NOVAK NEWS - PROPERTY PRO'S: AUCTION VS "FOR SALE" VS PRE-MARKET - WHAT'S YOUR BUYING STRATEGY? 🏆🔮

Unlock the secrets to mastering the competitive world of real estate with Stev and me as we share essential insights that promise to give you the upper hand in any property deal. Whether you're eyeing an auction or navigating the nuanced dance of private treaty sales, this episode equips you with the savvy needed to spot opportunities and make informed decisions. We dissect the benefits and challenges of various sales strategies, reveal how to connect with agents for off-market treasures, and offer practical tips to keep you at the forefront of potential purchases.

Joined by Stev, an expert in the field, our conversation is rich with strategic advice and candid discussion on the transparency of auctions and the oft-misleading guide prices that come with them. We delve into the pressures of selling before bidding and the egalitarian nature of expressions of interest, providing you with a comprehensive toolkit for due diligence. Don't miss out on the wisdom offered by our network of brokers and solicitors—professionals who do more than just crunch numbers and file documents, they're an invaluable source of guidance through the property purchasing labyrinth. Tune in to navigate the market with a newfound confidence and clarity.

Transcript

Speaker 1: 0:01

Buying like a pro. We're going to tell you how to navigate the auction for sale and pre-market space Stay tuned.

Speaker 2: 0:29

Good evening, monday evening. How are you, steph? We're out, are you good, buddy? Good, good to join you on this Novak News edition tonight. Yeah, privileged, definitely. We're trying to add some different value tonight. We're trying to bring some value to buyers in the marketplace. We're going to talk about, obviously, the different methods of buying real estate and one of the pros and cons, I guess, of each method, um, out there in the real estate, well, billy, what do you see as the main methods?

Speaker 1: 0:52

you know people are buying real estate or I guess agents are selling real estate under yeah well, we've got the, the three big ones in our topic tonight uh, an auction, uh we've got for sale or private treaty and then pre-market or off-market as a combined third. There's 670 properties for sale on realestatecom at the moment. Obviously that doesn't include the pre-market and the off-market properties, but that stock level is down from about six months ago. We're seeing that purchases are active and quite often coming across many different open homes, different price points and, I think, frustrated sometimes when they are not being successful in the negotiations across all three different stages. So we're here to help tonight, yeah.

Speaker 2: 1:42

And, like you said, there can only be one buyer for every property. But sometimes I'll hear out on the weekend while we're doing viewing. Somebody will say, oh, I don't like to buy it this way, I prefer to buy it this way. The truth of the matter generally is that the method of which the property is going to be for sale will generally be dictated by the real estate agent and sometimes by the vendor, but majority of the time by the agent, and you're probably not going to get a lot of choice. If it's the right home, you've basically just got to go along with it. But we're here to hopefully help you go along with it well, that's it.

Speaker 1: 2:16

you don't want to miss out on your dream house just because you're not familiar with that sale method or you don't like that sale method. It's all about preparing yourself and being experienced how to navigate the negotiations there and we're going to give you some pointers tonight, hopefully how you can be successful in tailoring your negotiations to each strategy.

Speaker 2: 2:39

So I think the first one pre-market- off-market, let's go off-market and pre-market, yeah, it's a good one, good one to start on. So, really, what is a pre-market or what is an off-market property? Generally in the old days it was something that is not advertised, so essentially you won't find it on realestatecom or domaincom. In the old days it wouldn't be in a newspaper. It would be generally a vendor in the past or a home seller in the past that would say to the agent hey look, I don't want to go full hog on the market, I want to pay for all the marketing. If you've got a buyer around this price point for my property, I'm interested in talking to you, yeah, talking to you further. So, um, I guess, as a purchaser, the toughest thing about pre-market, in my opinion, is finding out about pre-market, yeah, um, and then seeing you know what's out there because it's not advertised in the main channels. Billy, what do you reckon the best ways are about going, you know and getting on the radar with the off markets?

Speaker 1: 3:33

Well, you've got to be out there searching to begin with. So, whether you do that yourself or whether you employ someone to do that on your behalf, having contact with local agents to say this is what I'm looking for, this is the price point I'm searching in. Can you help me? Can you let me know if anything comes up? It's become easier and easier with technology for agents to build a rapport with potential buyers and set up some requirements, and then it's a flick of an email or a text message as a bit of a teaser to say this is what we've got. If you're interested, inquire for more info. So that's generally what the first touch looks like in terms of exposing someone to a pre-market property. From there it's then getting out to the open home or pre-market open.

