Year One as an Estate Agent

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So you’ve chosen to be an estate agent.

Congratulations.

Let me shower you with praise and approval. Lord knows you’ll need someone to cheer your career choice on, because estate agents enjoy the same status in our community as used car salesmen and politicians.

Being a newbie estate agent is an emotional rollercoaster. On any one day you could sell a home for a record price, cop an absolute earful when cold calling, help someone through one of the most difficult transactions of their life or lose a listing you’ve fought tooth and nail for.

Having been there and done that, I present you with a practical guide to your first year of being a newbie estate agent. You’re going to learn more about yourself, about people and about life than you ever thought possible. Enjoy it all.

1. Prospecting

Your success in real estate is predicated by your commitment to creative prospecting. First stop: cold calling. Being the new kid on the block, you’ll most likely be ‘shadowing’ a Principal or senior agent while you get your bearings. During this time, you’ll probably be given masses of old OFI sheets with barely legible names and numbers on them. If you’re really lucky you’ll be given data groups to call through on your company’s CRM.

You’re going to need to make yourself comfortable with calling people who don’t really want to hear from you very quickly. I’ve seen many real estate careers swim or sink based on the agent’s capacity to deal with rejection and social disapproval. Prospecting successfully begins with the attitude you bring the activity.

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If you anticipate a gruff response or an immediate hang-up from your prospect, or if you strike an apologetic tone – you’re starting at a real disadvantage. You need to understand that the recipient of your call is fortunate to be receiving your service and attention. You’re calling them for a purpose, right? Come to each conversation with a purpose. I recommend sharing information as your most successful point of introduction. The more specific the information you can provide to the prospect, the better: always ask them for email addresses. And never, ever ask if it is a good time to talk.

It’s important to acknowledge that not all phone calls result in data and quality conversations. If a buyer’s attitude is poor and they behave badly, they get deleted from the database. You don’t want to prospect people who are jerks for the rest of your career, rite?

Think creatively about what you can offer, and come to every prospecting action from the position of doing the call’s recipient a favour. The tone in your voice and bearing will change. So will your hit rate.

2. Presentation

The way you present matters. As in all service industries, your dress should serve to maximise connection between you and the client you serve. Have you got a million tatts and piercings? Do you live exclusively in leggings and Homer Simpson t-shirts? (If so, I am jealous of your comfort and sartorial splendour). No matter how snazz-tastic your wardrobe, your personal style has nothing to do with the way you will present as an estate agent. Tips on dress for your first year out:

  • Wear the best fresh and clean business wear you can afford. Target does a good job of it.
  • Don’t wear sunglasses (not even on your head) at opens. It creates a barrier between you and your audience, and signals a louche casualness.
  • Avoid getting all your goodies out. Look gorgeous or handsome by all means, but there’s no need for too-tight shirts or too-short skirts. It’s not comfortable, either.
  • Make an effort to smell good, not overwhelming.

You can – and should! – let your personality shine in the business attire you choose: but remember first and foremost that you want to create as few barriers to connection with your clients as possible. Be what they need you to be for them. Some clients will want a pitbull negotiator personality. Others will want a patrician market expert with a superior gift of the gab. Be nimble and flexible with your presentation and approach to each client.

3. Winners & Losers

You’ll win some deals, you’ll lose some deals. Learning how to ride the highs and plumb the depths without losing your mind is the secret to getting past your first year in ‘the game’. You’ll get better managing your emotions and expectations around listings. If you’re beginning your career in an agency that understands the import of mentoring junior team members, you will be supported by a more experienced team member who will hopefully help you put losses and wins in context.

In the early stages of your career, every win and loss is an opportunity for learning and refining your skillset. What worked so well about your dialogue with that particular client? What could be been more relentless about your approach to prospecting a listing snuck from under your nose? Keep on keepin’ on. Real estate success requires a determination to keep learning and improving.

A note on lost listings: if you don’t have a relationship with all ‘decision makers’, it is very hard to win the  business. Also, not all listings are ‘for you’. Some lost business may be a blessing in disguise with a nightmare vendor who never sells! When you lose, just think: what’s next?

4. Education

Happily, real estate and sales training can be found with ease.

First stop for education should be within your office. Your Director or mentor will ideally be taking an active role in your development by showing you best real estate practice. Too often, individuals who could be perfectly good estate agents leave the industry because they’ve been starved out by their office (i.e. Directors hogging all leads in a tight market, leaving inexperienced agents with nothing to work on or experiences to learn from), or simply sent out to be agents on their own without support. If you feel you are not being adequately supported by the organisation you’ve chosen to work with, look elsewhere. Real estate careers are long ones – make sure you select the right environment to begin yours from.

Beyond in-agency support, attend all the formal training opportunities provided by your organisation. Trek to AREC and be inspired by some of the best real estate thought leaders locally and internationally. Listen to (any number of) real estate podcasts for amazing ideas on prospecting and dialogue. Pore over your copies of Elite Agent for the many clues left by success. And read, voraciously. Business, fiction, personal development: it doesn’t matter. New knowledge means better connections  with your clients and better BBQ banter in your personal life.

Whether you become a career estate agent or you use your time in the industry as a platform from which to springboard into another people-centric service category – have a blast! You’re dealing with people at their very best, and their very worst: it’s a privilege either way. 

 

How to Win at Auction Without Being a Tool

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Last weekend I attended an auction in my neighbourhood. I was just sticky-beaking and enjoying the Saturday morning theatre. I arrived early and had a peek around the property after being greeted by a cavalcade of junior agents with iPads (don’t be mean to them … we were all young once and wore shiny polyester suits and sunnies on our head inappropriately until we knew better).

At auctions, you can almost always tell the serious, interested buyers from those who – like myself – are attending for sport. They tend to fall into two categories:

Serious bidders at auction be like:

The ‘Been there, done that’ bidder: older purchasers who are standing at some distance from the auctioneer. They arrive five minutes before the auction, and don’t attend the open. They’re cool ‘coz they’ve purchased property before (and they’re probably superannuants with loads of equity). Bless their cotton socks (and their Uniqlo vests over cashmere paired with chill AF oversized sunglasses).

