#7: From Ready to Regret - How Buyers Talk Themselves Out of Great Home

[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. And Formula 1 is underway! 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're bringing you a dose of our property market in detail. I'm Cate Bakos, Lisa and I are both buyer's 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.

[00:01:09] Hello everyone, welcome to the pod and today Lisa and I have a really exciting segment to share with you. It's called Sabotaging the Property Acquisition Strategy and sadly we see this often. So, we've got quite a few goodies to share with you. I'm really excited about today's session because I mean the hope in sharing this information is to kind of help people identify the self-sabotages.

[00:01:35] Because the funny thing about sabotaging is that we often are unaware of our own sabotages and until somebody brings it forward and discusses it and it brings it to our awareness, we're not even really aware that we're doing something. So, I'm like super excited to dive in. Yes, let's start. We're going to talk about this from our perspective as a buyer's advocate working with clients, aren't we?

[00:01:59] But it's relatable to anybody who is purchasing property whether they're DIYing or using an advocate. Yep, absolutely. So, the first cab off the rank is having a list of properties that you really liked but there was always one usually insignificant thing that prevented you from taking the next step. Yeah, I had one of these last year actually.

[00:02:20] A client came to me after DIYing this search for over 12 months and they just weren't getting anywhere and I said show me the properties that you missed out on or almost went for but didn't. And we looked at a lot of the properties and there was one in particular that stood out to me and the reason that they didn't proceed with the property was because they didn't like the flooring. And everything about the property was so good. It was so beautiful.

[00:02:49] It was so well located and it was a very rare property for that particular area. It was a small area so properties don't come up very often in the first place. It was a tightly held area. And the third thing is this house happened to be in really good condition and not like houses are either really fully renovated and absolutely beautiful or they need a lot of work. And this one just hit the right spot.

[00:03:11] And for the sake of changing the flooring over for anywhere between eight to 15 grand it's just such a shame to have lost such a beautiful property that would only come up once every sort of 12 to 18 months. That's tough. That's tough. And yeah, I concur with that. I've had situations where they might not have liked the colors or something that it's not superficial but it's cosmetic and that can all be factored in.

[00:03:37] And you've got to look at the lost cost opportunity is what I'm trying to circle. If your market's moving and your criteria list is so strict that you're saying no to things that might involve a circa $10,000 or $15,000 spent to change it cosmetically, well, you might be costing yourself a lot more than that if the market's moving. So that's always a concern. Yeah. The second one. Yeah.

[00:04:01] The second one is it comes down to price and it's when we have people that come to us and they say, I would have bought that one but I thought it was worth X but it went for Y. And it's a story for every single property and they're like $20,000, $30,000 or $50,000 off what it actually sold for at auction under competition. So that can be a red flag because if you're missing a lot of properties due to you thinking the property is worth less, come down to one of two things.

[00:04:30] It can be you're not yet up to speed with the market conditions and what properties are worth in the area and so we can overcome that with education. The second thing though that it often is, is that it's a subconscious sabotage where they're saying, well, I would have bought it but I thought it was worth $20,000 less than what it sold for. And there was nothing wrong with the property. So then when you ask the question, well, if we could have got that for you for $20,000 less, would you have bought it?

[00:04:59] And then they start thinking up other reasons why they might not have bought it and usually it's a fear response. Like it's a fear of commitment is what I find. What do you think on that one, Kate? I think you've nailed it. Fear of commitment or there is a reason why they don't want the property. I had a client not long ago who was going for a property in the southeast and I told them what I thought it was worth. And they said, we just don't want to go to that level for it but do you think it could go for X? And I said, well, probably not.

[00:05:28] On the balance of probability, not. But I'd be willing to be there for you if that was where your limit was. But talk me through that. When it's such a, it's not that it's a small amount, you know, $50,000 is a lot of money. But if you've got that borrowing capacity and we're talking about a $1.5 or a $2 million property, it's a much smaller percentage range. And so I said to the client, are you telling me that you would want it at this level but not at this level? And they said, that's right.

[00:05:55] And I said to them, I've got to ask you, do you want the property at all? Because maybe this is your way of telling me that it's not quite the right one for you. And if that's the case, at a bargain price, it's still not the right property for you. Oh, I love that. That is a gold nugget right there.

[00:06:12] And I think if you're in this situation and you're wondering if maybe you're sabotaging yourself by, you know, feeling like things are too expensive, I think there's probably, I guess, a gauge that we could use. Like if somebody was DIYing their search, how many properties do you think we could chalk up to, I'm learning what the market conditions are. And then when it clocks over to, this is a sabotage, how many do you think it would be for DIY buyers?

[00:06:42] I always think if someone's missed out on more than three properties semi-recently for a similar amount. So if they're constantly thinking it's worth less in the same sort of market conditions, that signals to me that they either need that education or they're sabotaging. And wishful thinking is another one. Sometimes people just are really hopeful that they can get a really good buy.

