On this episode of The Smart Property Investment Show, Gavin Rubinstein is in the studio to dispel the common misconceptions about real estate agents and share his tips for making your property market ready.
He joins host Phil Tarrant and regular co-host Tim Neary to discuss ‘real estate agent’ as a dirty term, why he believes honesty is always the best policy and how you can get the most out of working with your agent.
You’ll hear all of this and much, much more on this episode of The Smart Property Investment Show. Tune in now!
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Phil: G'day everyone, Phil Tarrant here. I'm the editor of Smart Property Investment. Thanks for tuning into The Smart Property Investment Show, it's always a pleasure to have you with us. I'm joined by a regular cohort, a colleague and friend, Tim Neary. How are you going?
Tim: Good Phil, thank you very much for having me on the show, it's good, yeah.
Phil: Well today you've actually got some relevance. Normally I just chuck you in there and hammer, and pepper you with a couple of questions, but-
Tim: Yeah, put me in the deep end and watch me flounder.
Phil: Yeah, which is good, and which is, I like to make sure I keep guys on the top of their game and just slightly on edge, but today we've got someone in the studio who I think you can play a role in being a keen face about getting some secret source out of this guy's brain and getting our listeners a little bit more educated.
Tim: Really excited about the guest on the show today, yeah.
Phil: It is good, so without any further ado we've got Gavin Rubinstein in the studio. So Gavin is from Ray White Double Bay, I don't even know what you're ... do you guys have titles? You're a real estate agent?
Gavin: Yeah, just a real estate agent.
Phil: It's just a real estate agent.
Gavin: Yeah, just-
Phil: There's nothing –
Gavin: Just an average agent. Just an average real estate agent, working hard.
Phil: Just a bloke trying to get by.
Gavin: Yeah. Thank you for having me by the way.
Phil: Ray White Double Bay, by the way. Is it a dirty word, real estate agent? For a lot of people it is.
Gavin: 100%. It's on the same sort of level as used car salesman, and some people would say it's dirtier than that. But you know, it is what it is. And I think there are a couple of key people in the industry who, particularly as of late, are working very hard to change that, myself being one of them.
Tim: It doesn't look very dirty with that St. Laurent cut suit that –
Phil: Normally we've got mortgage brokers in here who I think shop at Lowes, but you know, you guys, and I guess it's probably part of the stereotype about real estate agents right, I don't know what car you drive, I'd imagine it's pretty fancy-
Gavin: It's nice.
Phil: It's a nice car?
Phil: You dress well. You look like a bloke who's there to do business, and I think that's a good thing for a real estate agent.
Gavin: It's important, yeah look, and I think a big key factor in any sales business, real estate and everything else, comes down to energy. And you know, I do a bit of these talks and seminars and I always talk about the importance of energy, and managing your energy. Because you can cash energy in. You know, I mean low energy, poor energy really attracts the wrong sort of thing to a sales business, whereas on the other side of the coin when you've got that high energy and good energy, it attracts really positive, positive things going on.
Phil: This is a show for property investors, and property investors come in all shapes and sizes.
Phil: I remember I was doing some work last year down in Canberra around the federal budget, and there was a lot of noise around negative gearing and stuff, and I can't remember who said it, I don't know if it was one of the ministers, but they made a point that, they were talking about negative gearing and how negative gearing keeps prices high and, I don't want to go into the whole debate but they said one in four serving police people, negative gearing. They have negative gearing on their tax return. Pretty much going, property investment's available for everyone, and it works, and it's important for Australia. So there's a lot of misconceptions when it comes to property investors and I guess what I want to try and extract from you today, and you're from Double Bay, and for people who may not be from Sydney, or not familiar with Double Bay, it's one of our prestige areas, just before we come on air I asked you, mate, when was the last time you sold a property that was under a million bucks?
Gavin: I had to think about that.
Phil: And ... but you know.
Gavin: It's crazy.
Phil: It's crazy. But your type of-
Gavin: It's crazy that I had to think about that.
Phil: Let's be fair, one million bucks is the median price, pretty much in Sydney at the moment.
Gavin: Right, right.
Phil: It's pretty close.
Gavin: A million bucks today in Sydney, in the Eastern Suburbs, is going to get you, you know, in a good area? A brand new property that's one bedroom off the plan. The last million dollar purchase I made was for a one-bedroom unit in Double Bay, that was about two years ago now, maybe two and a half years ago. And that was 55, 60 square metres with one parking, which is what you get for your money.
Phil: It is.
Gavin: Really. Yeah.
Phil: It's just the reality of the world. It's just where we live.
Gavin: And even up to last week, new developments selling, one bed and no parking in Double Bay, Cross Street. 1.5 million. No parking. So ... it's the world we live in, it's crazy, eh.
Phil: Big money. Okay, let's try and dispel a couple of the myths, negative myths, or interpretations that our listeners might have about real estate agents. Number one, you're only in it for the commission.
Phil: Let's have a chat about this. So now we're probably -
Gavin: Should I leave now, or ...?
Phil: But this is it, you know. So a lot of investors, they're going to deal with a real estate agent on two sides, right?
Phil: They're either the vendor and they're selling their property, or they're trying to skewer a property for investment. So let's talk about commission. And my view of the real estate sector, I think agents ... We spend a lot of time in real estate, Tim, you run a big online platform for the real estate sector, you pay commission because you get value, is my view on it. As a vendor.