Speaker 2: 4:19

So it's just by an appointment viewing, not even an open?

Speaker 1: 4:21

Yeah it could happen before the property gets launched out, but you know pretty much establishing yourself on the radar. That's the most important thing, and sometimes people employ the services of a buyer's agent if they're getting frustrated with that or they don't have the time to do it themselves. Where they can, let someone know this is what my brief is and they can be the middleman.

Speaker 2: 4:43

Yeah, and I'd say, as a buyer. This is why, when you rock up to an open home and it's pretty annoying or you're meeting an agent or you're online searching for property, it is quite important to put in your details, you know. So, as agents, we can come back to you and tell you about properties that are on the market or pre-market or off-market. And a lot of times you know I shouldn't say a lot of times, but it happens time to time that a buyer may give us the wrong number on purpose. You know, look, that's fine.

Speaker 2: 5:11

If we can't help you as an agent, we can't help you as an agent. We can't help you as an agent. But there is an opportunity where we probably can help you and we can't help you, uh, because you haven't provided a contact number or the email address is incorrect or something like that. So, but as agents, we're not here just to bring people willy-nilly for no reason, because we'd like to talk to everybody, for for everything in the world, we want to talk to you about real estate. We we want to help you find a home and try to get you into the right home. So I think it's key to give agents the right details if you're serious about buying off the market.

Speaker 1: 5:40

Yeah, I think that's probably the biggest bit of advice. The quality of information you give to your agent will be the quality of home and accuracy that comes back to you with opportunities.

Speaker 2: 5:50

Yeah, I'd say, also with the pre-market or the off-market strategy, just be prepared if you're a buyer and you're looking at a home. You found a home that you like. They can move really, really quickly. You might see it that day and it could be sold that afternoon because the vendor generally is motivated to sell. Yeah, and they're not really up for running it out for two to three weeks to test the market or get a gauge. They're pretty much ready to do a deal.

Speaker 1: 6:15

So pre-market good if you want to do a good deal quick deal and in terms of navigating the negotiation, I would say for this one, put in a walkway offer, don't go back and forth. You don't have the time and property will move quickly and if it doesn't reach the right number, chances are it'll go out to market.

Speaker 2: 6:39

So you might as well put your walkway offer in and then move on, and that's a bit of a con as well. Sometimes the agents will use this strategy to test the market, gauge the market for feedback before going out with an accurate price, maybe onto the portals realestatecom or domain um, and sometimes it's used as a barometer for the vendor as well, so as a buyer. A lot of times that vendor is super motivated, but I'd say probably 30% of the time the vendor could be just testing the market with the pre-market strategy before looking at how they want to take the next steps.

Speaker 1: 7:02

Yeah.

Speaker 2: 7:03

With selling their home, so it can be a bit frustrating as a buyer too.

Speaker 1: 7:05

I guess that leads you into for sale private treaty, where quite often there can be a guide on the property and the campaign is not intending to go to an auction, so there's no set date or time as to when the property will be sold, it's just for sale by negotiation. Yeah, how do you navigate that when you see a price guide of a million dollars? Where do you start and where do you end? That's got to be the number one question. Yeah, I get as a as a resident agent, yeah, where's his price?

Speaker 2: 7:34

so look generally as as similar to an auction guide. When you see a guide marketed online, there's probably a 10 variable in there, um, 15 maybe if the market's super hot, but I would say that there's probably a 10 variation on where that advertised price is and to where the potential selling price could sit. Um, so, going with that expectation, I would say, as a buyer, one thing that I like about the full sales strategy is is that it might give buyers that are maybe first home buyers or a little bit, um, inexperienced with buying a property, and that's completely normal. We have to understand that. You know, people aren't buying real estate every single day. Yeah, um, it gives you a chance to see a home, talk to the agent, build a bit of a relationship with the agent. It might give you enough time to go through your solicitor and make changes to contracts before you start entering into legally binding agreements and things like that, so it can give you a little bit of time. That's what I like about the for sale approach.

Speaker 1: 8:32

Yeah, me too.

Speaker 2: 8:35

And it's sometimes a good strategy for the seller as well to not rush them through the process too.

Speaker 1: 8:38

Yeah, so for sale generally, you have a the benefit of a five-day call off. Yes, so at the point of exchange, uh, you pay your point to five percent deposit. We exchange contracts, meaning both parties sign the contract as dated. At that point your five-day call off begins, and that five days is an exclusive period for that purchaser to do their due diligence, to make sure their finances in place. It effectively gives you the better part of a week to work through with your team and make sure that you're good to go unconditional. That's when the property gets marked as sold at the end of the week for the benefit of a 0.25 deposit of your purchase price. So for $1 million you're about $2,500.

