Highlights from this week:
- A buyers agent guide to the ‘go to’ internet sites for researching the market. Cate Bakos lists her favourites.
- E-settlements have been available in New South Wales since late 2014. The exchange of electronic contracts was made possible in 2015. Fast forward to today and, as you will hear from the property lawyer who made history with Australasia’s first fully on-line transaction, it is bounding ahead.
- The property cycle – what makes the cycle, where are we at, does it change, and what impacts it? Damian Collins gives us an insight.
- Suburbs that are offering the best renovation properties right now. But you need to find a gem. Kent Lardner tells us how.
- How the growth of REMAX in Australia was smashed by the GFC.
Overcoming analysis paralysis – Cate Bakos
Kevin: Buyer’s agent Cate Bakos joins me to talk about the research tools that she uses to help her identify properties that she can recommend to her buyers or her clients.
Cate, lovely to have you on the show, and welcome. Nice to be talking to you again.
Cate: Great to back, Kevin. Thanks for asking for me.
Kevin: So, that is the challenge. I asked you if you could tell me a few of the sites you look at or where you go to get your data. Just let me position it up-front by saying that I think there is so much data. Sometimes we can go into paralysis by analysis, just analyzing too much stuff, Cate.
Cate: Yes, you are absolutely right. I meet so many people who get themselves into a real spin. There’s conflicting data and there is a lot of data out there, and deciding on which data segments you would like to rely on and how you need to extract data in order to make a judgment call is really important.
Kevin: Yes, so where do you start?
Cate: Obviously, the portals that are advertising the properties are a great start, and they have come a fairly long way, so we wouldn’t just rely on a search engine on its own. But we can certainly extract a lot of data, particularly when we look into the sold section and when you segment properties by type or by street, and we can see what has been selling and get a really good feel for the stock levels that are out there, the prices that they are achieving, the rents that are being asked, etc. So, they are obviously, the first port of call.
Kevin: I know there are a lot of other sites around that have some really good detailed data, and they analyze it quite well, but you are exactly right; REA, Domain, places like that, to get a feel for a demographic of an area, how long it is taking to sell, and list prices to sale prices. There’s some really good data on those sites.
Cate: Yes, without a doubt, and they’ve worked out how to make it quite user-friendly, and people can really navigate around quickly when they get to know the search engine.
Kevin: What are some of the other sites that you go to, to get a little bit more detailed information, Cate?
Cate: Yes, it’s a good question. ABS is my rock-solid port of call, and you have to have a lot of time to pour over the Bureau of Statistics website because there are so many ways that you can cut that data. But if you know what growth drivers you are looking for and you know what rate of change information you are trying to check, you can get a lot out of that with some careful planning. So, ABS is a favorite of mine, but it is a really serious site to try and navigate around.
Kevin: Yes. Some of the others?
Cate: We have our own industry portals. In Victoria, we have the REIV, and I know that each state has their own portals. And there is some really good data on those portals, and they have got heat maps, they have capital growth rates, quarterly reports. You can get lost in one of those sites for hours on end. And it is almost in real time, so I think we can’t go past those sites, as they are readily available to members.
Kevin: Yes, they are, the institute sites. There is an institute for each state. Do you have to be a member to get that detailed data?
Cate: You have to be a member to get the most detailed data, but it certainly does offer data for the general public as well. And it’s great data. I think anyone could have a look on there and agree that what they’ve enabled the public to have access to is really useful.
Kevin: There are some data sources that we know of that are quite public, like CoreLogic, or as it used to be known, RP Data. There is PriceFinder. There is a number of others. Do you use them as well?
Cate: Yes, in combination, I will use those. There is another one, On the House. When you run all of that data into them, you crosscheck various properties against each other, and have a look at the different ways that data is reported and cut, you can see growth rates that might be over differing periods. And so, when you are compiling your findings, you get a great overview if you can bounce around between all of these sites.
