#18: How a Buyer's Advocate's Role Changes Through Different Markets

[00:00:11] Melbourne will be hot throughout the day reaching a high of 38 degrees with a late change and possible thunder in the evening with a forecast low of 17 degrees. First time, second time, third and final time, it's solved!

[00:00:35] Hello Melbourne! I'm Lisa Parker and together with Cate we are bringing you a dose of our property market in detail. I'm Kate Bakos. Lisa and I are both Buyers Agents who work on opposite sides of the Melbourne market and we've clocked up over 40 years between us in the property industry. Join us each fortnight to hear some exciting stories from our coalface, market trends and some juicy auction updates. This collaboration has been a long time coming. We hope you enjoy.

[00:01:07] Hello Melbourne and welcome to the Melbourne Property Hour. I'm Kate Bakos. I'm joined with Lisa Parker and today we have a bit of a treat. We're talking about how the role of a buyer's agent changes based on market conditions and well whether we're in a buyer's market, a seller's market, a recovering market, a market that's facing some headwinds.

[00:01:29] There are lots of telltale signs but also we're just lifting the lid and sharing a little bit about what goes on in our world when markets change. Yeah, it's actually really interesting isn't it? Our work is completely different from a peak market to a softening market and more importantly the reasons why people hire us changes a lot in both of those markets.

[00:01:54] If we start off I think looking at a peak market which things were really amping up and getting quite hot last year and so we can reflect pretty closely to that. Do you want to chat about some of the firstly maybe we'll just dive into a little bit about how our world looks in terms of our workflow and how we're having to manage our time and our clients work during a really busy period

[00:02:22] and then maybe we'll jump in and talk about how the agents change the way that they're working with us as well. I think that's a great start. For a lot of people they think about a buyer's advocate and they imagine us walking through properties. You know we spend all our time on the road and walking through gorgeous houses and doing a little video here or there and negotiating being on the phone. In fact it's far from it especially if you're more than just a buyer's agent, you're running a business.

[00:02:49] So we're both principals of teams and we need to manage the clients that we're working with, the work that we're generating with those clients, the due diligence, the agent conversations, the negotiations and then of course all of the, you know, the psychology chats that you have to have when the client texts you and says, oh look we're a little bit nervous, can we have a meeting with you tonight? You drop tools, you do it. But aside from the work stuff, you've then got your staff, you're managing your staff, you're giving them directive,

[00:03:16] you're making sure that you're having, you know, really good reviews with them so that they're growing and experiencing what you want them to at work. But you also have to be driving the business. So we are marketers, we're sales people, we're HR specialists, we are buyers agents, we're psychologists and then of course we're friends and we're mamas. So there's a lot that goes on in our day but the percentage, you know, the pie chart of talking to people that are in your pipeline, growing your pipeline,

[00:03:45] onboarding clients, working with your current clients, servicing your clients that have just settled, you know, the post sales stuff as well. That pie chart mix, it does vary depending on the market that you're in. Yeah, I think you'd probably agree Kate that when we're busy, I dare say that 95% of our effort is put towards client acquisitions as in buying properties for people.

[00:04:14] Because when we're in a heated market, what we find is that properties either don't even make it to market or they hit the market and they sell after the first open for inspection. And so our focus when we're working with our clients is firstly uncovering the really good opportunities. Secondly, convincing the agent to let us in first.

[00:04:38] Thirdly, trying to stop it from going to the market because in those market conditions we can typically pick up a property at a better price off market than we can on market. Yeah. And then fourthly, rearranging our calendars and our schedules to get in to view a property at the whim of the agent because in a peak market, we're on the agent's timeframe.

[00:05:02] They're calling the shots, they've got control and we need to use our best negotiation skills to regain a little bit of that control, but we need to play it, play by their rules essentially in that market. And by doing that, we can get our clients the best outcomes. Let's talk about how that agent behavior manifests. You know, what does it feel like when it's a hot market and the client loves the property and you've got to get through it really quickly? How does the agent phone call go compared to a quieter market?