Gavin: 100%. I would have said the exact same thing. Correct.
Phil: Yeah, so for investors, you know, commission's not a dirty word for the real estate agents. They're part of a transaction, and they're serving the vendor, but they want to get the deal done. So you should never piss off a real estate agent if you're trying to buy from them.
Gavin: Look, I agree 100%. And I think the key is just understanding that all agents are different, right? So if they're good at what they do, their job is to get the best result for the vendor. I'm an absolute vendor's agent, I live and die by the vendor. Now I'm there to service the buyer and get them what they need in an efficient manner, be polite to them, right, it's a service-based industry, but at the end of the day I'm there to get the best outcome for my client. The client pays my fee. So I think it's key for these people to understand step one, if this agent is good at what he does, his job is to get the best result for his client. I'm not going to take that personally, he wants to get the best result, and me as an investor, I want to pay the least. So I think if you understand that sort of dynamic going into it, it can avoid a lot of confusion, getting into the nitty-gritty. Does that make sense?
Phil: Yeah it does, I think a lot of people go into a relationship, or into a negotiation, if they're an investor buying, there's a lot of prejudices about the real estate agent. And a lot of the time those prejudices are very negative.
Tim: We hear that a lot, you know, on Real Estate Business, on the sister publication, around this whole question of, and I'll just say this, not in inverted commas but I'll just say that the real estate agents are just in it for the commission, the real estate agents earn too much, and we're seeing some sort of so-called disruptors coming into the marketplace on that ticket.
Gavin: Yeah. Aren't we.
Tim: And I'll let Gavin speak for himself, but just talking for the other real estate ... just in terms of what we hear around how much work gets done under the radar, or behind the scenes that real estate agents do in order to get a buyer and a seller, a vendor together in order to make that sale. And that's where I guess the money is earned, the fee is earned, the commission is earned. And a lot of the time that's not seen, so I think that people should bear that in mind going forward, yeah?
Gavin: Definitely, and I think you nailed it, and it's what I tell everyone in terms of, you're paid commission when you provide value. So that to me is everything. How much value is a real estate agent actually providing? I can tell you, with the market the way it's been going, particularly in the areas that I sell in, if you get three agents in, all three are going to sell the property. The big question is, what's the difference in the price going to be, because I can promise you all three times it's going to be different. And the value comes in who's going to get the best price. Does that make sense?
Tim: It makes a huge amount of sense, and that value in terms of those three agents, the one that is the best negotiator-
Tim: And that's going to get the best price, and that's where the value sits.
Phil: I think the point I'd make on that, Tim, is yeah, I completely agree with you, but I think when you look at agents, and I guess we're talking from a vendor perspective now about how to choose the right agent, they're going to come in and they're going to give you an idea of what your place is worth. But it's about attracting the right people to buy that property. So it's the agent who is the one who is most capable, most able to get as many people as possible to look at this property and consider it. And then you look at the price side of it, and the commission is something you get into it, I think.
Gavin: Correct. Let me throw a spanner in the works. How's this? The real estate agent doesn't sell the home, right?
Tim: That's interesting, yeah.
Gavin: You cannot, you cannot make someone make a multi-million dollar purchase if they don't want to. The real estate agent's job is to market the home properly, so exactly what you were just talking about, and then once they get the right person, be able to read the play to a point where they negotiate the best price. So effectively, what agents do is market, and they negotiate.
I don't know about you, and I don't know about you either, but I can't make someone buy a two, a three million dollar house if they can't see themselves living there. You know? I can put together a comprehensive marketing campaign that's going to attract the right demographic to the property, and then, and only then, I can implement strategy to identify who is the premium buyer, who's going to pay the most amount of money. And I do that better than anyone else.
Phil: I've sort of mentioned where Double Bay was, but you're one of the top agents in Sydney, if not Australia these days, and you're obviously doing it, and this is not a plug by the way ...
Gavin: I'll pay you later.
Phil: But you are, because this is the whole value side, so ...
Gavin: Listen. There was an apartment I sold last night, we were discussing about different price spectrums and I said to you before, I love the negotiation, I love the chase, I do it all. Without mentioning exact numbers and addresses, this property was on the market last year with another agent. That's not to big-note myself, just a prime example of ... and there are lots of agents who provide this value, right? But exactly what we're talking about. When it was on the market last year, the vendor asked the agent, do I need to do anything here in terms of presenting the property for sale? They said no, let's get it on the market. Let's get it on the market. Let's get it on the market. They get it on the market, they had an offer at $1.29 million. Okay? The vendors went back to them and said get him to 1.3 and we'll do the deal. He lost him for $10,000. Interesting.
To me, that agent is, or has commission-breath. That's the sort of agent you're talking about who just gives a shit about the commission. Can I say that on here?
Phil: Swearing's fine.
Gavin: Okay. To me that's a classic example what you're talking about. Now, they lost that buyer and then the vendor's pulled the property off the market, a few months later, called a meeting with me, they'd seen what I'd done in the area. Sat down with them and said, what do you think we need to do? I said, we've got to completely get this place ready for sale, in fact, I employ someone to specifically prepare the property for home.
There are three important elements to a successful campaign, that's price, presentation, marketing. Now presentation counts for a third of the success of the campaign. At the levels we're talking about, you just said, how many houses sell under a million? So we're talking a lot of money here. You've got to place importance on the presentation side of it. So we put in a lot of effort getting the place ready, furniture, we put it on the market.