Kevin: There is another one, too – it comes out of Melbourne – that I know you’ve had a look at that’s now a national site, and that is called View, or it used to be known as Real Estate View. They have some great data, and their Kent Lardner has been a guest on our show on a number of occasions talking about what they look at. So, once again, I put those beside the REAs and the Domains in terms of some great information that you can get.
Cate: Absolutely, it’s a very clever site indeed.
Kevin: Can I just ask you about CMAs, competitive market analysis. These can be very heavily manipulated, can’t they?
Cate: I don’t like these at all, Kevin. You’ve hit a sore point with me. I think that people assume that they can be relied upon, and without understanding how a comparative market analysis report is put together, it can fall into the wrong hands and be a very dangerous piece of paper.
It’s an algorithm and it’s a combination of five different factors, and if there are any data integrity issues – so, for example, the land size isn’t actually reported for one of the key ingredients, or perhaps a bedroom has been listed as the incorrect number, or the maybe the property has undergone some refurbishment or even a really extensive renovation – the computer does not know that.
I’ve seen many buyers going out to the market, armed with the CMA that a friendly well-meaning broker or accountant has generated for them, and they already have the wrong idea of value in their head. And it’s because they have not cross-checked it, and they might find that the report suggests that they could secure a property within a $430,000 to $470,000 price interval , and we look carefully at the property and realize that it is just over $600,000.
I am referring to a real-life example, just from a couple of weeks ago, and the integrity of the data was lacking, and the client didn’t know any better and didn’t understand how to carefully cross-check that data and see if it was, in fact, a reliable report.
Kevin: Yes, I get a bit frustrated. I’ve seen some television ads for a major bank touting their desktop valuations, all done on that CMA-type algorithm, and touting these as being an accurate way to work out what a property is worth. Really, by and large, if you really want to know what a property is worth, you should get a property valuer.
Cate: Yes, I agree. And have a look at some recent comparable sales if you are not wanting to stump up the costs for a valuer. You have to look at these properties yourself and understand the size of the dwelling, the size of the land, whether the location is superior or inferior or comparable.
There’s a lot to look at behind the scenes, and buyers who are familiar with an area and familiar with other properties that are selling, comparing to what they are looking for are actually a pretty good judge of appraised value themselves because they are looking at a segment that is very tight and they’re becoming specialists in their own area. So, they shouldn’t discount their own ability to understand price and to not rely on an algorithm like this.
Kevin: Very, very true. Great advice. Cate, thank you so much for your time. Always great talking to you. Cate Bakos from Cate Bakos. The website, is it just CateBakos.com.au?
Cate: That’s right. Thank you, Kevin.
Kevin: Too easy. Okay. Good on you, Cate. Lovely talking to you. We’ll catch up again soon.
Cate: Thanks so much, Kevin.
Technology makes settlements easier – Claire Martin
Kevin: Property lawyer Claire Martin, who heads up the property department at Kreisson law firm, embraces PEXA technology, electronic settlements. We’ll talk about that because that is what the interview is all about. Claire made history last year, by completing Australia’s first fully electronic property sale. The exchange of contracts and property went fully online. Claire joins me to talk about that and what’s happening with electronic settlements generally.
Claire, welcome to the show, and thanks for your company.
Claire: Thank you for having me, Kevin.
Kevin: How did that settlement go? Tell me about how it went.
Claire: It was an arduous task. It was something that I had been trying to do as part of research for my masters, and I ended up having to sell one of my own properties. That way, I could dictate to the agent and dictate who they sold the property to and ensure that the purchaser’s conveyancer was onboard with PEXA.
Kevin: It’s pretty ground-breaking stuff, isn’t it? Let me just give a little bit of history here. E-settlements have been available in New South Wales since late 2014. The exchange of electronic contracts was made possible in 2015. Fast forward to today, 2017. Where are we with all of this, Claire?