[00:05:32] You know, we had a lot of interstate advocates coming into the market last year when it was really busy. And I know from agents that they would say that they were getting 20 phone calls a day from people that they didn't know and that it was driving them a little bit crazy because they were asking the agents a lot of questions that they should have been able to ascertain themselves as professional buyer advocates.

[00:05:55] And I think the key point there is that we need to have really good relationships with the agent so they'll pick up our phone call during a busier time because they won't pick up the phone if they don't know you.

[00:06:10] And it's really challenging in the first instance just to get hold of the agent because their phone is ringing nonstop all day with inquiries and they could put a property online and be slammed with 30 calls in one day as soon as a property goes online. So I think that's one of the key differences is firstly getting onto the agent. But the second thing is we have to get on and off that phone call really quickly. It's not a time to build rapport.

[00:06:39] It's not a time to chat and ask how the wife is, how the kids are going. You know, none of that sort of stuff. It's all about efficiency and making sure that we're not taking up the agent's time. And even texting instead of phone calling, you know, in those markets. Ringing the agent can't get through, text them. And they appreciate the text rather than the phone call. Yeah.

[00:07:04] I think about, and there's one agent that I do a fair bit of business with over here in the West. And when it's busy, who's really fast on the phone? Kate, Elphin Street, in or out? Great. That phone call is over in three seconds. We both appreciate it. Like both sides appreciate it. Yeah. What other things do you think changes with the agent's behavior and our access to properties or access to getting properties?

[00:07:33] So agents will want to showcase a property and run it all the way when their pipeline isn't full. Because their opportunity to meet prospective vendors, you know, someone who will purchase and then ultimately need to sell, or just meeting and greeting people at the door and making a good impression or having a great auction and looking like a star and then you've attracted prospective vendor attention.

[00:07:59] They can do that most effectively when they run it all the way. But when they're super flat out and their pipeline is chockers, they will be really happy to sell some properties prior, particularly if they're running out of available weekends for auctions. And I know this is obviously the Melbourne Property Hour, so we're talking about a Melbourne-centric market. But come October, November, agents will show you a new listing and they'll say, if you like it and you're at Circa X, I'll do something prior.

[00:08:27] And that's not necessarily because they can't get a great result for their vendor. In fact, we need to accept that we'll probably face a boardroom auction and have competitive bidding. But that agent wants that diary piece out of their diary because they can free up the weekend for other opportunities or negotiations or auctions. That's a really good point.

[00:08:49] And I think sometimes we've got agents who will want to run things because it's the very best thing for their client because they believe they'll be able to extract the most amount of money if they go on market. And then you've got agents who love doing off-market deals and they're more about volume and deal making than they are running things through to the market. Like I know a few agents who, one agent I think does probably 90% of their work off-market.

[00:09:18] Another agent I know I think does probably 60% of their work off-market. And so it just comes down to the agents. And then I know other agents who will 100% run everything through under most circumstances unless there's a sensitive, you know, home situation with the vendor. And then they might pivot to an off-market but otherwise they're running everything through to market.

[00:09:42] But I think the accessibility in terms of gaining access to the property really changes in a heated market. Not only do the agents not pick up their phone very often but they also are very reluctant to make appointments for us. And so we need to drop everything and get through the property at a time that works for them which means that we do tend to be calling our clients and switching appointments with them last minute.

[00:10:09] We do prepare them for that because we understand and know what the market conditions are and what happens. So our clients are prepared for how fast things move and that we might have to shift prearranged appointments around if we need to go out and see a property for them that we have no control over when that is.

[00:10:27] And it means that we're jumping in the car at a time that's probably not convenient where, you know, in a quieter market we might line up our day so that we're looking at 8 to 10 properties in one day in one location back to back. In a fast-moving market, we can't do that. But they won't allow us access during the day quite often. It's really funny how many vendors suddenly don't want to allow access.

[00:10:52] We know that it's the agents, it's not the vendors because the agents do help their clients prepare to go to market and part of that conversation is making sure that they can get access to the property when they need to. And so, but agents will say, oh, no, the vendors got a family and the family's at school. So we know that it's not the truth. But, you know, suddenly we don't have access. And so that makes things a little bit trickier for us.

