04 Aug Don’t panic. That is the worst thing to do – Ben Handler
Ben Handler, the director of Cohen Handler Buyers’ Agents, joins the chorus of those who are sick of all the talk about un-affordable property in Australia. He also has some excellent suggestions about how first time buyers can get in the market and a warning about the dangers of rushing in because you are fed up with missing out.
Kevin: We’ve been talking today in the show about whinging and whining about how unaffordable property is, particularly in relation to first-home buyers. Joining the conversation now is one of the co-owners, the director of Cohen Handler Buyers’ Agents, Ben Handler.
Ben, thanks for your time.
Ben: Thank you.
Kevin; We’ve had some pretty strong views expressed already about whinging and whining and what people should be doing to get into the property industry. How unaffordable is it really, Ben?
Ben: It really depends. I guess I agree in regards to people whinging that they’re struggling to save money, that they’re spending money on other things. However – we hear this a lot – while the market is competitive, it’s also very exciting and dynamic and rewarding at the same time for those who buy well. First-home buyers need to put effort into planning, into researching, into saving, and this ultimately will be determined by how serious the buyer is to find their dream home.
Kevin: Do you think we’ve play too much the hope game?
Ben: Absolutely. We define hope as really being reactive and not proactive. First-home buyers need to always be on the front foot and ready for change. The market is changing daily or even weekly, so they need to be ready to change their plan of attack. More importantly, they need to get really curious and start asking questions to the real estate agents, really being prepared, because there is a lot of uncertainty out there with what you can get.
Kevin: Help me with some of the questions they should be asking agents to get to the bottom of this.
Ben: For example, if a real estate agent has a property that’s scheduled for auction, a lot of first-home buyers forget to ask the question “Is there an opportunity to buy this prior?” Rather than waiting for that campaign to get to auction where the price, in most cases, goes up due to more interest, there’s always an opportunity to buy pre-auction. That’s also a good example.
Kevin: I guess one of the riders with that, too – and it’s not a condition, but it certainly should be something that every first home buyer should do – is make sure they do their homework so that they have a clear picture of the price before they start making pre-auction offers, Ben.
Ben: Yes, correct. That also comes down to just planning and understanding “Is this property achievable for my budget?” In most cases for a lot of first-home buyers, it’s not. They spend money on due diligence with their solicitor or their accountant or financial planner, and in fact the property is actually not in their budget at all.
Kevin: I heard a suggestion the other day from one of your colleagues actually – not necessarily in your company but he was a buyers’ agent – who was saying that first-home buyers should just totally ignore auctions because auction is a very dangerous way to buy property. I arced up at that because I think that’s some of the worst advice I’ve heard in a long time. You miss out on so many properties if you just ignore auctions.
Ben: Yes, it’s an interesting one. I guess sometimes it is good to take a property to auction to condition the vendor, especially in this market where vendors’ expectations of price is so high now as you can imagine, so sometimes it is good to bring it to auction to actually get the transparency of who are the buyers and what’s really going on. The real estate agents will tell you there are all these people interested, etc. Is it true? Who knows? An auction is a really good representation to understand what’s going on.
However, there is sometimes great opportunity to execute prior to auction – and that just comes down to asking the agent questions and really just getting curious as to what can be achieved.
Kevin: Do you think sometimes that first-home buyers risk buying the wrong type of house or even paying too much because they don’t do their homework?
Ben: It is very common. We see a lot of first-home buyers, really due to frustration, they start to settle for something that’s not really even part of their original brief. They get beaten down from missing out on properties, missing out at auction, from just spending too much time on the weekends and not finding the right property, and they begin to settle for what they really don’t want. We see that a lot.
Kevin: I wonder sometimes – and we touched on this earlier in the show, too, Ben – whether this is just a generational thing where first-home buyers or young people are genuinely looking for something more than what they can actually afford. In other words, their requirements are outstripping their capabilities.
Ben: Yes, this is very common, and as I mentioned earlier, at the very beginning, they get it wrong. [4:40 inaudible] for a property that’s actually not within their budget, and that’s where they get it wrong. Or they might see a sale that happened in that suburb six months ago for their budget but the market is moving so quickly that now it’s unrealistic. So yes, we see that a lot.
Kevin: Just in closing in the minute or two we have, could you just give us the best pieces of advice you have for first-home buyers to get into the market?
Ben: There are three critical things. One is prepare and have a plan that is actually realistic from the beginning. That is critical. Number two, they need to take full control and full ownership of the process, and that comes down to really educating themselves, getting good at asking questions of the real estate agent, etc. The third we see is resilience. You need to prepare yourself to miss out. It’s going to happen, and we see a lot of first-home buyers get broken as a result. They’re the three things.
Kevin: That third point you make there leads a lot of people to make fairly big decisions rather rapidly that could lead them down the path of making the wrong one – in other words, “I’m just fed up with this. I have to buy something,” and they’ll go out and maybe spend too much.
If I can just take you back to the first point, which was you said about making a plan. Who should be involved in that? Tell me the sorts of people we should be talking to to help get that plan together.
Ben: Here at Cohen Handler, we have a designated program to help first-home buyers, and that’s really about formulating this plan to actually understand “Are your expectations realistic?” And that’s mission-critical, number one. Can you actually afford to be in this area? And if not, let’s pivot and change, and make it realistic.
Kevin: Ben, it’s been great talking to you. Thank you very much.
The bottom line, I guess, is to do your homework, do your research, be prepared to maybe go down a few dry gullies, but stop whinging. Is that the message?
Ben: Absolutely. Stop whinging and put effort into preparing.
Kevin: Good on you. Ben Handler, CEO of Cohen Handler Buyers’ Agents. Thanks for your time, Ben. Nice talking to you, mate.
Ben: Thank you very much.