Claire: It’s bounding ahead. We can now generate hundreds of contracts in under an hour. We can now settle hundreds of settlements just at a click of a button. Once the technology was perfected from, I think 2015, the first couple of contracts were exchanged electronically. Then, in June 2016, I managed to get the settlements and the exchange totally paperless and digital. And now, we can generate high volumes of contracts for off-the-plan purchases that can be exchanged and signed electronically.
And then PEXA has recently released PEXA Projects, which means that when acting for a developer as the vendor, we can just upload an Excel spreadsheet and say “This is the property we are selling. These are the people who are buying those lots. These are their solicitors. These are the prices,” and it just pre-generates hundreds of workspaces.
Kevin: I would imagine, just listening to what you are saying here, that the bottleneck probably is not with the consumer. Would it be more with real estate agents, with other lawyers who are resisting this type of move? Is that fair comment, Claire?
Claire: It is a fair comment. We’ve been actively educating fellow practitioners and different agents, whether they are project agents or just day-to-day suburban moms-and-dads sort of sales, and a lot of them have not even heard of PEXA. So, there are some who are ahead of the game, there are some who are… Especially with practitioners, I know of at least a dozen practitioners who have retired because they don’t want to learn a new trick.
Kevin: You’re on record as claiming that the legal profession is slow to embrace new technology. I guess this is a classic example. Why is that, do you think? Are they scared about this?
Claire: Well, the government keeps on putting more risk on the legal profession. So, things like we now have to verify the identity, so if a purchaser is not who they say they are and they’re committing fraud or forgery, those sort of things are put back on the legal profession. There’s also the foreign capital gains withholding tax. There’s a whole heap of things that are making conveyancing a lot more difficult.
I’m not sure whether the government sort of said “Oh well, if PEXA is going to be limited to conveyancers and property lawyers, let’s get them to do all our tax collecting and information checking,” because the job has got a whole lot harder in the past year, and people are not charging a lot more for hours more work.
Kevin: And therein lies the problem, doesn’t it? A lot of these conveyances were done by conveyancers, not necessarily lawyers, and that is why they were able to keep those fees so low. So, if it is all of a sudden, becoming a lot more technical and you guys have to collect taxes, is there is a likelihood that settlements and conveyancing is going to become more expensive?
Claire: I doubt it is.
Kevin: You don’t think so?
Claire: By doing it electronically, you are saving a lot of time.
Kevin: That could be the answer, yes.
Claire: There is a lot more transparency between the parties, you are not sitting on hold to the bank for hours trying to book in a settlement. I think it was reported that 25% of settlements fell over because of human error.
Kevin: That’s right.
Claire: If these human errors are being eliminated before settlement even occurs, then you would think that the time saved is going to make things cheaper.
Kevin: State governments have mandated that electronic transactions need to be in place within the next two years. Is that realistic?
Claire: Yes. Western Australia is kicking it off. They’re going to be the test guinea pig for the country, and New South Wales and Victoria will follow shortly after. Queensland had a form of electronic conveyancing for many years, so it wouldn’t be too big of a change for them.
Kevin: I hear all the time that people are concerned about online transactions and security and so on. Is that a concern? Is that something we need to be concerned about, online fraud?
Claire: With PEXA, it is overseen by the Reserve Bank of Australia, so if a hacker is going to hack the Reserve Bank of Australia’s security, what chance do we have?
Claire: I’m pretty sure the majority of people who have superannuation hold some shares in some company. I have said to people, “Have you ever seen your share certificate? Have you ever held the paper document?” Even people who own houses, it is like “Have you actually held the paper document?” It doesn’t actually make much difference to the consumer. We’ve been living in a digital economy for many years now.
Kevin: Yes, we have just got to get used to it. Okay, great talking to you. Claire Martin is a property lawyer. She works with Kreisson.
Thank you very much. Congratulations on your ground-breaking work. Keep it up, Claire.