[00:11:19] And it often means that we're working late into the night, multiple days per week. And that's not a complaint. It's the nature of the work. And we don't do bio-advocacy for the convenience of it. Bio-advocacy, as our listeners will know, is something that we're passionate about. And we have to have that passion. Otherwise, you couldn't tolerate the hours that it sometimes attracts. I could not agree more.

[00:11:46] And, you know, a little bit of visibility into the driving and the times that we do so that we don't sound like we're moaning. A lot of midweek opens. So typically an auction campaign will have something midweek and then Saturday. Occasionally they'll have three in a week as well. And an agent that has the flexibility or an agent that is really obliging will also accommodate private inspections.

[00:12:11] And it might be that the vendor's already prepped the house and it's got a 5.30 p.m. Wednesday open. They're happy to run us through at three because the house is ready. Vendor's at work. Now, for us on the other side of town, a 5 o'clock or a 5.30 open equals nightmare because you've got pegged traffic either way. And you said it off air. You know, it can be a four-hour round trip because if you're stuck in really awful traffic to do something that would normally take an hour, well, it will take two hours. Yeah.

[00:12:41] So none of it's joyous and we're most efficient when we can knock off, you know, our eastern side inspections or our northern inspections in one big go and see eight properties back to back. I'm really happy to do that. Yeah, and that really changes the types of work that we actually take on during busy times compared to times when it's quieter. Because as I've just mentioned, when it's really busy, we don't have a lot of control over the access.

[00:13:07] And so when agents will have a 5 p.m. open, the whole suburb will have opens at between 5 and 6 p.m. and we can't get through all of the properties during that one open and then the other opportunity is the Saturday. And the reality is is that on a Saturday in a busy market, there's 40 people in the house and we can't do our job effectively when we've got 40 people in the house.

[00:13:31] We can make it work if we absolutely need to but our preference is always to do a private inspection so that we've got full access to the house. We can speak candidly to our client on the video that we're taking for them and that we're not pointing out favourable things in that video to an audience, i.e. other people coming through the property.

[00:13:52] And it also means that we can move through the property in a slow way that really demonstrates the floor plan flow rather than having to duck and weave through, you know, 40 other people that are inspecting. So that becomes something that's a little bit challenging to navigate but on top of that, we can't do the best job for our clients if we've got seven properties all open for inspection between 5 and 6 p.m. on a Thursday night.

[00:14:20] We can't get to all of those properties and so what we both tend to do and I only say this Kate because we refer business to one another in these circumstances is that we don't take on assignments in a lot of cases across town.

[00:14:34] During a busy period because we want to be able to do the best possible job for our client and that means being able to get to a property at the drop of a hatch and we can't do that during peak hour traffic and we can't do it during peak selling season where there's so much competition for properties that agents aren't letting us through the door.

[00:14:55] And so that's a really interesting shift that occurs I think for both of our businesses because we are, we do have that investment background and we're more of a strategic buyers advocate who applies strategy to our purchases with particularly with investors.

[00:15:09] It means that we are looking at a diverse range of areas that we buy in whereas other advocates who are more localised where they might only cover say six suburbs, the way that they work is entirely different to the way that we work. We will often be, you know, spending time a year purchasing in a suburb before we stop purchasing that suburb for investors and then we find a different suburb to start purchasing for our investor clients.

[00:15:37] Yeah, so true, so well said. Yeah, market conditions, they definitely dictate different agent behaviour and a real pivot from us. Yeah, and so Kate, let's chat about the reasons why people hire us in these markets because our effectiveness changes depending on the market conditions. Do you want to talk a little bit about how we really help buyers in a heated market? Yeah, there are lots of ways.

[00:16:06] So the first one is that we can move at pace for all of the really important things because we're very familiar with them, we're qualified and we have connections. We know how to move fast when it comes to due diligence which incorporates all of the comparable sales analysis, the due diligence, getting the contract reviewed, arranging a building pest inspection. Sometimes in a heated market, sometimes in a heated market, sometimes we've got 24 hours.