The ‘I should have done a nervous poop at home before oh God why didn’t I do a nervous poop why does this always happen to me’ bidder: they’re newbie first home buyers (although they might not be spring chickens, given the state of the Australian economy). These guys arrive ten minutes before the open for inspection begins, spend quite a while inside the property and then stand around right in front of the home waiting for the auctioneer to emerge. They’ll often be on obviously chatty terms with the agents, and have brought a horde of supporters with them.

At Saturday’s auction, both of these bidder types were present. Both bidders probably had the wherewithal to purchase the property, but it was the ‘been there, done that’ buyer who nabbed it in the end. And their strategy? It was to participate and not be a tool.

The ‘been there, done that’ couple waited until the auctioneer made a vendor bid, and then made a fair offer that was within quote range (although at the lower end). There wasn’t a huge amount of interest in the property, and they patiently waited for another bid to be made. The ‘I should have done a nervous poop’ buyer was obviously chomping at the bit to make a bid. He was a fella in his late 30s, rocking to-and-fro on his toes and trying to stare the auctioneer down. The auctioneer (who clearly knew this purchaser had an interest in the home) continually referred to this purchaser, giving him an opportunity to bid.

At this point the property wasn’t even on the market. Even if he did bid, he still wouldn’t have purchased the property as it had not made reserve. The ‘I shoulda done a nervous poop’ buyer was occasionally conferring with his partner and parents while the crowd waited to see if he would bid. He went on to ask questions of the auctioneer, before eventually saying he would make a bid of $1000. As I said, the property wasn’t yet even on the market, and the newbie buyer’s strategy was seriously impaired: if you want to have first right of refusal to access to reserve and negotiate with the vendor, you need to be the last bidder. You need to have the property passed in to you.

Of course, his $1000 bid was rejected (they were calling in $10,000 brackets), and the happy-to-participate ‘been there done that’ buyer went inside and purchased the home. The difference between the more experienced bidder and the newbie bidder comes down to this: a willingness to participate and an understanding that tricky strategy at auction is a load of hogswash. You got the money or you don’t. You participate or you don’t.

I bet the newbie buyer was spewing that they didn’t purchase the home they had so clearly invested in emotionally. From stalking nervously outside the front of the home to in-depth conversations with the agents and bringing a horde of supports along for the ride: they wanted to buy the property. But they got too caught up in micro-strategy and trying to be smart, excluding them from negotiating with the vendor.

Bidding

Here are my top tips for winning at auction (without being a tool).

1. Have finance pre-approval in place. Don’t even begin looking for property until you’ve got a hard budget to work with. It will only lead to heartache! Bidding at auction without pre-approval is something you should never do, as when you purchase at auction there is no cooling off. (Pro-tip: use a broker, not a bank.)

2. Take action (within your budget). If you’ve found a property you’d like to buy, participate in the auction. Don’t be like our poor mates who psyched themselves out with gameplaying and froze. Raise that hand and bid.

3. Don’t get too smart about bids. Putting forward a $1000 bid early on in the auction – before it has even reached reserve – is a tool move. By all means once the property is on the market, break down those bids as you see fit, but do so with purpose.

4. If a property is going to pass in, make sure it passes in to you. You’re not obligated to purchase at the vendor’s reserve – but you’ve won the opportunity to negotiate and know the reserve. If you don’t have the property pass in to you, you may have it stolen out from under your enthusiastic tootsies, which would suck.

Follow-Up Letter Fails

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For the sake of efficiency, most real estate agencies use standard letters of some kind in their practice. Whether they use form letters that come as part of their database, or developed their own set of generic communications fit for property management or sales department purposes, standard letters are simply part of the landscape.

Not all generic communications are welcome or helpful, however. I recently received this (highly redacted) standard letter sent from one of Australia’s leading real estate agents to a past vendor (inserted below). Kerry (the letter’s recipient) told me that although she really liked the estate agent who sold her home and considered the sale a job well-done, she found this automated letter insensitive and mildly offensive. She’d been receiving exactly the same letter for years, and finally decided to share her feelings about the repetitive, unhelpful form letter with the agency in question by editing the letter, and sending it back.

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As you’ll have noted, Kerry has made her own amusing amendments to the standard ‘anniversary’ prospecting letter, highlighting how being reminded of her sale (as the result of a relationship breakdown) was not the best way to win her business.

Agents and BDMs have all likely experienced blowback from prospective clients for insensitivity when prospecting. I recall being verily blasted by a screaming elderly gentleman in the depths of grief when I rang his home number and asked for his wife. “She’s dead!” he bellowed. “Deeeaaaaddddd!!!!” Needless to stay, I took his name off our database quicksmart – and felt pretty dreadful about the whole thing to boot. Of course, we can’t hope to know the ins and outs of every individual we might cold-call who wandered through one of our opens five years ago. Occasionally making mistakes is just human, and sometimes irritating people is almost part of an estate agent’s purview.

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But we can take steps to ensure our current and past client prospecting is useful and sensitive. Particularly when it comes to form letters. They’re one of the most controllable forms of prospecting an estate agency does. Whether they’re sent out via snail-mail or arrive as newsletters from your database, form letters are one of the most powerful client outreach tools we have.

It’s worth considering, then – just how many ‘Kerry’s’ might you have on your database? Clients who actually liked your service, but have found your ‘post sale’ care invasive or insensitive? Referrals are some of the very best sources of business estate agents can come by, which is why investing in quality standard letters and working out when and whom you should sent them to is such a valuable activity. Here’s a few things to consider when it comes to the form letters you’re currently using:

  • Are they standard issue from your database? If they are, it means that hundreds of other agencies around Australia (and potentially in your farm area) are sending exactly the same letters to your prospects. Your prospects will notice. They might not say anything, but they’ll notice that your communications are decidedly generic and estate-agent-y. Good news is: you can create new letters and nip this problem in the bud.
  • Are they relevant? Just how valuable is an ‘anniversary of sale’ or ‘anniversary of leasing’ letter, really? Unlike the anniversary of buying a property (broadly considered a positive event), the motivation behind a vendor or landlord choosing to sell or lease their home can be as the result of a separation, death or change in financial circumstances. Rather than using a form letter to fish for listings from prior vendors, it’s probably better to give them a phone-call or send them a friendly (non real-estate branded, don’t be tacky y’all) card in the mail.
  • Can they be more effective? Generic form letters do the trick: they’re bland, they’re branded, they allow you to put in your client’s first name or property details, they communicate a request or offer and they may serve a due diligence requirement. BORING. That’s what’s they are. Subvert the dull and insensitive form-letter trend and choose to create a suite of powerful, clever call-to-action communications for your estate agency. You might choose to do this as a team, you might divide the task into sales and property management team tasks – or you might have the talented folks from Ruby Slipper create a suite of ripper communications on your behalf.