Claire: Thank you very much.
Where is the property cycle right now? – Damian Collins
Kevin: Look, we all know that there is a property cycle, but let’s try to get a bit of a handle on what makes the cycle, where are we at, does it change, and what impacts it? To answer some of my questions about this, Damian Collins joins me from Momentum Wealth in Western Australia. You can catch them at their website, MomemtumWealth.com.au.
Damian, thank you very much for your time.
Damian: Glad to be here, Kevin.
Kevin: Demystify this thing for me, the property cycle. What’s a cycle in period of time?
Damian: Kevin, the property cycle is generally over a longer period of time – anywhere from 5 to 12 years – and during that cycle, you will have periods of time where property demand is outstripping supply and then you will have periods also where supply is outstripping demand.
One of the big important things with property is it takes so long for a product to come to market. If you want to provide more properties, developers bring them to market. By the time they get them through planning systems and so forth, it’s a couple of years, and that’s why you can have then, periods – like Sydney and Melbourne, particularly in the last couple of years – of seeing a shortage of stock and that has caused their prices to go up. Conversely, in Perth particularly, but to a lesser extent Brisbane, we’ve seen an oversupply in the mining era. That has caused too much supply, and that has caused their prices to stagnate or even decline.
Kevin: There is no one property cycle. We’re all at different stages in different parts of the country, aren’t we?
Damian: Definitely. You would suggest that Melbourne and Sydney, if you look at the old economic clock or the circular clock, they’re towards their peak of their cycle, if not at the peak, and Brisbane and Perth – and particularly Perth – are at the bottom. Brisbane really hasn’t done much in this last cycle, so I think that has still got some legs.
But also, Kevin, interestingly, even different types of property within a market can have different cycles. In Perth at the moment, some sectors are running very strongly; other sectors are running very softly. In Brisbane, we’ve certainly got oversupply issues with apartments but general houses are still going okay.
Yes, there’s not one property cycle across the country, and even in a particular city, there are different cycles within the property market as well.
Kevin: When you are looking at investing for the people who work with you, is the cycle one of the things that you look carefully at and try to pick where a market is and where it is likely to go?
Damian: Definitely. Look, when you’re investing in property, generally, for our clients and most people out there, for passive investment, you’re looking generally at a ten-year time frame. So, the first point is to go down to what are the best locations that are likely to out-perform over a ten-year period? We have a number of cities, four major cities in Australia, that have the demographics, the population growth, the industries to sustain long-term property price growth.
But then, from there, you start to look at where are they in the stage of their cycle? For Sydney and Melbourne for the last 18 months to two years, they have been getting towards the top. Who knows exactly when that is going to finish. Obviously, Brisbane has gone up a little bit, and Perth has actually come back a little bit over that last 12 months. So, you do certainly look at that.
I guess it still comes down to investors’ confidence. A lot of investors still like to stick with their home city. And if you have got a ten-year horizon and investing in Sydney, Melbourne, Brisbane, or Perth, I think you are going to do pretty well, but it is nice to get that free kick of a nice 15-plus percent upswing if you get in early enough in the cycle in that particular city.
Kevin: Yes, I guess you wouldn’t be terribly concerned about the cycle if you were really in the market – not trying to time the market necessarily but just spending time in the market, Damian?
Damian: That’s right, Kevin. I’ve seen a lot more money lost by people trying to time the market than by buying at the wrong time, particularly again, in major cities. Obviously, a difference in regional areas where they can be far more volatile, but in major cities, I’ve seen people hold out and go “Oh no. I will wait for it to drop.” Well, property doesn’t often drop, and when it does drop, residential in the major cities doesn’t generally drop a substantial amount. I have seen people wait and wait, and they end up often doing nothing, and they miss out potentially 30% or 40% growth over a cycle.