[00:16:34] And to do all of that and to have the report in your hand within 24 hours, that puts you ahead of the pack. And there are lots of buyers that drop out then. So for a lot of our clients, I'm sure you're the same. In a hot market, you might get someone, an acquisition client. So that is a client that wants you to act quickly for them when they have found what they think might be the perfect property because they've probably experienced loss.

[00:17:00] They've probably been caught out multiple times with that dreaded text message when they're in the middle of a board meeting saying, acceptable offer received on blah, blah, blah street, boardroom auction this evening at 7pm. They look at it and they want to cry because they love this property and they thought the auction was in two Saturdays time and they thought that they'd have enough time to get all of their DD done. So you only need to have that happen to you a couple of times and you absolutely need a buyer's advocate because you're busy, you're at work.

[00:17:29] This isn't your core skill and you don't know how to pull it all together in a day and you haven't got a building inspector that will move appointments around for you. Rookies don't get that opportunity but we do because we do a lot of business with them and we've got a great relationship with them. So that's the first and the obvious reason. The next one is FOMO. They're terrified that the market's moving fast and they're going to lose their place on the property ladder. So they want to get in quickly.

[00:17:56] They've got a real desire to buy sooner rather than later so that they're not paying an extra 10% in six months' time. And another one, they've seen auctions and negotiations spin out of control and sometimes they think that we're just a magic genie that can hold back the tide.

[00:18:12] We generally aren't but we certainly can have an influence on the heat of the competition based on the number of competing buyers because if we move quickly enough or if we negotiate strategically enough with the agent about how the showdown is going to go. And when I say that, I mean influencing whether we have a boardroom auction, whether it's on Zoom, whether it's best and highest, whether it closes out at 5 o'clock or 2 o'clock. They're the things that can make a difference to the competition numbers.

[00:18:41] So they're some of the obvious reasons why clients come to us in a hot market. Yeah, I think the other advantages is that sometimes we can influence or convince an agent to not send a property to market if they've given us early access. And so that's really advantageous because we know that it's going to pop off if it does make it to the open market.

[00:19:03] So we try, if we've got a suitable property for a client, we really try to hold that property back from the market if we can in a heated market. And the other thing is just those long-term agent relationships really come in handy during these busy times because the agents like ease of dealing with people. And when you've got 9 or 16 offers, the process is quite lengthy depending on how the agent's running the campaign.

[00:19:31] But they've got a lot of phone calls that they need to go backwards and forwards, backwards and forwards with. When we've got those close agent relationships and they can ring like you described earlier and just say, all right, Kate, here's where things are at. What do you want to do? They appreciate that they're able to be that direct.

[00:19:50] They don't have to have this massive long conversation with us and prove that, you know, what they're saying is the truth and, you know, have 50 million questions that they've got to go through with the buyer because the buyer's new and they're uncertain. And they're, you know, having to help the buyer through it, they don't need to do that with us. And so it becomes an easier transaction for them.

[00:20:09] And I think that can really work in our favour quite often, particularly if the agent has had dealings with us before and they know that we're credible and that we're reliable. Yeah, that's a great point. Which leads me to another one that I think, you know, I often say to buyers, don't interview a buyer's agent on the percentage of off markets that they do. I think it's a really false economy. And we'll chat more about that when we discover or when we uncover what happens in a buyer's market.

[00:20:40] But in a seller's market, typically the other sellers come out of the woodwork because they can see that values are soaring and that it's a great time to sell. And the agents are juggling a lot of transactions. And what we tend to see in a high transaction market is a higher need for a quick sale. So if someone jumps in and buys something and they've got a property to sell in order to make settlement work, they suddenly become a really good off market opportunity. And they're the real off market.

[00:21:09] So the genuine ones, the situational is what I call them, where the agent is saying, hey, if you can make the 8th of November work, it's a very short runway. But this vendor has purchased and they need to sell. They're not chasing the highest dollar. They just want a clean contract at a fair price. In a hot market, that is a gift. We'd love to hear how some of our tips are helping you on your property journey.