Then, there was a bonus commission incentive above a certain price. Okay?
Phil: That's something you put in, or they put in?
Gavin: We spoke about it openly together. They said this is the situation which, what happened last time, what do you think you can get for it, and I told them what I thought I could get for it. They were happy when they heard what I said, and they went with it. We spoke about bonus incentive, I exchanged contracts for that property, and this is last night, without again talking numbers, we're talking about $400,000 more than where the other offer was. Now the market wasn't bad last year, and these guys, they paid me, you know, 3.5% on that deal, but they were more than happy to do it because if you look at the difference, that's an agent providing the value. That's where the value comes in, and that's the difference, because I identified a buyer who really, really wanted this property, they were perfect for it, the vendor wanted to sell it at a particular level, and we got the deal done prior to auction. That's providing value. If they would've sold that property last year, 1.29, right? They would have been out of pocket by, we're talking about $400,000.
Phil: And the market hasn't moved that much.
Gavin: Has not! It has not. So just like any industry, there are agents, and there are agents. Just like there are doctors and there are doctors. And there are interior designers, and there are interior designers. And the ones who, again, going back to exactly what you said, provide the value, are the guys who win.
Tim: I love the way that ... Sorry, Phil.
Phil: No, you're right.
Tim: I love the way that Gavin describes it, there are doctors and there are doctors and that, and I always like to have a look at the top agents around the country and compare them to the top sportspeople, just in that analogy, in what you were talking about there I'm thinking about, there are golfers and there are golfers. You know, some golfers can just play a couple of shots and they've got some good shots, other golfers have got a full range, they use all the clubs in their bag, and you were talking about those three things in terms of selling a house. That's pulling out all the clubs in the bag and playing all the shots, the tricky shots, and it equated to, what did you say? From 10 to $400,000 more.
Gavin: Correct. And look, the vendors were telling me, they were saying, sort of when we were halfway point and not even going, okay, sell it. And I'm saying, hold on. You know, I walk around at an auction room, at an auction last year when I was talking to a solicitor who was representing their client, who was there just making sure everything was okay, he was telling me to put the property on the market and I'm telling him, hold on. There's more in this. You know, 90% of agents are going to be saying to them, let's go. They just want to see the deal. And it's unfortunate because those are the people that get classified as being dirty, those are the people who are classified as just chasing the commission. Don't get me wrong, commission's important to me. Commission motivates me, I'm not saying that for one second.
Phil: No, money's not a dirty word.
Gavin: 100%. But there are priorities, right? And my priority is, and there are lots of other good agents out there, their priority is to get the best price for the client.
Phil: So as a property investor, I don't want to be buying off you then, because I want to get the bloke that I know is desperate.
Gavin: Probably not, I hear that a bit. Probably not.
Phil: But when you look at it, you know, when I buy a property right? I try and buy property off-market.
Gavin: Yup. Clever.
Phil: I try and get it before it gets to market, that's a big thing if you're an investor. I try and identify properties that have been poorly marketed.
Gavin: Very clever.
Phil: And this is where you get the gold, I've bought stuff where it's been on the market for six months, four different agents had a crack at it, et cetera, et cetera. And I use a buyer's agent, I can see the wood through the trees-
Gavin: Who do you use?
Phil: A company called Right Property. A really good organisation. And they'll go, Phil, have a look at this, it's been on the property six months, they can't sell it, it's really, really poorly presented, they use that, it's really, really poorly presented, it's got no street appeal, it's this, that and the other, and they go, mate, spend five grand on this and you'll make 60, 70K on it.
Gavin: Yeah, yeah.
Phil: So this is the stuff, as an investor, this is what I look for, but if you're a vendor and you're selling your property, investment property or whatever, or to an investor, if you're up against a guy like you who knows his game, knows how to package and persist at a property, knows how to sell it, knows how to negotiate, knows the role you play and how you add value, you're going to be a tough guy to buy off.
Gavin: 100%, no question.
Phil: You know. And that's okay, as long as, if you know that as a property investor in what you're trying to buy, you need advantages, and I look for advantages, and I look to play the advantages.
Gavin: And those are exactly what you have outlined, the key aspects, if I was buying, I'd be looking at. That as well as, I love buying off the plan. I think off the plan purchases, depending on where they are and other factors obviously involved, I love off the plan purchases. But those are the absolute key for that sort of thing.
Phil: So I'm a property investor, and I like to buy properties under market value, I get involved in a negotiation with an agent, and not all agents are created equal, I think we've pretty much worked that out. One of the misconceptions or, going back to our original comment was around you know, agents, what are agents up to, do you trust them and this sort of stuff. A lot of agents will try and create competitive tension with any sale, and that's what ... any sort of commercial transaction you want to make sure that there's tension there. How do you know, as a property investor and if you're buying property, whether an agent's bullshitting you? How do you get the read on, is there really someone else? This miraculous buyer that's just come out of the woodwork who's got ten grand more than you, or 50 grand more than you? How do you spot these things, is there any way that you instinctively can work it out?
Gavin: It's hard for me to comment on that, because I never do that. I never have to do that. I know if I was buying a place, and I was an in-tune, savvy investor, I would've thought I'd have a pretty good gut feel on certain things, right? So I think all investors buy on you know, return or numbers, rather than emotion.
Phil: As they should be.
Gavin: Which is good. Right?
Phil: They shouldn't be buying emotionally.