Certainly, everyone wants to buy at exactly the bottom of the cycle and sell exactly at the top. It’s just realistically not likely to happen, and the best thing to do is when you’re ready and comfortable, as long as you have a long-term horizon and do your research, look carefully and get into the market.
Kevin: You have mentioned earlier in our chat that supply and demand is a big indicator. Is that, in fact, one of the major indicators about what’s going to happen on that clock?
Damian: It definitely is. Your demand is driven by population growth. That is the big one, and that’s one of the reasons why Melbourne is strong – their 100, 000+ population growth a year. Sydney is not far behind.
So, you have population, but to get the population growth, you need strong industries. The mining cities did very well in the mining boom. Obviously, that has tapered off, but actually, the mining sector is starting to recover again, so we’re starting to see marginal changes in population there.
So, you need the population growth, the industries, but of course, as I said earlier, the developers start releasing more land or bringing more apartments to market, but because there is such a long time period, often by the time they’ve built them, the cycle could have changed.
But I think one of the big things is an intangible one. It’s not just about number of houses and jobs; it’s confidence. Sometimes you do see people, particularly when they’re in that particular market, the confidence is perhaps over-optimistic or too pessimistic. It’s very much human nature; we tend to look at most recent history. People in Sydney and Melbourne at the moment, probably think it is going to keep going up forever, and people in Perth have the negative mentality, “Oh, it’s never going to go up again.”
History shows it always recovers and always peaks again. It’s been doing that for hundreds and hundreds of years, and it won’t change because that’s the nature of humans.
Kevin: Always good talking to you. Damian Collins, from Momentum Wealth. Thanks for your time, Damian.
Damian: Pleasure, Kevin.
Finding the best renovation suburbs – Kent Lardner
Kevin: Kent Lardner from View.com.au, joins me once again.
Kent, I want to talk to you this time about renovations and renovation suburbs. What makes a good renovation suburb, or is there such a thing?
Kent: The call out for me is always know what your renovation costs are upfront, so you start with that and you get that out of the way. What we’re finding statistically is a lot of the higher value – so you look at the higher median price suburbs – they’re often the ones that are best to renovate if you can find the gem. The gem being a smaller house or an unrenovated property, because typically, these houses in the wealthier locations, they’re significantly more expensive and a lot of people may not seek to want to live in something and renovate it.
If you can find the smaller house or the unrenovated house in a lot of these more expensive areas, from a statistical perspective, they’re the ones that uncover the greatest capital gain.
Kevin: Would the same apply to units?
Kent: Units, for us, is a little bit more of a challenge, because obviously with houses, we can do what if analysis of plus one bathroom, plus one bedroom. With units, it’s a lot harder obviously to do that.
Typically though, we’re finding increasingly now, a lot of these well-placed older units are being renovated, and you can look at what they have been acquired for or what the unrenovated ones come on the market for, and compare those to the ones that have been renovated, and there’s a lot of market activity in renovating older units in prime locations in and around the city.
Kevin: If you had a choice, would you prefer to renovate a house or a unit, and why?
Kent: That would depend on my use case: what’s my objective? Is it for owner-occupied? Is it for a quick buck, or is it to keep long term? So, you’d really have to identify what your scenario is.
I would almost say if the objective for me is to try and unleash the greatest capital value, there is no single formula; it’s about finding the property. It’s about the right property, at the right time, regardless of location.
Kevin: In a renovation project, are there areas that will generate a bigger bang for buck – as in a bedroom or a kitchen, or an additional bathroom?
Kent: Yes. We do a lot of this. We measure this and store these values in each location as a co-efficient. We mentioned that in an earlier episode. Typically, we store a price for every one-unit change in a bedroom, or a price per every one-unit change in a bathroom, and we look at these locations, and usually, as expected, the highest values are those wealthier suburbs where prices are higher. So, that is a given.
Certainly, those locations where I can find that one-bathroom property in an expensive location and add that bathroom, that’s traditionally going to give me the greatest return for the extension. Absolutely.