[00:21:35] If you'd like to get in touch with us, jump onto our website, themelbournepropertyhour.com.au. You can either leave us a written message or you can record it as a message. Let us know what you'd like to hear more of and tell us a little bit about some of your successes. If you're enjoying the show, please tell your friends and click the follow button on your preferred podcast platform. I think pricing also becomes really important. I think pricing in all markets is important.

[00:22:05] But the way that it works in a fast-moving market is that we have got our finger on the pulse in regards to the speed that the market is moving. And so we can price in what the future growth looks like for the next two months and guide our clients accurately between how much they're paying for the property and at what point would they be overpaying? And at what point, you know, even if they need to stretch, are they not going to regret it in two months' time?

[00:22:33] Because we can see the speed of the market so we can price in the future growth if we need to, to be able to get them into the property. Because sometimes over, I won't say overpaying, but stretching for a property and paying more than we ideally would like to will actually save our client more money in the longer run than if we miss out on that property and wait for the next one. And I think buyers don't necessarily have that confidence. We've been doing this for such a long time that, you know, we've got our finger on the pulse of how things are moving.

[00:23:03] But also we know what the pipeline of stock looks like because we're speaking to the agents and we know what they've got coming up. And so if we know that they've got good stock levels, our advice to clients on price might be completely different than if we know that they've got nothing like this coming up. And we've spoken to all eight agents who are active in this particular suburb and we know exactly what's coming up over the next four months.

[00:23:27] That information is invaluable for clients to make an informed decision about what to spend on a property. Yeah, without a doubt. And it's a really hard conversation, isn't it, when you've got a client who, you know, has a very tight wish list. So it's very particular. And the frequency of their dream property coming onto the market might be twice a year or three times a year.

[00:23:51] In a hot market, you can't stuff around and take a chance on losing that property knowing that you might be paying an extra 5% for the next one that comes up that is essentially the same value. So we do have to have those hard conversations and it isn't easy for people to get their heads around. And it only happens in hot markets.

[00:24:12] But my goodness, when you are facing that situation where you've got the ideal property and they've got the budget to get it, but you know they need a little bit of a stretch. And I'm not talking a 10% stretch. I'm talking 3% stretch. That's hard for someone to want to do. Because, you know, if it's a $2 million property and all of the comparable sales point to $2 million and you're saying, look, have you got an extra 60? I'll be pretty uncomfortable about you asking for that. Yeah.

[00:24:39] So I think realistically if we distill that down to two or three main points, it's speed, it's agent contacts, and it's the experience in knowing how these markets move and what you need to do to stay ahead of the market. That's right. The other ingredient that you haven't chatted about is our hours blow out in a hot market. We're exhausted at the end. We can't sit back and say, well, you know, it's 8 o'clock, I'm having dinner with my family. Finally, you're working ridiculous hours.

[00:25:09] You've got interstate, international clients. You take those calls when you have to take them. I've had deals where the agent's still ringing me after midnight and you're on. I have a small child, as you know, and the amount of times that I will sit down for dinner and then I just look, the phone rings and I just leave the dinner table. No explanation, no nothing. Everybody knows they're used to it.

[00:25:31] But the amount of times that I kind of either will walk in the front door and out the back door to go into my home office is quite hysterical during busier times. And we're very lucky. We've got flexibility within our household when things are very, very busy. I get off doing everything at home and my husband kind of holds everything together and he eases off work because he has the flexibility to do that.

[00:25:56] And they just know that I'm six days a week, late nights, and they'll deliver dinner to my desk. So, which is really nice. And I'll scoff it down in between phone calls. So, often though that's 10 o'clock finishes. So, which I kind of love the pace of it. I don't mind a part of it. Like the adrenaline of it is enjoyable. We like having a lot of balls in the air. It feels quite good to be able to carry so much and make so much happen in a day.