From lease renewals through to ‘just listeds’ (I think we should all put ‘anniversary of sale’ letters behind us for now) – can your mailouts and EDMs be more effective?

Never Pay for a Vendor’s Marketing

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It’s the start of a new year in Australian real estate land, and agents all across the nation are slitting each other’s throats for the chance to hold an authority in their hot little hands. 

At the start of each new year, there is terrific pressure on estate agents to kick off on the right foot with plenty of real estate on their stocklist. Subsequently, commission fees and pants are dropping at a rate of knots, as agents scramble to list property at any cost. Much of this pressure to list comes from panicked Principals whose weekly sales meetings are enough to send their teams into paroxysms of panic as they wonder ‘will I list this week’?

When you’re working in a real estate business where the predominant motivator to list business is fear and punishment rather than a narrative of professional development and team support for your individual strengths, making good decisions about your financial future becomes a hard task. As your retainer stacks up, your confidence begins to dwindle. The thought of not making your KPI for the month makes you nauseous and dry-mouthed.

So when a vendor you’ve assisted over a period of ten years with regular appraisals and negotiation tips to purchase finally decides to list their home with you, you get excited! There is only a couple of provisos: you’ll need to drop your fee to match the cut-price agent they’ve had visit their home for the first time and you’ll need to pay for their marketing.

Well. After you’ve finished shaking your fist at the Gods and ruing the day you ever met these cheapskate vendors, and after you’ve finished monologue-ing to your partner that people these days are worse than they were in the 90s, you realise you’ve a decision to make. Will you meet their terms? 

I understand how achingly you want this listing. How much pressure you’re potentially under to list at whatever the cost. But agent, the cost of listing badly is high.

Here are some of many reasons you should never pay for a vendor’s marketing:

  • The Numbers Don’t Add Up

If you agree to pay your vendor’s marketing – even if it’s only internet, photography, copywriting and basics – you’ll personally be up for several thousand dollars in costs. Say your total fee for the vendor’s home is $20,000. You’re on a 30/70 split with your Principal, so you’ll garner $6000 for this sale. MINUS your superannuation and any fees your Principal additionally takes. And MINUS your $3000 vendor advertising. That leaves you with around a $2000 profit. And the taxman hasn’t even been paid yet.

It doesn’t take a super-genius to recognise that this is a shit deal for you, the agent. The vendor is on a good wicket. Indeed, your Principal still makes money. But you? If you agree to pay vendor marketing you are working for sweet nothin’. You are nobody’s slave. If this is the culture you are being coerced to list within, you’ll need to find a new estate agency that respects their team and wants to lift standards within the industry.

  • Danger Clients

When you’re at the point of listing and you think the cat’s in the bag, it is galling when a client you’ve nurtured for years attempts to undercut you. I’m not talking about a small commission negotiation here – I’m talking about asking you to match a complete tool’s fee and pay their marketing to boot. Such clients have broken a social contract. They are dangerous. They are likely litigious. They do not see you as a human of value, they see you as a tool to be used. Be very cautious here: such undermining behaviour from a client does not bode well for a happy sale. You’ve been warned.

  • Spend Your Money on Yourself

Remember the last time you turned down a girl’s spa weekend because it would cost $600? Or when you didn’t go to a conference because you considered it to ‘spensy at a cost of $1500? Or when you didn’t buy that Paul Smith suit that was on sale? When you didn’t invest in social media marketing because the monthly cost seemed too much? When you wouldn’t get your kid that glittery Barbie because it didn’t fit in the monthly budget?

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Don’t deny your professional development and personal desires through budgeting, only to blow it all on some bastard vendor who doesn’t respect your time or skill. Energetically paying for vendor marketing is a bad choice, psychologically it’s detrimental to your confidence as a negotiator by trade. Blow those bucks and treat yo’self and your family – not them. You’ll benefit personally and professionally by turning this narrative of saving around.

  • Lift Your Standards, Don’t Drop Your Daks

Once in a while, we all lose listings that should have been ours. They should have been ours because of the years of service we’d given the client, or the great result we’d just garnered. Such lost listings sting. When I was an agent I remember losing a listing to a total fool of an agent who cut his fee to almost nothing. The vendor was a bastard for using my time over many years, and I felt silly for investing so much time in a wanton user. I cried and cried, I remember the flood of tears hitting my callback sheets. It was all very dramatic.

But after all the nose-blowing and at-volume listening to Usher in my car, I moved on. I prospected with more intelligence and communicated with rigour to my farm area. I didn’t need that zonzo’s listing. I didn’t want to diminish myself by working for nothing, and I didn’t want to become an agent who’d list at any cost. Instead, I would work with clients who weren’t dangerous, who respected my expertise and who understood reciprocity.

Never pay for a vendor’s marketing. No matter how much pressure a Principal puts you under to do so. Working in real estate is a tricky  business where confidence is all: don’t short-change yourself to satisfy someone else’s sense of entitlement. There’s other listings to be had – go chase ’em.

The Myth of the Auctioneer

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If there’s three things Melbournites love of a Saturday, it’s coffee with the papers, watching their team win at the MCG, and the street-theatre of a cracking auction.

And it’s not just Melbournites that love the smell of an auction in the morning: the perennial popularity of ‘reality’ real estate TV such as The Block is testament to Australia’s fascination with property. Whilst The Block is a show more about winning cash than selling real estate, each season I watch The Block finale as I can’t help myself: I’m a Melbournite who loves an auction.