Gavin: If they get emotional, it's going to become a problem, right? But if there's no emotion there, and there's a gut feel or a feeling based on you know, feeling like it's bullshit, call the bluff. And if you call the bluff and you expose the agent, well it's like one big game. You win. And I think you can do that a lot easier being an investor rather than a homeowner because a homeowner, being emotionally invested and wanting to house the family, or the mother's having the kids, a hundred different reasons I can give you, they can't pass it up that easily. But I'd say always go based on gut feel. Just don't tar every agent with the same brush, because it's really not the case.
Phil: Absolutely, and agents, and it comes back to relationships, right? If you try and grab properties off-market, you'll do that because you have a relationship with an agent. If you start burning agents, you're going to get a reputation, and they're just not going to want to deal with you, they're going to go, this guy's a whatever, he's hard work, I'm not going to ...
Gavin: Correct. Big time, big time.
Phil: So being a property investor is about getting the advantages and knowing how to play it, but whether you're buying a property or anything, you want to make sure ... When I like buying stuff, and I like buying stuff, I'm good at buying stuff, I want to enjoy the process as well.
Phil: You know, a lot of people just kill it with negativity or averse negotiation stuff.
Gavin: It's a game.
Phil: It's so ... it plays on both sides.
Tim: That's an interesting point you make, I just want to ask Gavin while we're on that subject, the agents in the game, you talk to one another? All the other agents from the other, the competition in Double Bay?
Phil: When he's letting down the tyres from the bloke so he can't get to the next listing presentation.
Gavin: You know like, I've got no issue with 99% of agents. No issue. I don't blame the community or society's negative perception on agents, seeing how some of them conduct their business. Seeing how casually most of them take it. The issue we've got as agents and as an industry is, the entry barrier into becoming an agent is extremely low. So anyone can really do it. But generally speaking, there's one or two who, you know, I don't love, and everyone else I'm impartial about. You've got to remember, and again everyone's different, I'm very competitive so I'm there to win. I'm there to win. So by no means would I be rude or unfriendly, but no real issues.
Phil: So as an investor, how ... so we end up in a commercial transaction, how can I paint a picture of myself as an investor or a buyer, that you're going to prioritise me over other people that might be looking at a particular property. What can I do, what can I say, what can I show you that says I want to spend more time on this guy because I reckon this guy's going to be the buyer?
Gavin: I think, put effort and time into building rapport with agents. So, you know, if you think about some regular clients I've got who I look out for, we've built rapport through just doing transactions and deals together. And I know certain things about these guys. Certain things like, they're cashed up, they're ready to go, they move quick, they're not difficult in terms of, you know when we get into contracts, making deals over things that are kind of immaterial but they make just a big deal. You know, genuine, real buyers, ready to move. And ready to move at a decent price.
When we even talk about getting the right price or maximising the price for the vendor, to be clear, I'm not there to rip off buyers. When you say an investor would meet you, you know, I wouldn't buy from you, I'm not there to rip anyone off. I'm there to get the best price. And that doesn't mean it's ripping someone off. So often I'll have a conversation with an investor or someone who comes in and says we really want to buy it, and my simple answer is honesty is the best policy. I don't sugar-coat things. If you want to buy it this is the price, you can buy it at that, if you don't want to buy it, let's find you something else. And if you make the process smooth for the agent, and he knows you want more, frequency builds trust. Naturally that's going to build and kind of evolve over time. And I've got plenty of clients who I'll call straight away and give the heads up on things to come through at the start.
Phil: So these guys have got the advantage over other people, you get –
So as an agent, say someone goes, I want to move this property, I want to sell it. Will you try and sell that to your network before you market it outside of the network?
Gavin: Definitely. Always.
Phil: That's what a smart agent will do.
Gavin: And it's not just investors, it's homeowners as well. With the market the way it is, with prices the way they are, there's a lot less of that going on. For a couple of reasons. One, the vendor wants to expose the property, because there's lack of choice, lack of supply. If you compare, and I can only go off Ray White Double Bay's listings because it's all I know the statistics of, listing levels this year at the same time last year were 35-40% down, and listings last year were tight. So this supply/demand equation becomes an issue for investors, for homeowners, because it underpins the prices. Now an owner's going to most of the time want to go to auction now, and second of all, when you bring your network through, whether they be investors or homeowners, and you tell them the sort of price you want to achieve, they don't go for it, because they perceive it to be high. But then what happens is you go to auction and you hit it or more, because of the way the market is. So there's an interesting climate out there. There's an interesting climate out there. It's almost a hard one to juggle.
Phil: It is, and every market's different, right? Double Bay's going to be different to Bondi, different to Coogee or different to Mount Druitt, they're all very different, and I guess it comes down to the way in which you get the information you need to know to make a good decision. Within your ...
Gavin: You know your stuff, this is not your first podcast.
Phil: I've done one or two of them before. But you know what, I know a lot of real estate agents, we know a lot of very similar real estate agents, we run Real Estate Business which is for the real estate sector, we know guys like Tom Panos who is a gun in this space, both on a sell side and also from a media side.
Phil: And I feel quite fortunate that I've got this network of people that I talk to about property investing, right? And you know what, it gives me an advantage. So right now? This podcast is for me as much as our listeners, because I'm sitting here going, what can I extract out of you to improve my knowledge so when I'm making my next buying decision I'm going to have that little bit of advantage. I enjoy the game, I like to win.
Gavin: Yeah, don't we all?