[00:07:05] And I'll sometimes have clients come back to me with examples of properties that have sold for a bargain price and say, well, I saw this one. But if you found that needle in a haystack that just for whatever reason was a good quality property that sold for a cheap price and there's no others to support it, it might be a bit of an anomaly result. And if you're going to wait until that next anomaly comes along, you could be waiting a long, long time in the moving market.

[00:07:31] Now, buyers who have actually engaged a buyer's advocate aren't immune to this sabotage. For me, I have a one property rule. And if a client, like, I mean, people hire us for a reason and a part of our job is to be able to get the pricing right. And in many markets, we can have a high degree of accuracy, like a lot of the time.

[00:07:56] And when things are a little bit difficult to determine what a property will go for at auction, we're usually pretty upfront and honest with our clients about that, that it's hard to pick at the moment. But if a client hasn't listened to our advice on pricing, I have a one property rule. If they'll do it the first time, then we go along with it and say, OK, I don't think your chances are good, like you said before, but we'll go to auction. We'll see. And we hope that that's the learning experience that it takes for them to be ready next time.

[00:08:24] But if they begin to approach the second and the third acquisition with the same manner, my flags are going off. Like this is a big red flag for me. And this signals that we're having a serious conversation. Yeah, I think that's a really good rule. We've got another one here. It's changing parameters. And this happens for innocent reasons as well. It's not always a sabotage.

[00:08:47] But sometimes when parameters are being changed on us, particularly multiple times, I might smell a bit of a red flag with sabotaging the acquisition strategy. What about you? Yeah, I think we probably could talk a little bit about the difference between refining and sabotaging. So when we work with our clients, there is always a refining process that we go through.

[00:09:11] Sometimes our clients come to us with either a mixture of ideas that actually don't gel together that would create a property that would be available in reality. And our job is to help them work through what is and isn't workable in one brief. And that's what I refer to as a refining process. And the other way that we refine somebody's brief is when they're not sure. So they might come to us and say, I don't know what style home I want or exactly which suburb I want to live in. And so we go through that process of helping them.

[00:09:40] But what it should be is a productive refinement that actually leads us to an end result. And sometimes we could be going down one path. We're about to pull a trigger on a property because it meets all of the requirements that we're looking for for our client. But then at the last minute, the client puts the brakes on and they realise at that moment that it's actually not that that they want. They actually want something completely different. And sometimes clients feel really bad about that and apologise.

[00:10:08] And sometimes, though, that's OK, because it's actually a refining process. And it means that the next one we're going to get is going to be the right one because they've realised what they want. But if you want to talk about the sabotaging form of that, Kate, because there is a difference between the two. There is. Yeah. When you're looking on Mars and all of a sudden you're in Jupiter, you know, we sometimes have that. And I'm being a little bit cheeky here with words.

[00:10:34] But I might be looking in the, you know, let's say inner north and things are going well. There's a good enough supply of property there. And I can tell that we're not on the same page. And after all of that careful and productive discussion about the inner north, I might then have a phone call at an odd time saying, hey, we were just thinking, you know, what about Daylesford? What do you think about Daylesford? That's a completely different proposition. It could suggest that the client's not ready. Yeah.

[00:11:04] Often it's a case of sabotaging the strategy that they've got. And maybe it's because what we've refined just isn't gelling with them well or what they've told me is only part of the story. Yeah. The other one is adding more parameters. I mean, what we want to help buyers do is to get a suitable list of parameters that are must-haves in a property.

[00:11:27] But we don't want an exhaustive list of 20 must-have parameters because it would be impossible to satisfy all of those. But a sabotage that can come up with the ever-changing, unrealistic parameters is every time we nail the brief and get the right property, one, two or three more parameters are suddenly added onto it. Yes. I mean, that can happen when we're refining.

[00:11:50] It's more the case when it happens multiple times that it's a red flag for us that there is a sabotage going on. And again, the sabotage is so subtle that people don't realise that's what they're doing sometimes. Yes. It can sometimes signal that there's another decision maker. Oh, yes. So you're talking about crowdsourcing feedback from other people. Yeah. Or there could be another stakeholder.