When I began in real estate as novice in my twenties, I aspired to one day have the knowledge and sheer chutzpah to be an auctioneer. Happily, I acquired that skill, and was one of very few female auctioneers in Melbourne at the time. It’s true that calling an auction is not for everyone: some agents don’t fancy being the focus of a crowd, others feel nervous about their capacity to count in varying increments under pressure. I remember my Principal explaining to me that whilst it appeared that anything could happen in an auction situation, the likelihood was that it wouldn’t. Being an auctioneer is tantamount to being the circus Ringleader – what occurs during the process of your call is mostly in your control.  Although I’ve been privy to hundreds of auction calls, I’ve only seen a couple where the crowd have heckled or behaved appallingly. When unpleasant outbursts do occur, the wider crowd will often turn on the heckler – either by making dagger eyes and huffing in their general direction, or by literally telling them to pull their head in. I must admit, I always enjoy it when the ne’er-do-well heckler gets their comeuppance.

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Being an auctioneer is a talent, a skill that not all possess. Auctioneers are the lead actor taking centre stage at the pointy end of our weekend property sport, admired, reviled and mythologised. Here’s the thing: auctioneers don’t have the supernatural money-making powers shows like The Block and many punters believe them to have. A fine auctioneer executes a wonderful piece of performance art paired with the gain of lucre in public: it’s compelling and exciting to witness a great auction that flies past reserve in the blink of an eye. But in real terms, the true influence an auctioneer has over a property’s sale result is low to moderate at best. Here’s why:

Auctioneers are only as good as the sales campaign behind them.

An auctioneer cannot make an over-priced property in an over-supplied market sell, no matter how great their patter or how capable their count. In order for an auction to succeed the listing agent (this is the person with their name on the ‘For Sale’ board) must have run a good campaign. This means they’ve collaborated with their motivated vendor to appropriately price the property, attracting interest from the market – and hopefully, hordes of potentially-willing purchasers on auction day. If the property is overpriced, no amount of mad auctioneering skillz will save the campaign. The groundwork critical to a superb auction result is undertaken by the listing agent – and finished off with razzle-dazzle and control by the auctioneer. Ultimately, selling real estate is all about pricing competitively; the adage of ‘price it low, watch it go’ will always be true (regardless of trends in quoting). If a property is overpriced and there’s no willing bidder in the crowd, the best an auctioneer can do is emergency triage and entertainment before passing that sucker in and privately negotiating ASAP.

A house made entirely of KFC buckets mortared with ‘mashies’ will successfully sell at auction if it’s priced competitively enough: the auctioneer will simply season the deal with their charming seven secret herbs and spices (none of which involve pricing the property or educating the vendor about market realities, all of which is done by the listing agent).

Auctioneers are enabled or stymied by vendor reserves.

On The Block, contestants are delivered reserves stipulated by the true vendor (that being Channel 9). The narrative of The Block positions the contestants as the vendors, though in reality they’re not: they have no control over the reserve set by the station.

In the real world – should an auction be struggling – the agent can take instructions from their vendor mid-call. Depending on market conditions, the vendor may choose to put the property ‘on the market’ and amend their reserve to the last bid – or they might maintain their reserve, opting to pass the property in and negotiate with the highest bidder. The vendor’s instructions directly inform the auctioneer’s ability to successfully sell their property under the hammer. Again, much of the groundwork assisting to make the vendor aware of market feedback on their property is completed by the listing agent – who can hopefully encourage the vendor to set a reserve that’s realistic.

Auctioneers can’t make people buy houses.

When Shelley Craft looks to camera on The Block, remarking that ‘the auctioneer really has to go out there and make us that money’, I feel slightly nauseated. The auctioneer is not the person a successful sale hinges upon: the listing agent and the vendor themselves are. It’s misinforming the public to simplify the matter and pretend that the auctioneer can pull money from clench-fisted buyers who don’t see value in a property. If a property passes in, it’s not because the auctioneer is crap. It’s because the vendor hasn’t met the market (whether they’ve chosen to reject their agent’s advice on reserve, or the agent hasn’t attempted to condition them is the unknown factor).

It’s absolutely true that a talented auctioneer has some influence over an outcome at auction. They serve to entertain and inform the crowd, warming them up and encouraging those interested in bidding to raise their hands. Auctioneers are a walking advertisement for the prestige of the agency they represent, and should be sharply-presented with a dynamic calling style. They are responsible for making the crowd feel safe, and as though all is under control – if you’ve been to an auction where the auctioneer is fearful, the tension and dread is palpable and can serve to scare the crowd to stillness. Auctioneers are a very important part of the real estate sales process in Australia: they’re the Baz Luhrmann sparkle on the everyday gruntwork of a month of open for inspections. Their job is awe-inspiring to many, and the best of them are raconteurs who make our Saturdays sparkle with filthy lucre and witticisms – particularly when bidding is fast and furious. All I’m suggesting is: the auctioneer doesn’t have market power in the palm of their hand. Ultimately, it’s the vendor – and the talent of their listing agent – that decides whether an auction campaign flies or fizzes.

Iolanthe Gabrie a senior property writer, and the Director of Melbourne’s social media agency, Ruby Slipper.

Photographs by Kyle Larson.

Cut-Price Property Management: Dirty Deeds, Done Dirt Cheap

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Urban high streets across Melbourne are populated by what now appear to be our most essential businesses: nail salons, coffee shops, property development display suites and supermarkets.

Between the gel pedicures and the Aesop-filled real estate display suites, there’s another trend that’s emerging more brazenly than ever before: dirt cheap property management. Whether pasted on empty apartment windows, dropped into our letterboxes, bombarding us from billboards or as part of our Facebook feed, it’s not unusual to see property management fees advertised for as little as 3.3%.

If you work in the real estate industry, you’ll probably be disgusted by such a low fee. But if you’re not (and let’s face it, most of the community are not), you won’t intuit much from the advertised fee – you won’t know if it’s high or low, and what value you get for your hard-earned. This deficit in communicating value is a failing of the real estate industry in Australia: they’ve not convincingly told the story of property management, and how it is an expert profession.