Speaker 2: 9:18

Yeah, so the pros are there's quite a few there and you can do your due diligence. The cons, I think as a buyer when you're looking at a property that's for sale, is you don't exactly have 100% transparency, so you won't know where the other buyer's interest might sit. The agent might call you. You might turn up to a property. It's very busy, there's 10 to 15, maybe 20 groups through there. Yeah, um, the agent will call you back and say look, there's a lot of interest. You need to put an offer in as a buyer? Um, you can ask the agent but most stages won't say look, this is the exact figure where that buyer's at. They'll give you a guide to probably where you need to be or they'll push you for your best.

Speaker 2: 9:54

Yeah, but it can be frustrating because some buyers? Um and some agents I should say some agents aren't aren't completely honest um out there and it creates frustrations with buyers because you just want to know am I in a legit position where I can buy this home or not? Yeah, so that's a bit of a con? Um with that process is that you know you won't be able to see where the other buyers are. The pros are that you can have a cooling off period and you can negotiate pretty much everything during that cooling off period, if not before yes, spot-on terms are up for negotiation.

Speaker 1: 10:24

so anything you need. Again, it's good opportunity to talk to the agent. Let them go to work for you as well as the vendor and try and pull something together that's mutually benefiting. That leads us into auction. Auction Means action. How do you say auction? Billy Glenn would say auction, auction. Yes, glenn says auction means action. It generally does.

Speaker 2: 10:50

Plenty of activity. With an auction, or auction if you will, I am always surprised with buyers. Come auction time, the number of buyers are here saying to me I'm not going to buy at auction, I just won't buy at auction. And as an experienced agent, I love the strategy of buying a property at an auction. I'll tell you why. I mean, look, the guides that are advertised in the real estate world are not always accurate. With an auction, again, just be aware that there's probably a 10% swing in that guide guy price hopefully you know we've stamped out under quoting and all of that, but I'd like to say that it's all gone.

Speaker 2: 11:31

I do see sometimes cheeky guides from other agents in the marketplace, um, but as a buyer, if I'm buying and I've got my price that I'm, you know that I'm prepared to pay for the home. I can see exactly live, minutes and minutes, second to second, where my competition and where my other buyers sit. And if I miss out, fair enough, I can see completely that, hey, that buyer offered that much more than I did or not. Or if I purchase the property, you know I don't feel like I've overpaid because I can see where that market is. So as a buyer, you. I love that aspect of auction. I think the con can be one is just getting a clear and accurate picture from the agent as to where activity sits, estimating you know where it might go, and it's sometimes hard to do. But also with an auction we don't have the flexibility of a cooling off period, so you do a lot of that work up front and there's costs associated with work up front.

Speaker 1: 12:29

Yeah, I mean the best benefit is it's complete transparency. You look across the living room or you can look across the bidding floor and see where the other competition is coming in at. Everyone has done the same preparation, which I think is important to recognise. In a private treaty sale you might be up against people that are finance, you know ready, cash approved, things like that Whereas everyone's done the same due diligence for the auction. The biggest con is it takes time and preparation and that sometimes costs.

Speaker 1: 13:03

So downloading strata reports and downloading building and pest inspections. They cost Getting contract amendments, which is very normal in a private treaty sale. You do that once. In an auction build-up it could be, you know, multiple times if you're missing out and looking at multiple properties. That can be a couple of hundred, could be a couple of thousand dollars a pop every time you attempt to try and purchase at auction. So there's costs associated with that. The best way to work around that as a buyer is to fill out the agent and the campaign on price first and then start to make those amendments and due diligence downloads at the end closer to the preparation, so you can get with a good solicitor. You can get a turnaround time of 24, 48 hours. You don't really want to be doing these amendments in maybe week one. Leave it to week two or three and work towards the date set online, because that way you're able to stay up to date with the campaign. You're being informed by the agent the whole time and then you can make your investment when the time is right.

Speaker 2: 14:05

Yeah, yeah, I think a con that I recently saw that was with an auction that I recently had here on the beaches was a family that at the time of first viewing the property, needed to sell their property first to be able to make a play at it. So sometimes timing can be a bit of a con. If you've got to sell first to be in a position to bid at that auction, it can be a bit of a con. Um, if you've got to sell first to be in a position to bid at that auction, it can be tough. Yeah, it's something you can probably negotiate during a a private treaty or a full sale approach. Yeah, um, luckily, for them.