[00:26:26] That's really, really exciting. But it is the most challenging market for us to navigate. It's the hardest market for us to navigate. In busy times, I think it's harder for both the sales agent and the buyer's agent because we're all working like it's intense. And during quieter times, I think it's harder for the sales agent and it's more beneficial for us as buyer advocates. And maybe that's a great segue to talk about that. Yeah, it is.

[00:26:56] I mean, there's only one really challenging part to a buyer's market. And that is even the buyers that can buy and want to buy, a lot of them don't buy because they're terrified. So, our pipeline diminishes. You know, the downside is that we have to work on marketing a lot more. We have to be more patient with our pipeline and we have to keep our staff busy. And those can be really tough periods, particularly, you know, for businesses that are carrying high overheads.

[00:27:25] So, you've got to be willing to roll with it and always have a bit of a buffer as well as a business owner. Because a down month in a buyer's market when you haven't got much of a pipeline and you're running on only a few clients, it's a very different look and feel to being busy and having a great pipeline. Yeah, I think a buyer's advocate can be the most effective when it comes to getting price savings. You know, in a busy market, it's not necessarily about the amount of money we can save our client.

[00:27:54] It's about getting our clients into the market, which ultimately saves them money when a market's moving away from them. But it's not tangible money, you know. But in a down market, we can be the most effective at getting real savings off of the property's value or the price that they're wanting.

[00:28:15] And we can buy things genuinely under market value, not, you know, the BS types of under market value that we see thrown around a lot these days. And that's probably a conversation for a different day. But we can genuinely save our clients a lot of money. I think I shared recently that I purchased something for 17% below what I would have bought it for just three months earlier. And it would have sold more than what I was able to get it for.

[00:28:45] It was just the timing and the vendor circumstances that I was able to pick the right time to make my move. And I was able to extrapolate even more savings than what the general market in that location had delivered. And so, we can just be so effective with that. And I think the other good thing about this market that I really like is that you and I both have clauses that we like to use to protect our clients.

[00:29:12] And in a busy market, we have to forego using those clauses in most cases because it will lose us the deal. It will lose our clients the property. Whereas in these markets, we can use our protective clauses that we add to the contract to give our clients additional protections and added value. Yeah, let's talk about what some of those are. And I know we've had eps where we've discussed this.

[00:29:38] But things like building and pest inspection clauses, I don't like ticking the box on the REIV contract that states major structural defect. And I don't need 14 days or 21 days. I usually need three or four days and sometimes less. But I want to make sure that if there's a stack of minor defects that wind up costing quite a bit, or they might be defects that really trouble our buyers. I don't want to be bound to that contract. I want to be able to get out of it.

[00:30:08] I don't want to pay the 0.2%. I just want to be able to exit. So, I can tell the agent quickly, hey, we're out of here. It's got too many hairy things in it. And I'm not then having a fight about the fact that the building pest inspection doesn't say that it's a major structural defect. So, that's one type of clause. Another one might be, you know, the house is free from debris and belongings and junk. So, that, you know, if there's old timbers under the house that I've asked to be gone, I've got something that can legally enforce that.

[00:30:35] And then we have, you know, all kinds of other conditions that might be around leaseback or access to the property or an ability to go and get five trades through to quote for jobs. Or we can, in the case of an investment property, get the property manager through to do the gas and electricity compliance testing and the minimum standards check. All of that stuff's definitely an advantage for us. And in a hot market, the agents will say, forget it. The vendor won't agree to it. Or, hey, Kate, the other offer is clean. What are you going to do?

[00:31:04] Yeah, there's also great opportunities for good quality property in these markets. You know, the homes that are really hard to get and everybody's chasing in a hot market. And they're still hard to get in a quieter market. But we have a little bit of advantage with those too, Kate. Do you want to chat about that a little bit? Yes. I remember going for a property in our last big upswing when it was a really hated seller's market. And the agent thought they had eight bidders. And we had over 10.