As a country, we’ve become intensely price-driven across many industries. Having been drip-fed an insulin-sweet feed of cheap clothes and cheap supermarket shopping, our national lizard consciousness now equates cheapness with value. At the same time, most of us inherently seem to understand that we pay a cost for our cheapness: it’s the obsolescence built into our technology, the fashion tops that look rubbish after three washes, the throw-away culture we’ve engendered. As wages stagnate, the cost of essential services like gas and electricity rise and the median price of housing soars, we look for ways to cut costs in other parts of our lives. It’s an uncomfortable tightwalk we balance upon as our economy shifts.

There are, however, some categories of expertise you don’t want to go cheap on. It’s pretty clear that a bargain basement overseas medical procedure is unlikely to be equal to its more expensive local delivery. Cheapness in professional services is something most of us are wary of, too: we want to know our lawyer, accountant and conveyancer are expert in their field. It’s only the few who are entirely price-driven that pretend all doctors are the same, all lawyers are the same and all accountants are the same – regardless of their level of expertise and accountability.

So why do we not feel similarly about our real estate professionals? Being responsible for the care of our real estate assets is clearly an important role – so why do we think that a cheap property manager will be a good property manager? Aren’t we worried that a business who wins custom courtesy of their cheapness might not be the most legitimate and experienced business? It’s disappointing that the race to the bottom when it comes to real estate fees is often fuelled by real estate businesses themselves.

If you’re an investor attracted by ultra-cheap property management fees, here’s a few reasons to think twice before handing over your precious real estate.

  • If you’re not paying much money, YOU ARE THE MONEY.

A real estate agency’s value is based on the only true asset that business has: this is their rent roll. Whilst the public often think sales is where the money is made, property management is where an agency builds its saleable value. There’s no consistency in sales – having six months of outstanding results is no predictor of the next year being a corker. Sales are just the cream on top of property management earnings.

Cheap property management fees are a sure sign of a Principal wanting to build their asset before selling it on. In short: they’re cutting fees to bulk out their property management asset in an effort to raise its value before flipping it. Their focus isn’t about quality service, supporting their property managers to do a great job for landlords or only managing properties in a geographic area that makes sense: it’s just about numbers.

The result for you as a landlord? Prepare to be sold on to another real estate agency, and soon! You’re a number, not a member.

  • Which way do you want your property management service?

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You can only ever pick two. (I take every opportunity I can to wheel out this clever venn diagram.) Cheapness and speed don’t equal excellence – and when you’re gambling with literally hundreds of thousands of dollars of real estate, do you really want your property managed by an agency who put such little value in their services that they slash their own wages? Probs not.

  • The Golden Ratio

There’s a maximum amount of properties that any single manager should be responsible for. It’s approximately 150. In real terms, that’s a minimum of 300 relationships for a competent single individual to manage between landlords and tenants. Do you know how many properties the cut-rate, beleaguered property manager might be handling? Anywhere from 200 to 300 properties. We’re talking about 600 relationships. You don’t have to be a property expert to know that these figures don’t spell quality management. Far better to trust your asset to an experienced property manager handling an appropriate amount of properties. You want them to know you, remember you, call you and know about your weird air conditioner.

There are a bevvy of reasons not to go cheap on yourself when it comes to important services like property management – but these three spine-chillers should do for now. 3.3% management fees? No thanks!

Iolanthe Gabrie is Director of social media agency Ruby Slipper. 

False Economy: Why Abolishing Stamp Duty for First Home Buyers is a Fail

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Stamp duty taxes in Victoria are legitimately bonkers. They’re at genuine ‘You’re in a cult call your Dad’–levels of crazy. An archaic tax which was never meant to actively disadvantage property purchasers at the extortionate rate it does today, the State Government of Victoria’s coffers are filled courtesy of our love of real estate. And whilst it makes sense to update this rough tax lever from days of yore, there’s no political will from either side of the fence to amend the percentage of stamp duty taxes we pay – our economy relies too heavily upon it.

At a ridiculously huge 5% of the value of a property, Victorian Stamp Duty taxes equate to approximately $30,000 on a $600,000 mortgage. $30,000 ain’t small potatoes in anyone’s language. That amount of cold hard cash could pay for a hipster wedding, replete with taco-truck and Snapchat-station. It could furnish a home with a mixture of IKEA and one carefully chosen couch from West Elm. It could pay off a portion of your HECs debt. First home buyers have a lot of things they could spend their $30,000 stamp duty fees on, which is why Dan Andrews’ announcement that the State of Victoria will abolish these taxes for newbie home buyers purchasing properties up to $600,000 has been such a hit.

The bad news is, abolishing stamp duty fees for first home buyers only makes it harder for them to buy property. I’ve got a lot of time for Dan Andrews (I even call him Dan, which means we’re bonfide mates). I’m a pinko-lefty, and I’ve been impressed as he has developed into a great communicator and a good Premier. And I understand why he’s made the move to abolish stamp duty fees: it buys him more political capital in the leadup to an election, and it’s hard to argue with the benefit of abolishing such a tax for a group doing it tough.

But it’s false economy, because stamp duty isn’t the barrier to first home ownership. 

Wider economic issues which can only be fixed at a Federal level are those which are disadvantaging first home buyers. And whilst Dan’s olive-leaf offering to first home buyers makes everyone feel kinda good, it’s a butterflies-in-the-tummy moment with a high price to pay. It’s the tax-policy version of diuretic romantic movie The Notebook: it makes you feel something in the moment, but you know it’s not good for you in the long-run.

Abolishing stamp duty taxes will fuel demand in a property market which is already fiercely competitive and difficult for first home buyers. It gives a false sense of richesse, intimating that newbie property owners have another $30,000 or so in their back pockets to spend. And whilst $30,000 is nothing to sneeze at if you’ve got it in the palm of your hand – in the life of a 30-year mortgage, it makes little difference to your purchasing capacity.