But then again, you can find other houses that are under-valued. What we traditionally do – and we’ve been doing this a fair bit in recent months – is we’ll find properties that have been listed for sale, and what we do, is we’ll match up, through a matching algorithm, the three best comparable sales.
Typically, the algorithm will pull back properties based on time and distance and size, and we’ll have three comparable sales that are served up and matched to a listed property. We’ll take that listing price, we’ll compare it to those three other properties, and if those three other properties are all higher in value than the listing price, we say this may be a bargain. What we do then is we list these down and we go and look at them, and we say, “Yeah.”
Typically, what we have found is we’re listing these down, we can produce hundreds of these each week, we go and look at them, and then what was this process is doing is, obviously, uncovering those renovators’ dreams, and some of them, truly you can see, just be looking at a few tiles and a bit of a paint job, it truly, truly is an opportunity.
Kevin: How can we access these properties?
Kent: At the moment, we’re just producing them bespoke, as a media article for a bit of fun. Obviously, in the coming months because we are getting such good feedback, we’re looking at actually making it ongoing service and adding it as a product of View.
Kevin: We should make that available through Real Estate Talk, I think. That would be a great idea.
Kent: I think we can do one of those in the next week or two, Kevin.
Kevin: That should be fantastic. Hypothetical now, I’m doing a renovation. I’m thinking about adding an extra bedroom. Is there a tool that you could point me in the direction of that will indicate to me, if I add another bedroom to this property, what will it do to the value?
Kent: Visit View.com.au. There’s a link there that says Property 360. From that, you can enter in your address and find your own property. We have a landing page for every house in the country, every address in the country. You can then look at that; it’ll present a tool that allows you to change the bedroom count from, say, two to three or three to four, or change the bathroom count. And then once you make those changes, hit Submit, and that will serve up a new price estimate and also serve you up comparable sales.
From that, then you can cycle through and pick the best three matching sales that are based on either (a) the way the property is today or (b) the way you think the property will be after you renovate, and that gives a great idea of what the likely price will be.
Kevin: Okay. That website again is View.com.au, and from there…?
Kent: And follow the link to 360.
Kevin: Thanks, Kent. We will talk again soon.
Kent: Thank you, Kevin.
The rise, fall and rise of REMAX – Michael Davoren
Kevin: Michael Davoren is with me in the studio. Michael is the managing director for RE/MAX Australia and New Zealand.
Tell us the history of RE/MAX into Australia.
Michael: RE/MAX generally is only a very, very new company in world terms as well. It’s only been around for 44 years now, but in Australia, about 20 years. You know, you hear the football commentator say “It was a game of two halves.” Well, RE/MAX’s story has been a game of three thirds, really.
When it first started, as you know with other companies, it really did take off. It took off immeasurably. It was very strong. A lot of the established agents joined. And then all of a sudden, whilst it was very fast growth, it was very quickly followed by the GFC, and that smashed it for a while.
Kevin: Explain the business model for those who don’t know.
Michael: The pure RE/MAX model is a model where good agents are paid a very high split of the commission. They run their own businesses. We have what we call conjunctional agents now. We don’t use the term because it’s nothing like an independent contractor anymore. We have changed all of that. But it really is people owning and running their own businesses within businesses.
Kevin: Yes, the consumer generally wouldn’t see the difference, but internally, the difference is quite massive, isn’t it, because RE/MAX gave agents the opportunity to truly run a business within a business for the first time.
Michael: Absolutely. And where a lot of the growth for RE/MAX in Australia has come from as well is they’ve grown businesses within businesses, and then eventually the right ones – and that would still be a small percentage of agents who are appropriate to – go out and have their own business.
There has been some good growth, but the numbers did fall away after the GFC there for a while, and when we took over about five years ago, we had to turn that around, and we have turned that around. We’ve now got good growth, but the models have changed.