[00:31:34] And it went off. And the resultant price, I mean, I missed out on it, obviously. And I had a big stretch budget because I had said to the client, this is such a beautiful property. You've chosen your dream home, but it's everyone else's as well. Well, here's all of the intel I've got on the other buyers. You're absolutely going to need, you know, at least $250,000 above the top of the quote. Here's where I think its pricing sits. But, you know, this will probably exceed that. And they gave me a budget that I thought, yeah, this is ours. And we didn't get it.

[00:32:03] It went crazy. In a buyer's market, you probably still have competition, but never to that tune. And I think a lot of people get excited about the prospect of a bargain. And sometimes they miss the really high quality property where there's less of a premium attached to it. And so if buyers can remember one thing in a buyer's market is don't lose sight of the fact that you can buy a really high quality property with less competition.

[00:32:29] You don't need to go for something that has no competition where you feel like you're slaughtering the vendor and getting a ridiculously hot deal. There's no point feeling excited about a heavily discounted 7 out of 10 if you could have bought a 10 out of 10 without paying a premium. Yeah. The other advantage that we bring to the table during these markets is just knowing when to move on a property because we have more choice and we've also got more time. So we don't have to move as swiftly.

[00:32:56] And so I think buyers can sometimes get caught out in these situations where they don't feel the pressure to make decision. And so their indecision actually costs them good quality properties. Whereas with us being around for as long as we have and seeing these market conditions, we're able to say, no, this one is really worth, you know, putting an offer in on because this property is such good quality.

[00:33:24] And I know that it doesn't feel like you're under pressure right now and nobody wants properties, but this is a property that you really should be excited about because I think buyers' sentiment towards the market changes and they think they've got plenty of time and they think that they can just keep holding out, holding out, holding out. When the reality is that there's a point in time where something happens and the whole tide changes. And we've spoken about this before where a lot of buyers think that it takes a long time for a property

[00:33:52] market to react to certain triggers, but in reality it actually doesn't. The market reacts overnight. So if the government presses a lever that is designed to cool the property market, we see that cooling happen virtually overnight. And likewise, if they do something that triggers that they want to stimulate the property market, they press that trigger and we see the effects of that immediately. And so price growth starts happening immediately.

[00:34:20] And I think that's one of the risks that buyers in these market conditions can miss is that they don't realize how quickly the market can change and sometimes they get caught out. You know, they're a bit too cocky, a bit too overly confident that the ball's in there, they've got all the control and power and then the market switches underneath them overnight. And then suddenly they're in the conditions where they're competing against other buyers

[00:34:48] and it takes them a while to adjust to the new rules, so to speak. The new rules being the, you know, having competition whereas before they haven't. And then suddenly they need to make quicker decisions. And I think a buyer's advocate can be extremely effective at giving buyers confidence and understanding that they don't easily have on their own, particularly if they haven't transacted in a lot of different markets over their lifetime.

[00:35:16] Yeah, that's a really great point that you're making. And just to wrap up on that point, I think one of the enemies of the buyer, and they might not even know it, is data. They think that data makes their knowledge richer, but what a lot of them fail to recognise is that there's data lag. So we're looking sometimes at data that is three months old. You know, we see the recorded sale date and recorded price often occurs once a property settles.

[00:35:45] And so what you're seeing in the headlines and what the media are putting out there is not necessarily representative. And you and I both know the media is the last to jump onto the fact that a market has turned. So once the market starts to improve, we don't see that filtering through the headlines for another two or three months. Yeah, and I don't think we see the full effect of it until about 12 months because we'll see a 2% or a 3% decline per quarter.

[00:36:11] Like we'll see really small percentage declines in the data when in reality on the ground, we know it's 10%, but that's not revealing itself till 12 months down the track. And typically when we look at the charts of Melbourne's recovery, I think if I'm remembering correctly, recovery periods in Melbourne are generally 12 months and the market's fully recovered after a downturn.

[00:36:35] And so it's really interesting that we've got that data lag that can really send people off in the wrong direction if they're not really tapped into what's actually happening on the ground in the market. Yeah, I agree. What about vendors, Kate? I mean, vendors' expectations and how they behave in these markets really change quite a bit as well. Yeah, vendors are a little bit like the media and there's a lag effect.