Phil: Nothing wrong with winning, but it's got to be done the right way as well, because you know, as a buyer you're ... you don't want to be pissing off, I don't want to be pissing off agents. I like agents, and I get how to get the best out of them.
Gavin: You're one of the only few, by the way.
Phil: Yeah, well hopefully we can try and educate, because I think a lot of people make the mistake of just going into these negotiations to burn it, and try and get the price. And the best price, say you're talking about 10 grand, 20 grand, 30 grand, whatever it is, if you think that if you buy for a fair price, and I try and buy under market value properties, but you buy for a fair price but you create that relationship, moving forward you're probably going to get greater value, because, it's when an agent calls you up going Phil, I don't know if you're ready to buy, but this person, if they don't sell this today the bank's going to punt it, do you want it? You go, that's when you get the goal.
Gavin: But how often is that happening at the moment?
Phil: Not a lot.
Gavin: Not a lot.
Phil: Not a lot. You know.
Gavin: With interest rates the way they are ... And I can, look. I'm no expert when you go out of the Eastern Suburbs, but that hasn't happened for me for a very long time.
Phil: So how many buyers off you become clients eventually?
Gavin: A lot.
Gavin: A lot. So you know, again part of the services is, buyer's agents out there's becoming a big thing. It's a growing industry. Rapidly. And part of the commitment when I'm selling for a vendor is actually including a buyer's agent side to the service. So what I say is, once we get through the process, I'll act as a buyer's agent for you for free. And I say to them, and I'm up front and I set up the expectations at the start, and I say look. I'm not going to be sending you a hundred properties a day, you know what you like, when you see what you like contact me, I'll go through, give you my view, bid at auctions, negotiate the deal, because it's another string to add to the bow for me, and it's also because I just friggin' love the process. You know, like I love bidding at auctions. I love negotiating deals. I love, I'm attracted to it. In a sick way.
Phil: But you like the game, you like the game.
Gavin: Yeah, it's all the game, and then there's also a pretty significant list of buyers who will come to me to say, hey listen. This is what I want, right, when you find it for me, you get my house to sell. And they dangle the carrot. Which is always attractive, so I get to do what I like and then I get to list a property, and then sell that. So a lot, yeah, and you need to enjoy that process. I think motivating an agent by saying, you know, find me something at a good deal and I'll give you a property to sell is always going to be attractive to an agent, right? Not everyone can do that all the time, and a lot of savvy investors, they're not selling much, or I personally wouldn't. I mean, don't sell property if you don't have to. I'm talking myself out of a job here.
Phil: Oh, I've never sold a property in my life.
Gavin: Yeah, it's obviously-
Phil: I've bought a lot, and never sold one. So, you know. But staying on this theme of having advantages on the buyer side, as an investor, would you prefer to deal with a buyer's agent than a buyer?
Gavin: Yeah, I would.
Tim: That's interesting, Gav.
Gavin: I would.
Phil: Interesting point, so ...
Gavin: Unless they're savvy, and well-experienced in the game, like someone like yourself. I like to move quick. My team and I want a really sort of fast-paced machine, and the sort of procrastination and the back and forward can be a little bit tedious. And everyone's different. When you've got a buyer's agent representing a buyer, they will play the game with you, and it's also fun, because they're trying to get the property at the best price, you're trying to sell it at the best price, and it becomes a game ...
Phil: It's pure negotiation.
Gavin: Once again, right? But they facilitate the process a lot smoother, because they do a lot of it. Everyone negotiates a different ... part of what I like to do, always when someone wants to make an offer on a property pre-auction before it's hitting the auction room, I always get people to sign a contract. I don't waste time with verbal offers, because to me talk is cheap, and until it's on a contract it's not ... And you know, some buyers you have this conversation with it can kind of freak them out. I need a signed contract that's unconditional with a 66w certificate, which probably everyone on this show knows what I'm talking about, means it's no cooling off, and a cheque to present it to the owner. That sometimes can freak a buyer out, well why do you need that? Whereas a buyer's agent understands the process and how it works and that when you've got a signed contract it means it's a fact, and when you sit with the owner and you present it to them, they're making decisions based on real information that they have, exactly like you said. Whereas when it's just talk it's ...
Phil: So that's an important point then, if you're serious about buying. If you want to low-ball an offer, putting in a proper contract though is going to show that you're serious about it.
Gavin: Definitely. Definitely.
Phil: Yeah. That's good.
Gavin: But again you've got to be careful with that, because if someone low-balled an offer on a property, with me anyway, and they even signed a contract and it was low-ball I'd just hand it right back to them.
Phil: Yeah, that's fine, but they're going to know. It's part of the process.
Gavin: Of course. And the agent has to communicate that to the vendor.
Phil: They have to.
Gavin: So that in a way is beneficial to the buyers, of course.
Phil: So the buyer's agents that you've dealt with, or buyers, what are the ... it's a game, right? The buyer wants to get as much information as possible about the vendor and their reasons for selling, and the drivers behind that, to help them best frame the way in which they can come up with an offer, right? It's just the way it works. What are the sort of best open questions, best questioning that really good buyer's agents or buyers ask you to try and get as much information they can to help them paint the best scenario? Is there anything in particular?
Gavin: Well why don't we talk about how I would manage it if I was repping a buyer, right? So certain things I always like to know is, why is the vendor selling. Vendor motivation is key.
Phil: You just ask, why are they selling?
