't

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Speaker 2: that case, Well, the person who had made that early

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Speaker 2: offer was were the ones that got the keys on

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Speaker 2: the weekend having said that they had to pay a

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Speaker 2: handsome sum to get to win that though.

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Speaker 1: They certainly paid a premium, didn't they. But I mean

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Speaker 1: it was worth a shot, wasn't it of going in

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Speaker 1: and making that offer in advance, because they may have

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Speaker 1: just been able to secure it for slightly less. So

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Speaker 1: say you, then you do get that call from the

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Speaker 1: agent and say that there's someone else that's made an

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Speaker 1: offer and it is a serious offer, and we want

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Speaker 1: to know what's your final offer. How do you come

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Speaker 1: up with a price? Because the big issue that I

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Speaker 1: can see here is transparency or a lack of transparency,

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Speaker 1: And as a buyer, you could feel really really uncomfortable

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Speaker 1: here not knowing what anyone else is offering, at least

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Speaker 1: with an auction you can see exactly what other people

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Speaker 1: are bidding. You might not know what their maximum budget is,

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Speaker 1: but at least you can see what they have bid

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Speaker 1: and you can come in over the top of them

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Speaker 1: as required. But it feels like there is a big

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Speaker 1: risk of potentially over paying, because hey, if you've got

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Speaker 1: one chance essentially to make an offer, you're going to

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Speaker 1: want to make sure it's one that will actually win.

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Speaker 2: Michael, You've hit the nail on the head. This is

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Speaker 2: the awful thing about that question. And it's also why

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Speaker 2: I'm not a fan of expression of interest campaigns, and

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Speaker 2: I guess not taking a property to auction because an

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Speaker 2: auction is completely transparent, love it or hate it, it

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Speaker 2: is transparent. With an expression of interest campaign, everybody is

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Speaker 2: submitting their best offer. You have no eyes on what

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Speaker 2: other people are even offering, so you sort of put

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Speaker 2: something in and think, do I go to my absolute

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Speaker 2: stretched do I just sort of go midway? And this

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Speaker 2: is what I think is really problematic about even that process.

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Speaker 2: So let me just say from the outset, you have

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Speaker 2: to really be fixated on getting this property, and if

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Speaker 2: you are, and if these are the terms of engagement

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Speaker 2: to bid for this house, to me, that really illustrates

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Speaker 2: that you are you are really rustled onto this house.

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Speaker 2: You're you're you're a devoted fan, what we call an

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Speaker 2: emotional buyer, and I think in that instance you would

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Speaker 2: basically go to your limit because what you risk is

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Speaker 2: that someone else, you know, just literally offers a few

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Speaker 2: grand more they win the keys. Because there shouldn't be

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Speaker 2: much too much negotiation at this point. It should just

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Speaker 2: be the best offer wins. And you should also ask

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Speaker 2: the agent like what are the term house is going

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Speaker 2: to play out? Like, are we're going to end up

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Speaker 2: having a boardroom auction, which is when the agent will

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Speaker 2: get everybody in the room and then you will thrash

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Speaker 2: it out like a street auction, but it's in a boardroom.

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Speaker 2: But in many expression of interest campaigns it is just

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Speaker 2: the best off of wins. There is no further negotiation

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Speaker 2: negotiating that takes place. So understand when I submit that offer,

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Speaker 2: will that be? Will that be final? And because often

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Speaker 2: the age until the seller is saying I'm done with this,

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Speaker 2: I want this just over and done with.

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Speaker 1: Okay, And it just comes back to that place where

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Speaker 1: we started, where it was the same as the question

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Speaker 1: that the agent was asking, when you were walking through

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Speaker 1: the door for the first time. In terms of what

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Speaker 1: do you think it's worth, what's your price range, what

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Speaker 1: kind of what's your budget. It is about knowing what

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Speaker 1: the property is worth by looking at the other sales

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Speaker 1: in the area and doing as close to a like

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Speaker 1: for like comparison as you can in terms of looking

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Speaker 1: at the same suburb, comparable streets, similar sized properties, all

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Speaker 1: of those things, so that you can at least it's

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Speaker 1: a very difficult thing to put an exact kind of

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Speaker 1: number on what that property is worth, but at least

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Speaker 1: you are not flying blind if you've done that research exactly.