There’s a lot more variation in the models now, not just one RE/MAX model. There are all sorts of models. We have totally traditional offices out there. The bigger agencies now concentrating on conjunctional agents.
Kevin: Interesting, too, because the introduction of RE/MAX actually brought about a number of changes in existing operations. Some of the major franchise groups have diversified as well. They have similar models inside their model.
The commissions for the consumer haven’t changed, so therefore they don’t perceive a difference. But as I was saying earlier, the difference internally is quite large. It gave good agents the opportunity to start to run their own business and earn more of the commission.
Michael: Yes. But it has also given them the opportunity to build their own brand, to create their own environment, to employ their own staff. There are a lot of advantages to it. The real estate industry has seen an increase in competition. I think the consumers have seen some benefit in that.
I think when the consumer is looking for – and this is a hard thing for them to do – the right agent, I don’t think it should only be based around what the fee is. I think that it’s really important that sometimes the cheapest agent can be the most expensive when it comes to ability to negotiate and the prices that are achieved.
I think, overall, the industry has become far more professional than what it used to be, but I think that there has been some evolution, and I think that that’s one of the things that’s going to stand very strongly for the real estate industry as the different models come in, all that sort of stuff. I think that we have evolved as an industry.
Kevin: Will there be a change in the models, do you think?
Michael: Yes. There will always be new models come in, but the traditional model will stead fast for I think a fair time to come. But it’s very important that the real estate agent doesn’t get so wrapped up in technology that they forget that it’s a relationship business.
I can remember when I first started my real estate career many decades ago. I started with my father on the Gold Coast, and he used to make me walk with him to the post office every morning. It used to drive me crazy to be honest, because it used to take so long. But it was all about people wanting to talk to him and him wanting to talk to people.
That has to come back into the real estate business. I think we got a bit carried away with who can build the biggest database. Yes, you have to have a good database, but you have to have people out there who really do know you, not just know of you.
Kevin: That’s a great lesson, not only for real estate agents but for all businesses, because they talk about how big their database is, but how well are they interacting with that database?
Michael: Yes, and how many of the people on that database are actually advocates for them? As a topic of discussion, real estate is probably one of the most popular discussions. Even in a social atmosphere, people want to talk about real estate. And if people are talking about real estate, a good real estate agent is the one whose name has to pop up, and they’re the ones who will really survive and thrive in the real estate business in the future.
Kevin: Yes, it’s a very interesting topic, and I can imagine… I know we have a lot of agents who listen to this who hopefully are getting the message that so many agents have got good databases, they just don’t know how to communicate with them, so they just simply push out their listings – “This is my latest listing,” or “Here are all my listings” – thinking that that’s actually what consumers want.
But it’s not. They actually need information. They need “Tell me how to get through this transaction when it’s time for me to do it.”
Michael: Yes, and it’s the same with all sorts of stuff that real estate agents have been doing, be it door knocking, be it letterbox dropping. They have to understand that people will put their properties on the market when they’re ready, not just because a real estate agent needs a listing.
It’s the communication that goes on right throughout that period of time until that time comes when they do want to think about selling, and that agent’s name has to be the one that comes up in their thinking, in their discussions on who they’re going to use.
Kevin: Yes. This has been the big change, and you touched on it, that the move from the agent being transactional to being relationship and understanding that the houses are inanimate, they just stay there; it’s the people who move in and out of those houses who are the real customers.
Michael: Absolutely, and a good agent’s strengths are in the marketing of that. You have to be able to talk about the asset itself, but you have to be able to understand that the buyers who are there are eventually going to be sellers, and so the relationships have to start there and have to be genuine.
And the same with the sellers. We are appointed by the sellers. I’ve met thousands of real estate agents over my years in real estate, and I think the vast majority of them genuinely do want to try and do the right thing by their sellers and buyers.
Kevin: Absolutely. Michael, all the best. Michael of course from RE/MAX. Thank you very much.