Gavin: Oh mate. Don't ask, don't get. I learned that from a very, very young age. I'm not scared to ask any questions, to a seller, to a buyer, to an agent, doesn't matter. So I always want to ascertain if I'm buying for a client, why are these guys selling? Are these guys dipping their toe in the water? Are these guys going to waste our time, send us down an emotional rollercoaster? Or, a time-wasting rollercoaster if you're an investor, and not end up doing the deal. So it's important to know what's the motivation here.
From there, I'd want to understand what's written on the agency agreement. From there I'd want to understand how many contracts are out, which doesn't necessarily mean anything, but from there I would want to know, if this property were to go to auction tomorrow, how many of those contract-holders would actually turn up at auction and put their hand up. Right? These are the certain questions I ask. Now, unfortunately not every agent is going to answer those questions. If someone asked me those questions, I'd answer everything. Because it's the same thing I say to the buyers and sellers, honesty's the best policy.
Phil: Absolute transparency.
Gavin: Just be blunt about it. And it also qualifies better, and it eliminates this whole ... Time is money. Time is, the most important commodity, not only to agents, to everyone is time. So why are you going to waste it? I constantly harp on about how important time management is, productivity is, and I find when you fluff, or when you muck around, or when you talk shit, you just waste time. So just call it how it is. And a lot of agents will.
Tim: But not all agents do, do they?
Gavin: Unfortunately not.
Tim: Yeah, yeah. Yeah.
Phil: They're the guys that's probably got about 50 listings that they can't sell, and they're probably somewhere else, you know ...
Gavin: Yeah. And or they'll have no listings.
Phil: But you guys are, you know, you're ... It's, what is it, the Superbowl where you guys are, right? Every day. It's big ticket, you've probably got reasonably sophisticated buyers and sellers.
Gavin: Very, very.
Phil: Who are all ... because of your price point, they're probably reasonably wealthy, and they've probably got jobs and all the stuff that gives them a lot of experience. But the buying, and for me, because I love buying stuff, as I said before, and I like to win, so...
Gavin: Do you buy off the plan much, I mean you talk about how you...
Phil: No, never.
Phil: Never. No. Never buy off the plan.
Gavin: Why, out of interest?
Phil: I don't like the uncertainty of it, to be fair. A couple of things, I don't like the uncertainty. So for me, buying off the plan, and don't get me wrong, some people buy exceptional properties off the plan, and probably where you are, because it's pretty tightly held and all of the stuff coming up, higher ticket price, and people are probably a little bit more in tune to maybe a bit more of a punt. But for me, buying off the plan is something ... you buy at today's prices are going to be, you know, two, three, four years' time when it's built, potential for growth there.
Phil: Makes me nervous, but some people absolutely kill it. Buying off the plan for me, I often don't like the way in which the product is marketed. So I think many times a lot of buyers, particularly if they're not sophisticated, get sold up on glossy brochures or this big dream, and ...
Gavin: Right, so you think the price climbs?
Phil: Yeah, well, someone's got to be making money somewhere, right?
Phil: The project marketer's either making some cash or, somewhere along the way. But as long as you know that, as long as you know what is the inherent value of a property, so if you're buying two-bedroom apartments in Double Bay, you've probably got stuff which is built in the 30s and 40s, you've probably got stuff which is brand new, so you should be able to establish pretty quickly what is the price today for a newly-built, one, two years old two-bedroom apartment in Double Bay, with or without views. There's probably a point. So if you can buy at that price, off the plan, I'd have a look at it. But a lot of people just don't know. They just don't know the inherent value of it, so I think a lot of people new to property investing get sold up on this idea of off the plan, and they think that's why you buy property. I've got to buy new, new is better. They get sold up on, hey, if you buy this you're going to get some great tax breaks because of depreciation. So I think a lot of people always look at the ... I always look at, you know, what's this going to cost me in cash? Whereas a lot of people look at off the plan purchases based on a taxation outcome, or something or other. So this is my view, what do you reckon? Why are you an off the plan man?
Gavin: You know, when I got into this business was always being put under pressure to buy property, right? And when I bought my first place, I'm just particular in terms of, if I'm going to live in an apartment it's got to be new. I grew up in a really old, run-down apartment, let's not get too into that, it was ... I didn't want an old place. I didn't want to live in an old place. So I found that, I bought a place off the plan and from there, continued to do it a few times and it's just worked out really well, obviously because the market is climbing. Now bear in mind, they're in really good locations, with very well-known and respected architects and builders, that, you know, I felt really comfortable with at those levels. And on all of them have done reasonably well, but again that's on paper, if the market tapers off tomorrow then it's a different story, but I feel as well the particular areas I purchased in had a lack of new properties. You know, sometimes markets where there's off the plan properties are saturated. That's an issue for me. But in these high-end areas where there aren't a whole heap of choice or options for people who specifically like new buildings, new properties, just like there are specific deco apartment buyers, they're always going to be pretty sought-after.
Phil: It's all about demand, you know. If you own a property you'd need to make sure, it's got to be in a place where people want to live, it's the type of property that people want to buy or rent, it's close to all the amenities and transport and all that sort of stuff, but rarity is something which puts price pressure on a property. So in the Eastern Suburbs a lot of deco stuff, there's probably more deco stuff than new stuff now, particularly because of ...
Gavin: Yes, for sure.
Phil: And the new developments that come through in Double Bay, I imagine you're probably ...
Gavin: 30,000 a square metre on a new site in Cross Street in Double Bay last month.