The barriers to property ownership for first home buyers are:

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  • Deposit

Accruing a 10 – 20% deposit on a property is a Herculean task. It can feel particularly Sisyphean (see, arts graduates go everywhere) as prices soar ever-higher around you, whilst you continue to sock away $500 bucks a month for your deposit. This is obviously depressing for first home buyers, and a true disadvantage for those who can’t move in with the parentals to save for a deposit. With Melbourne rents being what they are, saving for a deposit is a true barrier to lending.

Rather than offering a nominal $30,000 reduction in stamp duty (which isn’t giving you cash, it’s just a commitment not to charge you anything), why couldn’t the State Government enter into  guarantor scheme with lenders, allowing purchasers to fast-track their deposit on HECs-like repayment loans? That’s would be a genuine hand-up. (Which would probably also inflate property prices if our interest rates remain at such lows – but it’s true action rather than a gesture.)

  • The Cash Rate

The national cash rate is too low. Whilst banking institutions are slowly raising rates independently and limiting some kinds of lending, the Reserve Bank of Australia have left the cash rate too low, for too long. People are able to borrow huge amounts of money for very little. Those who have equity – i.e. those already in the market and Baby Boomers in particular – are taking advantage of these conditions. This bombastic pairing of great equity earned from 20 years in the property market with ultra-low interest rates explain why first home owners represent such a small percentage of those purchasing real estate in Australia. They can’t compete. And all that cheap lending is no good for our nation more generally – where can we go next time there’s an economic crisis? Rates must go up, to both slow the pace of property transactions and to safeguard our economy for the bumps that are bound to come in the future. It’s actually making interest rates more expensive that will even the playing field for first home owners – not the omission of $30,000 from their mortgage.

  • Negative Gearing

The big one. Negative gearing actively disadvantages first home buyers in a wholesale manner that no stamp duty amnesty can ever address. Australians look to property as a safe way of building wealth and security for the future. They know superannuation won’t really help them – because whilst there are multi-millionaires with lush super balances – your average Mum and Dad will need to invest in order to retire with any modicum of comfort. So – property and negative gearing has been our national panacea. Those who have property assets have seen them grow – exponentially – over the past two decades. One couldn’t save at the rate a property in an in-demand local is growing at the moment. These property owners are now unlocking that equity to buy up big – benefiting from tax benefits which make it easier for them to own and maintain multiple properties than it is for a newbie  buyer to stake their claim on a Title.

Without changes to our negative gearing tax laws, we are impoverishing younger generations. At the very least, we’re creating a future where individual wealth will be dynastic in nature, with Mummy and Daddy allowing their children the chance at home ownership. If you come from disadvantage, it’s game over. Now, I’m not necessarily saying that we destroy the whole kit and caboodle – but that negative gearing should be amended or abridged to limit the kind of property an investor can negatively gear, the value of the property an investor can negatively gear and the amount of property an investor can negatively gear. 

Realtalk: abolishing stamp duty for first home buyers is an appealing gesture. But it’s an impotent action which only compounds demand in a market starved of supply. It diminishes the ability of first home buyers to purchase property. It’s a sugar-high with one bad hombre of a comedown. It compounds the effect that the true barriers to first home ownership present – and if the Federal Government don’t take action by working with lending institutions on equitable deposit terms, by amending negative gearing taxation laws and by working with the RBA to lift the national cash rate – future generations will be locked out of the property market.

PS for First Home Buyers: If the ship’s going down, make sure you spend your $30,000 with gusto and enjoy a frickin’ deluxe taco-truck wedding with a meme-inspired pinata. Treat yo’self, because it doesn’t look like the ruling elite ever will. #BAM

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Gratitude and the Estate Agent

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gratitude

I love coffee cards. I only drink decaf, but that doesn’t stop me from punching my way through a coffee card in the space of a fortnight, before being rewarded for my good custom by my local provedore of (de)caffeinated beverages with a freebie.

I feel treated, acknowledged and delighted by this gesture. In all, I’ve probably spent about $35.00 with a coffee shop over the space of a couple of weeks, who then reward me with a coffee worth 10% of the value of my investment in their business. That’s just good business – and increasingly, we expect our loyalty to be rewarded – even with the most basic of purchases.

Can you imagine if an estate agency spent 10% of the value of a vendor’s investment on treating their vendor and buyer? It’s likely you can’t.

And that’s because the real estate industry has a problem with saying thankyou.

The bad old days of cleanskin wines and Donna Hay cookbooks are gone. The real estate industry is being forced to give more than ever before, whilst ostensibly working for the same (or a reduced) commission. Frankly, I don’t know how they’ve gotten away with displaying insubstantial gratitude to the people who pay their bills for so long. Are you a real estate stalwart grumbling with disagreement? You’re likely part of the problem.

Free-market economics are improving standards across the real estate community, with savvy agents looking to innovate across the entirety of their businesses. Creating an edge is where it’s at, and that point of difference simply can’t be achieved with the lacklustre delivery of shiny, branded Christmas cards with a printed ‘signature’, templated dross-filled newsletters focused on your business rather than your community, or a cheese knife and woodblock set handed across the front desk by a harried Sales Secretary at settlement time.

So what’s the edge? And how can you get it?

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The edge is called delight. Delight is the emotional state that creates goodwill between parties. Goodwill brings with it referrals, repeat business and cold business – all drawn magnetically to you as a sales agent or a company because of your reputation. Delight costs, of course. It costs in personalised, thoughtful gifting. In genuinely giving back to your community in terms of quality messaging on bespoke social media. It costs in time, as well – in lounge-room sitting or calling that landlord client to check-in on how his experience with your property manager is faring. Delight is the only currency that matters in an age when fewer agents are doing more business thanks to ‘marketing units’, more powerful databases and the collapse of smaller agencies into monied mega-brands.

So let’s get grateful. To both our vendors and our buyers – who have both paid a healthy portion of your monthly bill courtesy of their invoice. It’s easy to become numb to 5-figure commission checks when you’re within industry, splitting them up into their 40 – 60% splits before they’ve even hit the trust account. But each commission is big bucks to your vendor, and it needs to be appropriately acknowledged.