Speaker 2: 14:34

They did sell in time they were able to, to have a go at it. Um, but that's something that you know, you probably want to be aware of is you want to make sure that you've got access to funds come time to settle or even exchange. One thing I will say with an auction, however, is be prepared that on the day that, if you are the lucky bidder, you're in a position to sign the contract, put down the right deposit and you can enter into an agreement. Nothing worse than a buyer turning up buying a property and not being able to pay a deposit.

Speaker 1: 15:01

Yeah, and those conditions remain in place up until midnight the day of the auction. So if you're a purchaser, you've got to understand that. Uh, some of these properties will sell prior, some under the hammer on the day and then some post auction. So that could be, you know, hours after, or it could be days after. But even if that property passes in, there's still great opportunity to purchase. It's not all over over Red Rover, and it's not too late. You're still able to make that offer.

Speaker 2: 15:29

Yeah, there are a few other ones as well. Out there there's one called expressions of interest which we're seeing pop up more and more. I think it's a common thing in Melbourne or maybe Adelaide. Expressions of interests, or like even a tender, offers closing at a certain time Look again, probably similar to the auction strategy where you're trying to get a gauge to where the market is Might be somewhat frustrating because you don't have the transparency of an auction but probably the deadlines of putting in offers.

Speaker 2: 15:59

But there are other approaches that we see in the marketplace. Expressions of interest, I would say you really want to go and find as many comparables as possible out in the marketplace and understand that although it is I'll use the term painful for a buyer to try to find all that information, it's as painful for the person next to you doing the same thing. So no one's really got an advantage over you, but it can be frustrating trying to find, you know, evidence and recent sales that you know try to lead you to a price. So it's challenging with the expressions of interest yeah type of thing.

Speaker 1: 16:31

I think with any campaign, though, if you're uncertain on price, you can always ask for the resources. Do you have any recent sales, can you? Can you show me anything else on the market? If you're, if you're talking with a good operator in your marketplace, chances are they're going to be able to say I've just sold this or I've got another one to compare to. So that's the way you can get an idea on pricing. If there's no set guide and if you know I was going to say if you're looking, you know between other properties you can always give us a shout as well. You know we can help you other properties.

Speaker 2: 17:04

You can always give us a shout as well. Yeah, you know we can help you. Yeah, I was going to say a quick tool. So we obviously in in the background of the real estate world. We've got access to different systems which track property prices and and data for us. But, as a consumer, there is a. There's a fantastic system. It's completely free, um, it's called realestatecom and domaincom and basically you can go into the realestatecom, hit the sold tab. You can even type in a street, if you want suburb, put in the parameters of what you're looking to buy under the sold icon and it will bring up everything that's sold recently with similar parameters to the home that you're looking at. So if you see something going out and it's just say hypothetically priced at 1.5, but all the comparisons are selling at 2 million, you know it's probably going to be a two million dollar property. Yeah, um, in the marketplace. So that's that's quick, free, accessible information to consumers, to buyers, um, both on realestatecom and domaincom, yeah, that's massive advice.

Speaker 1: 17:57

Yeah, and so to to get that. You really want to be searching on the web platform, so jump on your ur, go into Google. Yeah, not the app, not the app, you won't have access to it. Yeah, so you can type in if you're in dy, your favorite Street, and see what's sold, or you can. You can jump into dy and you can search by price. Last three months. Yeah, you know, make sure that your research is recent. A month to three months, depending on the way the market's moving, is recent enough, but hopefully that's helped someone tonight.

Speaker 2: 18:29

Yeah, 100%, because, like always, we're here to help. Again, look, most agents are going to be super helpful. They will have the resource, they'll be able to show you what's been selling in the area. But, as a buyer, there's always a pro, always a con. I'll just say do your due diligence, jump out, have a look at what's been selling in your suburb and, if anything, feel free to ask questions. You know, most real estate agents, like I said, are here to help. We want to answer questions, we want to give you an opportunity to buy a home and we'd love to see you buy a home and we'd like to help you do that.

Speaker 1: 19:00

Yeah, do that. Yeah. And if, if you um don't have the trust in your real estate agent, um, call another one. Call another one. Or call your broker, call your solicitor. Those guys are there to help with the paperwork and the money, but they're also there to give some general advice. They see transactions day in, day out as well, so they're pretty well versed in the same language. Yeah, spot on, that's it. Have a good night, thank you.