Phil: And they don't sit on the market very long, right? They probably get snapped up pretty quickly.
Gavin: 30,000 a square metre. One-bedders for one and a half, no parking.
Phil: Yeah. Pricey.
Tim: Sounds like it's off the plan also, and there's off the plan and there's off the plan, like you were saying earlier, agents and agents, and doctors and doctors.
Gavin: Yeah, definitely.
Phil: It all comes down to, what is the inherent fundamentals of a property, whether it's new or old, whatever, what is it? What is it about it –
Gavin: How many boxes does it tick?
Tim: Yeah. And know the boxes, and know which ones are ticks, know what you're doing, know what you're looking for.
Phil: Mate, we're going to have to wrap up Gavin, but you mentioned, something I picked up, that you love auctions.
Phil: And they're cool, you know, they're really good.
Gavin: I love ... That auction floor is like, I'm more comfortable there than anywhere else.
Phil: Who's your chief auctioneer now?
Gavin: James Keenan.
Phil: Okay. He's not bad.
Gavin: Weapon. He's a weapon.
Gavin: I love Keno, he's a good man. He's patient.
Gavin: And that helps. You know, it doesn't matter how long it takes, there's never, he never tries to wrap it up quickly. Never.
Phil: So as an investor bidding at auction, take the emotion away, you know, make sure you get a price point that you're happy with, you're not going to move from, but if I was going to sit down with your chief auctioneer and say, and I'll do this via a third party, what's the one thing that you should never do at auction, what would he say?
Gavin: Sit on your hands. Why on earth, it perplexes me, I just don't understand it. If you've come to buy the property, like you say, you set yourself a limit, I think that's important, but what are you waiting for? What's ... I don't understand why someone waits to put their hand up. I mean, particularly to see where it unravels. I'll give you my top tips for auction, because I friggin' love bidding for people, right? And I have this meeting with everyone before we go into an auction and bid, okay?
So for me, step one is, I'm always the first person to bid. Always. But it's very low. I'll tell you why I do that. If I bid first, right, albeit low, but first, and I stand at the back of the room so I can see what's going on, I then after that get rid of the hard part, and the hard part is the first person to bid. Most of the time, I'm speaking generally. Once one person bids, it starts to unravel.
Once the thread comes out it starts to unravel, so once I've made a low bid, which is way away from even what they've been quoting and I know the reserve, other people start to bid. And then I shut up, and I stand back and I watch, because it's good to see how many people are here, and who am I bidding against? It's again, just one other big game. I will not bid again, right, until the property is about to be sold, and I'll tell you why. The person who's about to buy it, and I'm not even talking like maybe, I'm talking second, third, about to be sold to that person. Provided that's within the range of the budget I've got and the number I've set, I'll bid $1,000 just before it's about to go to that person.
And then all I'll do is focus on that person, not even a look at the auctioneer again, providing it's within the number and budget I've set myself, and just focus on mentally psyching them out. Right, and so what that means is, as they bid, knee-jerk reaction bidding as a response to them so that they feel, even if I'm right up against the line of my budget I'm never going to stop. And I have auctioneers throw out plenty of funny comments to me, like oh, he waited longer that time, we're not even letting him finish his breath and bid before I've bid again. And the auctioneer even saying to the other buyer, you know, he's going to run out of steam soon when I'm like $10,000 away and I'll respond to the auctioneer, am I really? You know, so it's all just a psychological game, I feel, wherever you are. But I don't understand why people just ... I get when they'll sit on their hands to wait for that very sharp end of it, to then capitalise, but you know, the auctions kill me when people just sit there and no one puts their hand up. Why'd you come for, then? So don't sit on your hands is what I would say.
Phil: So do you think if you put the first bid in, low, and then you're quiet, everyone else is thinking oh, that bloke's ain't got enough money, he's not coming back in?
Gavin: Always, every time. And again the auctioneers throw out, and it's just one big game, they always say you know, the guy who started it's going to finish it, where did he come from? We didn't think he was going to be here. This guy thinks he's going to get it then comes a $1,000 bid out of nowhere and people are like, what, how?
Phil: How do you know, and it's tough, you're probably going to answer it depends, but how do you know when you sit there and you're going through a process, it might be $100,000 bids and it gets into tens of thousands and then down into like nine, eight, then you're into 1000s, right? When do you know that the auctioneer is actually going to sell it, you know? Is there any ... because they're like this is it, last final, whatever?
Gavin: So they have to announce the property's on the market. They have to. Once they've done that, right, and you've got to be really comfortable to manage this. Like I said before, I'm so comfortable in an auction room. I'm as comfortable in an auction room bidding in multi-millions of dollars because I've done it so many times as I am you know, sitting in my bed in pyjamas, relaxing with a cup of tea. It's exactly the same for me. And so when an auctioneer announces that the property's on the market, it's going to be sold, first, second, third call. If no one else makes any other bid apart from that, about to hammer go down, you know it's going to be sold.
Phil: So they go first call, second call ...
Gavin: Third call.
Phil: Third and final call?
Phil: It's going to sell.
Gavin: It's going to sell.
Phil: So if you want to bid you've got to get in there then.
Gavin: Right then, yeah.
Gavin: And some people ... I'll go right up until third and final, literally before he's about to slam it, and throw in a thousand bucks.
Phil: Yeah. Okay. And it's okay to ask them if the property's on the market? Would you ever sort of put a heckle in there?