[00:37:01] So vendors tend to catch on to market conditions a little bit later than the buyers do because they're just looking at their one property. They're sitting there listening to the feedback and they're thinking about all the properties that sold before theirs and their expectation is set by that. So a vendor that's come out of a strong market and decided to sell when the market has turned, they can be a really challenging vendor to work with because they need to see a few more examples of changing market conditions before they're willing to accept a lower offer.

[00:37:31] And of course, there's always that lack of willingness to sell at a loss or to take a figure that's underneath your expectation, especially if the agents have pitched their appraisal and it's not aligning with what the buyers are putting forward. So yeah, a vendor that's still coming to the party. I heard one saying the other day, vendors had a taste of helium. So, you know, like their head is in the clouds. We really struggle with those types of vendors.

[00:37:59] But then when you turn the tide, a vendor that sat through a really horrible market and it started to improve, those vendors might not have clued onto the fact that the market conditions are changing. So they're still willing to make the market and take an offer that they think is representative of where a horrible market's been, not understanding that if they wanted to change a little bit with their campaign, they might actually be able to get some competitive bidding and get a better result.

[00:38:24] And it's the experience, I guess, that enables us to workshop through these different scenarios and know when to hold off from putting an offer in and so that we can get a better deal for our clients if we wait a little bit longer. And in the reverse, knowing when to strike. Like a lot of people, as you mentioned earlier, ringing me at the moment, they're asking me about off-market properties. And I said, look, getting access to off-market properties is something that we do all day,

[00:38:54] every day. That's part of the job. It's not some special thing that, you know, only certain advocates. It's, yeah, getting access to off-market properties is easy, but it might not be in your best interest right now to buy something off-market. Like I might actually recommend you to run to market because I can get you a better price if we let it go to market and we wait six weeks before we put an offer in.

[00:39:19] I might be able to save you $40,000 or $60,000 compared to getting it off-market. And that's one of the differences and one of the things that I think people need to be really careful about. And I see things on different podcasts and on social media around this where an agent will say, you know, they'll go to a buyer's agent who really wants to get things off-market. So some agencies, they get bonuses. Their staff get bonuses.

[00:39:46] They get paid extra if it's an off-market property compared to if it's an on-market property. And Kate and I have discussed the fact that we don't do that because what we're interested in is getting the right property at the right price for our client. It doesn't really matter which way it comes about. It's really about getting the best pricing for our client and the best conditions. And sometimes we can do that off-market and sometimes we can do it on-market. And I don't understand why people want to pay a premium just to get something with an off-market label. I mean, for me, I just want to pay the right price for a property.

[00:40:16] So that's really the strategy that comes into it as well with the off-markets. We get far more off-markets in a down-market. But I want those properties to actually run to market so I can get a better price for my client personally. Me too. Sometimes it's the one where the agent's really pushing you to try and buy a prior. And it feels like you're running against the tide when you're saying, oh, look, no, we're not quite ready. I'm pretty sure we'll be right to be there on auction day. And the client's saying, oh, can't we just do a prior? I really don't want to go to auction.

[00:40:46] But you just know if it's likely to pass in, that's the auction you want to go to. You've got far more negotiating power after the hammer's not been able to fall and they've passed it in and you're inside and there's no one else outside. Much better deal than buying an off-market. Yeah. So it's really interesting how we shift the way that we work with agents, the way that we work with clients, our workflow during the week, how fast we move, how we might slow things down. We use different strategies for different markets and our effectiveness is there in every market.

[00:41:15] It's just the value that the client receives can be quite different in each market and they might hire us for different reasons. But in all markets, we're very effective and we're very used to navigating the market conditions to be effective. So hopefully that's given our listeners a little bit of insight about how we pivot and change and how our world changes when the market changes and how we can still be effective for our clients in every market. I've had fun with this one. It was a great app.

[00:41:45] Well, Kate, I'll catch you next time. See you then. Thank you for joining us on today's episode of the Melbourne Property Hour. We hope you've enjoyed the show and we look forward to you joining us next time.