Word to the wise (and not the wise-assed): this isn’t an opportunity for Principals to pass the buck on gifting. This gesture of gratitude must be a percentage that comes off the whole fee. Not just the amount of commission apportioned to the sales agent – that’s lazy, and greedy. Imagine the sense of delight you could offer your vendors and buyers by setting aside just $3000 of a $30,000 fee and investing in gratitude. BBQs and dinner-tables around your community will soon be buzzing with talk of your decidedly un-realestate-y generosity. This delight could be a big spend all at once, a fair splitting of the resources between the vendor and the buyer. It could be a portioned upfront spend on the two parties, with an additional amount put into a collective ‘delight’ kitty, used for the benevolent scattering of goodwill to deserving clients in the form of coffee cards for newbies to the neighbourhood, magazine subscriptions, tickets to the theatre or weekends away.

The edge is delight, surprise and gratitude. It’s time to give back and to say thankyou. And it feels good.

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Photography: Breeana Dunbar

Location: Aquabelle Apartments, Mornington Peninsula

Iolanthe Gabrie is the Director of Ruby Slipper, Melbourne’s best social media agency. Learn more here.

 

Christmas Parties: The Estate Agent Guide

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You can tell Christmas is coming in three key ways when you’re an estate agent.

One is when your clients decide to wait ’til next year to sell their home,  feeling they’ve missed the boat in terms of an auction campaign or harnessing the ‘spring buzz’. The second way you can sense Christmas is nigh is the sight of Mr Kipling mince pies at Woolies. And the last is the arrival of the annual Christmas party invitation – which is something either met with great excitement, or gnawing dread. In today’s Hometruths Melbourne blog, we offer a Christmas Party guide for principals and estate agents – a thorough what-to-do and what-not-to-do guide that will make for happier celebrations of the year that was. More Nutbush, less Krampus.

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Are you a Principal? Congratulations on making it through another year. It’s tough out there for a boss, #amirite? You’ve probably contended with an array of events in 2016 including but not limited to: legal skirmishes, staff turnover that made you panic, tax bills that result in emergency accountant visits and enforced attendance at your local real estate institute for CPD points. It’s hard to tell which of these is the worst, innit? In any case – you’re on the home stretch and it’s time to reward your team for the many wins you’ve enjoyed. Here’s how to do it:

  • Forget about mini-buses. Anywhere.

It’s true that a winery day out sounds initially appealing, especially if you rather enjoy the odd tipple. But being stuck on a bus hours outside of your capital city with Jerry the BDM vomiting pulled pork burgers and pilsner out the mini-bus window is a much less happy reality. Don’t make the Christmas party into something which must be borne through gritted teeth rather than enjoyed. Appreciate that not everyone in your team enjoys drinking, and take that into account when planning a stress-free and enjoyable day out together.

  • Don’t conflate team-building with celebration and reward.

You have 11 months of the year to do team-building. Christmas parties are not about that: they’re a reward that shows your appreciation as a business owner without making anyone feel put upon or pressured into an activity they don’t enjoy. Less abseiling and trust exercises, more ‘here’s a personal gift from me to you, what would you like for your entrée?’

  • Partners matter. Include them.

Estate agents often work six days a week. In order for an agent to succeed and make you money, they need the complicit support of their partner. The real estate widow is carrying the domestic workload and executing the emotional labour of a couple by themselves. They are as much a part of your success as your employee. Make sure they know they’re appreciated and included in Christmas celebrations and rewards. Let’s face it: a Christmas lunch or dinner with your team alone makes for pretty dull conversation. Throw partners into the mix, and you’ll have a diversity of relaxed conversation that’s (hopefully!) about anything other than the office. Don’t be cheap about this – scale your celebrations to a level that partners can be acknowledged and rewarded within.

  • Don’t be offended by difference.

Maybe you’re going ahead with a Christmas party at a winery. Or you’re taking the team out for a day of paintballing. Be open to the reality that not everyone in your business will want to participate. Not everyone drinks, travels in mini-buses well, or enjoys toting paintball guns in the bush. If you have a team member that would prefer to sit this event out, don’t make a big deal of it. Their fun isn’t your fun. That’s OK. Reward them privately in a way that they will appreciate, and your tolerance and thoughtfulness won’t go unnoticed.

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Are you an estate agent? Well done to you too, on making it (nearly) all the way to 2017! It’s time to enjoy and pat yourselves on the back for having being faced with alarming circumstances during 2016 including but not limited to: changes to quoting laws, dogs constantly jumping on you during listing presentations, forgetting open A-Frames on street corners, dealing with irate, threatening buyers during boardroom auctions and trying to meet your monthly KPIs. Holiday season is here, and our recommendations on best enjoying your team Christmas celebrations include:

  • Keep it nice. 

During your Christmas office party, you may very well enjoy a snifter or two of your favorite tipple. Sante! Relax and mellow out. But don’t let that sweet devil’s liquor loosen your tongue or allow you to behave in a randy, inappropriate fashion. You’re still in a professional setting, so calling people racist nicknames, bottom-pinching, or indulging in a disco-bikkie or two in the bathrooms really isn’t on. It’s easy to ruin a reputation. And it’s easy to bully other people when you’re in a position of power. Neither action is very spirit of the season, really.

  • Give your boss a gift.

Appreciation, innit. Goes a long way.

  • Make an effort.

Some of us like Christmas parties more than others. If there’s an activity that makes you really uncomfortable and you don’t want to participate, speak frankly to your boss about this. If they’re not a d*ck, they’ll respect your considered response. But if you’re just generally a Christmas party hater, take off your Grinch hat. Make it a more enjoyable a day by offering to organise games or a focus for the party. Maybe not Cards Against Humanity, but something that will elicit a giggle from everyone. Or indulge in a new outfit for the day, and think of ways to engage with your colleagues outside of your daily roles. Chat to Jacinta’s husband about his favorite books. Find out if Gregg is still collecting 1970’s football cards. There’s more to your colleagues than meets the eye, I’ll bet.

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Photography: Breeana Dunbar.