Gavin: Yeah, a lot of people do it, but it's like ... the auctioneer just tells them to shut up in a nice way anyways. Every time I've seen someone ask that, the auctioneer responds, I'll let you know when the property's on the market. We'll tell you when the property's on the market. So you know, I always recommend to people if we're going to try and buy for them at auction, we don't want to see this get passed in. Let's try and get this on the floor. And every agent's different, like we spoke about before, but the key here is to secure this property in an open and transparent environment. That's important. Because once it gets passed in it becomes ... it can become hairy. I would much rather know that I'm getting it in that transparent environment.
And so other examples whereby the property hasn't reached reserve when I'm bidding for a client, or you know, they haven't created a sale, I'll often call the agent over and I'll say to him, go speak to the owner, tell me what the bottom line is, and attempt to negotiate to get it together on the floor. That to me is important.
Phil: For our listeners, the vendor and their representative agent never want a property passed in at auction.
Gavin: Depends on the agent.
Gavin: It depends on the agent.
Gavin: So now I'm talking about the investor, right? You know how you were talking about before, how do you know if an agent's bullshitting or not? Pass the property in, an agent is in a position to bullshit. Do the deal on the floor, it's transparent. You're seeing everything that's going on. So, you know, I like transparency.
Gavin: I like transparency, so as well, unless ... I'm a big advocate of auction, when I'm buying, when I'm buying for clients, I'm an auction agent.
Phil: Okay. That's all right. Tim? Anything mate, we're going to have to wrap up.
Tim: Mate, I just, you know for the listeners, you can't see this but this guy's for real. When he says he's comfortable, and when he says he's into auctions, I mean his whole face just lights up, and you can see it, and he wears it, and you remind me of the Tiger Woods of golf when Tiger Woods first came on the scene.
Phil: Too many analogies!
Gavin: I'm going to pay you both later.
Phil: Mate, you're paying us with advice, you know, or insights. Yeah, the better informed you are, the better you are at doing what you're doing. It's simple, it doesn't matter what it is.
Phil: Use analogy. Doctors, lawyers, whatever.
Tim: That's, yeah.
Gavin: And if anyone wants to have a look at just property posts just in general, Instagram @g_rubinstein, there's constant sort of daily updates there, it's always fun to look at.
Phil: That's good, yeah. Check it out.
Gavin: Thank you guys, appreciate it.
Phil: Mate, yeah, thanks for coming on. Enjoyed it. Stay in touch, and let us know any gems that you've got, but we'll get you back on the show and try and pick your brain a little bit more. But I think you've been very open and forthcoming in sharing your years of expertise in the real estate game, and I think a really couple of valuable things you've said today for me, you know. Being a bit ballsy at auction I think's one of them, you know. Know what you're doing and have fun. You've got to have fun with this sort of stuff.
Tim: You've got to have fun, and you can see it. Yeah. Absolutely. There's a lesson there, dead right.
Phil: And make sure you look for those advantages whenever you're dealing with an agent as well. You know, whether you're on the buy side or the sell side, you want to be a buyer that people want to do business with, and if you're a seller, you want to make sure that you're not only choosing your agent based on the commission that you're going to have to pay with them, because you know, you might pay a little bit higher commission but if you're selling properties for tens of thousands more, everyone wins.
Gavin: Yeah. You've got to be careful about that, again just to finish off, it's a great point to finish off on. The cheaper agent in the proposal side of appointing an agent is most of the time the more expensive agent. Not all the time, right, most of the time. Because while he may be cheaper in marketing, while he may be cheaper in commission, his skill-set is likely not going to be at the level of the more expensive agent. And I can tell you that because if an agent's cutting on marketing, we just spoke about the three elements, price, presentation, marketing, that's a disadvantage to you. That's going to make the price less. And if the skill-set is not on the same level and the price they're getting is less than the more expensive agent, the net position of you at the end of the process is often a lot less. So, big big one, the cheaper agent in the presentation is nine out of ten times, when the transaction is done, the more expensive agent.
Phil: Well if your property is poorly presented, poorly marketed, poorly priced, you get guys, experienced investors like me coming up and making sure that I get that as cheaply as possible, so you know. That's the way we do it.
Tim: You don't want to leave a gap open.
Phil: Yeah, it's good. Thanks Gavin, appreciate it mate. Tim, good one, appreciate you joining us again.
Tim: Good work today mate, yeah.
Phil: Remember to check us out, smartpropertyinvestment.com.au, we're on all the social stuff, Facebook, Twitter, LinkedIn. Remember to go to the website if you've got any questions for Gavin, or me, or Tim, or about the show in general, contact us, [email protected], that's right. Keep those reviews coming on iTunes, I was slightly disappointed this morning when I woke up and I saw that we'd slipped out of the top 10 on iTunes, so ...
Tim: Big, big fall.
Phil: This is your fault I think Tim.
Tim: Oh, not my fault.
Phil: Ever since I've brought you in here we've been ... no, that's good.
Tim: Oh, gee, Phil I knew you were going to go there.
Phil: No, we've been doing really well, but please keep those reviews coming on iTunes, five-star rankings which is great, and please do leave a comment, the more of you guys that just spend that couple of minutes just to do that for us, we keep sort of rising through the ranks and making sure more people listen to us. Which is what we want to do, keep you informed and give you the intel you need to do to be a better property investor, so thanks for tuning in, we'll see you next week. Bye bye.
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