[00:12:18] I've got a lovely client right now whose original strategy sounded really good. And then I had an overlaid set of new requirements parameters after the first week out. And it's evident that a mum might be living with her and a mum's got her own set of parameters. So they're the things that we need to know about when we're putting together a brief. If there's more stakeholders, not just people who are sharing their opinion,

[00:12:43] but people who might be contributing to the purchase or living with them have got to know about all of this stuff. Yeah. But I think people like to be generally helpful, but often their help is actually hindering a buyer's process. So, for example, if we have young adults who are buying their first home, mums and dads who've bought many, many homes,

[00:13:07] bought and sold and renovated homes over the years can be an absolute asset and a help to that search process. Whereas a mum or dad who may have bought one, maybe two properties in their entire lifetime and have their own ideas about what their kids should be buying. Sometimes the advice is sound, but sometimes it's actually just not in alignment with what the kids want. And I think if somebody's looking for a home, whoever they're turning to for feedback,

[00:13:35] you need to make sure that person really understands you and what's important to you and what you're looking for in a house, because otherwise they can actually undermine your search. We'd love to hear how some of our tips are helping you on your property journey. 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.

[00:14:03] 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. Crowdsourcing feedback. It does happen. It's so challenging because they might be looking on a forum where people don't understand what their strategy is.

[00:14:32] And there's just all of this advice floating around. Or it could be, you know, Uncle Bob at a barbecue or someone at work. It makes it really hard when they're talking to someone else who hasn't been involved in the intricacies of their strategy determination. Yeah. I think if there is somebody who's going to be heavily influential on a search, I think you need to take them along for the whole journey because there's nothing worse than them coming in at the last minute

[00:14:58] and they haven't understood all of the decisions that have been made to get you to the point that you've got to. And then at the last minute, they undo everything and create doubt. And so I think you have to be very careful about including other people in your journey and who you're choosing to include in that journey. I so agree. It's a bit like having a name for your unborn baby.

[00:15:24] If you tell someone about it, you need to be prepared for their opinion. It's sometimes better just to have the baby and name it and announce it. And it's a bit the same with buying a property. Yeah, I agree. The next one that I want to chat about is responsiveness, just being available to make decisions in a timely manner. I find that I don't know how this plays out for a DIY purchaser, but for somebody who's working with a buyer's advocate,

[00:15:53] you can always tell when somebody's sabotaging when suddenly they go, they're ghosting you. So no returning of emails, not picking up your call, not returning your text messages. And then they miss the deadline for putting an offer in. And it's a clear sign to us that there's a sabotage there because if somebody is really serious about the process of purchasing a home, we require them to be available to make those decisions.

[00:16:21] And of course, if life's happening, if you've got exams, for example, if you're studying or if you've got some big project at work, I mean, we're always mindful of that and we'll always work in with a client when we know those things are happening in their life. So I think people have to be realistic about their capacity. If there's something major happening in your life that's going to conflict with you being clear headed enough and available to make swift decisions on property,

[00:16:47] then you've got a way up where like if it's the right timing, I guess, to be purchasing a property. And if you find that you're always avoiding those calls, I think there's a little sign there to dig a little bit deeper and ask yourself what's really going on. That's right. Some people really struggle to make fast decision. Other people might be, you know, in surgery if they're medical professionals or whatever it is. But if we know these things, if we know that our airline pilot client is flying tonight, we can buy time.

[00:17:16] We're good at that with agents. What's really hard is when we're ghosted. Yeah. We don't know what to say to the agents and we have no answers. And obviously, we need to keep a very good professional relationship with the agents. We need to be reliable. And that's where our clients get the benefit of our expertise is when agents love dealing with us because we are reliable and they trust us. That's where our clients get the benefit. So we have to be really careful about how we conduct ourselves in that regard.

[00:17:45] Yep. My next one is a bit of a fave. Being hung up on the one that got away. So you can have a loss and it can be devastating, but you've got to move on. You chalk it up to a learning experience. I always say to someone, there's got to be something else out there that will make you even more happy. Let's just move on. Because if you let that property haunt you, it will stop you from being happy with another property. Have you ever had a case where one got away? Like you personally? Oh, yeah.

[00:18:15] Years ago when I was younger. Yes. But I learned pretty quickly. You know, you can bounce. It's a bit like having your heart a little bit broken when you're young and you have a boyfriend and he drops you. You've got to get up and dust yourself off. You've got to get. Meet more men. Yeah. Find that, Prince.

[00:18:33] I think another one that comes up a lot for nervous, more so investors, I find, than homebuyers, but it can happen with homebuyers, is trying to time the market, like trying to get that timing exactly perfect. And what I actually find with people who are really hung up on getting that perfect timing is that they often really mess the timing up.

[00:18:57] So people who are really good at going, look, I don't know if now or the end of the year is going to be right, but I feel like now is roughly the right time for these reasons. I'm just going to bite the bullet and go. They jump in and they do really well and they ride the wave up. But the ones that try to time it have got a real hang up on timing it. I find that they always ring me when the clock is at, when the hands are on 10 o'clock and they've missed most of the growth in the market and they're jumping in at the height of the market.