Don’t Be a D*ck: The Landlord Guide

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Following on from our rather popular ‘Don’t Be a D*ck’ guides for estate agents and homebuyers comes Hometruths Melbourne’s essential ‘Don’t Be a D*ck’ guide for landlords. Good landlords: may we know them, may we be them, may we become them. Being a landlord is an important social role, and one that many take with all due seriousness. Unfortunately, some landlords make life difficult for everyone involved – for their tenants, their managing agents and for themselves – due to either sheer bloody-mindedness, a lack of understanding of the landlord-tenant relationship or because they’re just d*cks. We hope today’s handy guide goes some way to remedying the situation for the latter.

1. Don’t be the cheapskate who self-manages their investment property.

Don’t be that guy. Often a  close relation to the vendors who put ‘For Sale By Owner NO AGENTS’ handwritten signs  against their front windows or in micro-font in the local paper, the self-managing landlord is motivated principally by cheapness fuelled by ignorance. ‘Why should I spend $100 bucks a month on an agent?’ he thinks. ‘What me worry?’ When your investment property burns down due to an ill-maintained hot water system or a crew of whimsical bikies take over the residence using the corner spa as a giant meth-cooking boiler, you’ll be worrying alright.

Unlike the relatively short term relationship between a vendor and a buyer, the relationship between a landlord and a tenant is an ongoing affair which may last many years. Like any relationship, it will have its ups and downs. It requires good professional boundaries based on a robust knowledge of tenancy legislation in your respective state, an understanding of bonds and notices and of the responsibilities and rights of both landlords and tenants. Even in the best of landlord-tenant relationships, matters can become fraught. Whether that’s because of rent late-paid regularly, maintenance issues, wear and tear or body corporate issues – a managing agent is the essential fair sounding board between you and your tenant – emotionless and encouraging resolution at all times. Resolution supported by the hard word of the law, that is. If you don’t know where to lodge a bond (or you wonder what a bond even IS), can’t properly create condition watertight reports, if you don’t know how to correctly vet potential tenants or understand the parameters of legislation around rental arrears, eviction and representation of matters at VCAT – you cannot risk self-managing. The systems and accountability mechanisms a professional property manager has at their disposal shores up your financial position, while leaving you to get on with your daily tasks – not trying to remedy complex tenancy matters you are not expert in. Word to the wise: leave it to the professionals.

2. Don’t get Uncle Don to perform maintenance on your property.

And don’t pretend to be Uncle Don either, ya cheeky bugger. Some landlords are controlling and suspicious when it comes to maintenance, occasionally doubting the veracity of the request for maintenance. If they learn there’s a gas heater on the blink or the oven’s not working, they will attempt to perform maintenance on the cheap by doing it themselves. This is dangerous and irresponsible. Deaths have been caused by faulty appliances. It’s a serious matter. Don’t believe me? Read this article and feel the fear of God. Unless you are a registered, insured tradesperson, don’t put your tenant’s welfare at peril for the benefit of a financial saving. Your property manager has an array of trusted, insured professional trades at their disposal for urgent and non-urgent repairs. Take your property manager’s advice when it comes to maintenance, and don’t be the d*ck that haggles over service callout fees (“What do you mean it’s $220 for a callout? I’ll just get Uncle Don to go ’round.”). Being a landlord has responsibilities which are expensive – maintenance done properly and in a timely fashion is one of them.

3. It’s your investment property, but it’s not your home.

Flying in from interstate on a stopover? Ringing your property manager incessantly once you land to get through your property ‘for a quick look’ on short notice? ‘They won’t mind, will they? It’ll only take a minute’. Erm, actually the tenant probably will mind. Your tenant has the right to quiet enjoyment of their home. They pay for the privilege. Your property manager can inform you about annual access to your investment property for routine inspections, but make sure to begin any conversation about inspecting your investment long before you fly into town. Your tenants will likely want to present their home in the best possible light, and be aware of strangers entering their private space.

4. Don’t be a hateful bigot.

Thinking of asking your property manager to turn down the applications of people based on their race, gender, sexuality, marital status or disability? You don’t deserve to be a landlord, you unutterable bastard. Nick off.

5. Don’t choose a property manager based on cheap fees, or ‘free management’ periods.

Property management businesses who urge you to join them by offering heavily discounted fees or ‘free management’ periods are focused on building up their estate agency’s largest asset: that being their rent roll. These are worth a motza to the agency. What they’re not focused on however, is the service they offer you as a landlord or the health and workload capacity of their property managers. You’re just a number to fatten a rent-roll for these behemoth discounting real estate businesses, rather than a client to be cared for. By all means, if you’re being prospected by an on-the-ball property manager who knows you and your property inside-out, consider leaving your lacklustre current agent for them. But don’t be wooed by a cheap fee which will only save you shekels and likely disturb your tenant-landlord relationship. Your role as a landlord is more than a simple return on investment and screwing down every service provider to save you dollars – you’re housing humans. And if you’re irresistibly drawn to cheapness remember: thing that are free aren’t of value. That goes for property management services and anything else of import in life. Property investment and being a landlord is a long-game, in which you should try your very darndest to not be a d*ck.

6. Realise that selling your leased property is an inconvenience to tenants.

Sometimes ya just gotta sell a property. I get it. Whilst having a tenant in-situ during a sales period isn’t ideal (in many cases it dissuades owner-occupier purchasers who need to wait for your tenant’s lease to expire), it isn’t uncommon. It is an inconvenience to your tenants, however. Think carefully about your motivation: are you really ready to meet the market, or are you livin’ on a prayer Jon Bon Jovi style when it comes to your asking price? If you’re being wooed onto the market on the never-never, don’t put your tenants through the hell of a sales campaign – months of open for inspections with no result due to your own price expectations being out of the ballpark. If you are ready to sell, proceed with the selling process in tandem with your property manager and sales agent, respectfully and transparently. It is a good idea to offer fair compensation to tenants during sale period – a sum that will be paid to them (or taken off their rent) at the end of a set time contingent on the property being opened at agreed times and in a condition which is appropriate. This is both an incentive to the tenant, and an act of good faith. By the way, this doesn’t mean throwing them $20 a week for three months worth of opens. Don’t be a d*ck.