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Speaker 2: And I think it also makes you look like a

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Speaker 2: more will not just look like you are a more

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Speaker 2: informed and intelligent buyer, which I think to the agent

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Speaker 2: will represent you to the seller in a way of

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Speaker 2: they're not going to budge here, they know what they're

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Speaker 2: talking about, because I think I think also that changes

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Speaker 2: the perception of you to that seller.

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Speaker 1: Can I ask you one final question, And I just

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Speaker 1: find this so curious, this tip that I read that

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Speaker 1: you should use odd numbers in your offer, which I

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Speaker 1: find fascinating because of course logically most people would say, Okay,

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Speaker 1: I'm going to offer one point two million or one

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Speaker 1: point three million, but if you come in and offer

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Speaker 1: one point two one or something like that, then hey,

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Speaker 1: you might just have just edged in front.

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Speaker 2: It's just that psychological trick, isn't it, of just of

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Speaker 2: someone thinking this person's going to keep going and going

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Speaker 2: and going, you know. And there's something about the odd

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Speaker 2: number that makes people just feel like it's a much

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Speaker 2: more precise way to do it, and or that they've

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Speaker 2: got an infinite budget. And I think and no one

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Speaker 2: wants to be bidding against someone who's in that category, but

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Speaker 2: that it illustrates that they're not hitting that celling at

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Speaker 2: one point two. That's it. I'm done, I'm out. It's

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Speaker 2: an interesting technique, isn't it. And I think there's something

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Speaker 2: sort of and I think there's also something thoughtful about

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Speaker 2: an offer like that, like you've sort of you've weighed

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Speaker 2: up the fact that, well, it does have northern orientation.

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Speaker 2: Maybe i'll put an extra thirty k on for that.

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Speaker 2: Then it you know, it doesn't have a crossover on

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Speaker 2: the driveway, I'll take thirteen thousand off of that. And

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Speaker 2: this idea that you really know your stuff and you're

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Speaker 2: you know, just flushed with knowledge and you're just not

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Speaker 2: going to be able to sort of be screwed around here.

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Speaker 1: I guess I love it because it also takes a

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Speaker 1: little bit of the emotion out of it. As soon

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Speaker 1: as you are able to put things into a spreadsheet

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Speaker 1: and actually go, okay, if this is worth this and

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Speaker 1: this is worth this, then it does kind of make

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Speaker 1: it less of an emotional decision and more of an

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Speaker 1: analytical one.

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Speaker 2: Yeah, it's like you become a professional valuer effectively, and

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Speaker 2: that that's how property valuations are done.

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Speaker 1: I don't think, though, Alice, that I'm ever going to

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Speaker 1: be comfortable when the agent asks me when I walk

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Speaker 1: through the door, what's your price range? I think even

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Speaker 1: after all of this, I think I'm still going to

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Speaker 1: go ah, and I'm just just looking for now. Thanks.

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Speaker 2: It's well, there are other people you can speak to

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Speaker 2: you about that, Mike. We'll probably like I'm sure they're

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Speaker 2: the lovelies psychologists to even help you gain confidence in

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Speaker 2: that area, because I think I think really that you

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Speaker 2: should feel quite empowered to do so, and I really

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Speaker 2: encourage you just just to practice on your kids and

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Speaker 2: just just crack on with it.

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Speaker 1: Yeah. Yeah, especially now that we've had this conversation. I

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Speaker 1: know exactly what to do. I should not be surprised

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Speaker 1: next time I walk in and the agent ask me

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Speaker 1: that question. Thank you very much, Alice.

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Speaker 2: Thanks Michael.

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Speaker 1: That was real estate expert Alice Stalt's national property editor

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Speaker 1: at Domain, and I'm Michael Thompson. Make sure you're following

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Speaker 1: the podcast and we'll be back next week with another

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Speaker 1: episode of the Property Pendulum, brought to you by Domain

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Speaker 1: and Fear and Greed, the podcast that tells you which

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Speaker 1: way the property market is going to swing, how to

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Speaker 1: make the most com