[00:19:27] And then they're going to experience maybe another 10% growth, but then they're also going to have that growth come all the way back to their purchase price when that market recovers. Yes. So I think people are going to be really careful about perfecting the timing. I think it's good to be thoughtful about it, but I think you've got to really relax and just trust in your decisions. And if you're financially ready, you just need to move forward at the time that you're financially ready to do it.

[00:19:55] If you're waiting for that sign, waiting for the bell to ring or waiting for the data to break, markets already moved. And we both know that data lag is a real thing. We don't start to see the data increasing capital growth rates until the market's already been moving for a bit. Yeah. So people are surprised at the moment, not everybody, but people are surprised at the moment to hear that Melbourne's doing really well.

[00:20:18] What some people are saying to me, these are people who are just really listening to probably media and not property, I guess, leaders and property analysts. What they're hearing is that, you know, Melbourne, for example, is all doom and gloom and they're worried and they're like, oh, the land tax and this and that. COVID lockdowns. City's still quiet. City is so not quiet. But what we're experiencing on the ground right now is anything but what people are seeing in the media.

[00:20:47] And so what I'm saying to them in September through to December, I think the headlines will catch up. But the market has already moved and you've just missed the first sort of 5% to 8% growth because we're already in a growing market. It's just not reflected yet. Yep, I agree. So not finding common ground with a partner. That is a big one. And it can be a sabotage if you've got one person that's saying yes, yes, yes. And the other one is finding fault with properties.

[00:21:15] If you're not on the same page, it's not going to happen. Before I was a buyer's advocate, I sat down with my partner. I didn't know how to do the job as a buyer's advocate, but I actually sat down and had a briefing session with my partner. And then we were both aligned with what we're looking for. I had the list. I went out and found the property and excitedly said, come look at the property, blah, blah, blah. And then he just shoved on the brakes and was really resistant.

[00:21:42] I couldn't understand what was happening because everything that we said we wanted, it offered. It was very confusing. And then at the last minute, he said, I actually don't want an apartment. I want a house. And I was like, oh, that's a completely different proof. Let's start again. And so that was really interesting. And fortunately, I navigated that, you know, at the time, the way that we would as buyer advocates. And so we were able to rectify that quite quickly and find something quite quickly for ourselves. Oh, it's impressive.

[00:22:11] So buying an investment, but considering how it could fit into future home options, this is a really hard sabotage for an investor. And it happens more often than people could imagine. You're laughing. So you tell me your story. It's just, this is the worst thing. Every now and again, you can get a home buyer brief that actually aligns with an investment brief. But it is probably 2% of the time.

[00:22:37] And what I find is that when people are trying to do both things at one time, it never fits. And everything is compromised. Because either the personal requirements come to the forefront. But then when they're asking you about capital growth or rental return, it's been undermined because they've selected something that fits more their personal requirements and their personal desires. And the two don't always align.

[00:23:03] I mean, sometimes we can get a great home for somebody that will also do really well for capital growth. But often it's very difficult to actually do both things. And they're two completely different searches. Absolutely. And if an investor is not prepared to take that step as a pure investor, I've got a question why they're doing this. If it's for future reasons, very, very different brief.

[00:23:26] My second last one, which it strikes a lot and I always think it's sad, is when people try and avoid auctions. I love buying at auction. And the reason for that is because I have complete visibility over what everybody else is doing. Whereas in a private negotiation, you don't always know that. So you're relying on the honesty of the agent to base all of your decisions on. What about you?

[00:23:54] Yeah, I completely love an auction for lots of reasons. I mean, auctions aren't fun when you know that you've got five or six or seven or eight bidders. You know that it could be a real showdown. But they're transparent for exactly the reason that you said. And everybody is governed by the auction rules. In a private negotiation, there's no private sale rules. The agent can handle it how they like. Best and highest. I'll go back and forth. I'll just sell it to this person and not call the others back because I like this person.

[00:24:23] There's so many difficulties associated with private sale. But avoiding auctions, people do it because they're terrified of a magnitude of things missing out, being in a public place, bidding unconditionally. But education around values and getting all of your due diligence done carefully, including a thorough contract review and making sure that you've got your finance in place and you've been pre-approved with proper credit assessment. They're all of the things that should give you confidence at auction.

[00:24:53] And the reality is for all of the people that are too scared of auction to opt in, you've probably got a reduced buyer pool anyway. So I think it's one of the biggest no-nos when it comes to jumping into the property market in a place like Melbourne. Well, there is our list of sabotages.

[00:25:11] I think we've put them all out on the table and hopefully some people have been able to kind of remember a few of those so that when they're going through the search, whether with an advocate or DIY, they can keep these in mind and just kind of keep a check on yourself. Is it a sabotage or is it sound thinking and, you know, rational thinking that's leading me to the decisions that I'm making? So well said. I hope everybody enjoyed this session and we look forward to seeing you on the next episode.

[00:25:42] 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.