Purple People Eater: Why Purplebricks Will Improve the Real Estate Industry

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Purplebricks is not going to revolutionise the Australian real estate experience. But it may very well improve it, and for the better.

For those not of the industry, a potted history of Purplebricks:  a UK-based technology business, Purplebricks offers fixed-price property marketing which purports to upend every market it enters. They’re best thought of as a technology and data company, in much the same way as Uber and AirBnB are: they don’t actually own assets such as physical agencies – they own technology and systems. They’ve got money to spend on PR and (because they’re clever and know which way their bread is buttered, unlike many of the old guard of our existing property industry), they’re engaging in both a traditional and digital media assault. Which is frankly what you have to do if you’re wanting a startup to do well.

Many agents have been proverbially sh*tting purple bricks at the thought of their industry being disrupted. If you’ve been getting your knickers in a knot about the entrance of Purplebricks into the Australian real estate market, it’s more a revelation of your potential professional weaknesses than of their ability to destroy your livelihood. Here’s why:

  • If you lose a listing to Purplebricks, you probably deserve to. Ouch. Right? Purplebricks listings are much like the infamous ‘chicken raffle’ listing, where four agents are called in to complete appraisals within a week. These listings are really a race to the bottom, where a decision by a vendor is based primarily upon agent cost because nobody did their bloody job and prospected them properly. Agents who have ongoing relationships with potential vendors based on true prospecting – which is offering information over a long period of time, paired with personal service and a sense of intelligent delight –  will not lose listings to Purplebricks. That’s because their offering isn’t based on a fixed price. It’s based on expertise, accountability, an actual relationship and (most importantly) – reciprocity. Purplebricks will undoubtedly appeal to some vendors – those who haven’t been prospected, those who are very price driven, and those who think they are the expert. The first of these – the vendor who hasn’t been prospected – is really a problem of agent neglect which can be turned around by action. The second two – vendors maniacal with greed or narcissistic in the extreme – are best avoided anyway. It’s these latter potential clients that Purplebricks will benefit from, and probably not to your detriment.
  • The UK real estate market is not the Australian real estate market. The UK has a ‘chain’ real estate system, which diminishes urgency and expectations for buyers and vendors. It’s best understood (in a nutshell, and very simplistically) as a chain of property settlements which must occur simultaneously. Every sale is conditional and held together by a chain of purchasers agreeing to go ahead with their transaction. If one buyer can’t settle for whatever reason, the whole chain of transactions fails. It’s unthinkable in comparison to the Australian real estate transaction process. Our own market has no such weakness: if you don’t perform on an unconditional contract, you’re toast. Australian expectations of real estate sales transactions are substantially higher than they are in the UK. Price quoting on property and expectations of price based on the quote also differ – in the UK, the asking price for the property is the asking price expected. Buyers know to offer below immediately. Our own market is the polar opposite – with buyers recognising that the asking price is often below vendor expectations. An Australian vendor left to their own devices to quote on property price a la Purplebricks will be completely stuffed, resulting in failed campaigns at a much higher rate than traditional agent-led campaigns. Moreover, capital cities in Australia have auction-centric markets. As any agent worth their business card knows, a successful auction campaign relies on conditioning and education of both the vendor and the buyer. It’s not a matter of whacking a price on the thing, uploading it to your favorite real estate portal and cracking open a tinnie. Purplebricks’ model appears to favour the private sale market which is more natural to the UK – it will probably work well in some more suburban areas of Australia which have limited capital growth and poor agent activity.
  • Fixed-price real estate marketing isn’t a new thing. Purplebricks has marketing and technology, and they’re utilising it at far more sophisticated levels than many of the dodgy fixed-price ‘Sell My Whatever’ brands of the past. But their model is essentially the same. Their offering will appeal to some of the market, certainly – variants on this offering always have. The best way to future-proof yourself against potential disruptors wearing different guises? Be a better agent. Use technology to your advantage. Prospect properly. Pay attention to details. Make people feel special. It’s a service industry, which is something the real estate community itself sometimes forgets. Our trade is our capacity to serve our community and negotiate relentlessly for our vendors.
  • Horses for courses. Not every vendor is driven by value. Some are driven by prestige: they want to list with the best agent who has the best marketing. They want the soft gloss, four page brochure. They want the VR floorplan. They want everything that opens and shuts, and they want their friends to see it. These people will not be attracted to PurplebricksOther vendors will kill you for a dollar and want to haggle down the price of a Happy Meal. This may be partly your failure for neglecting to show them why you deserve to be paid for your time and effort. But it might be because they frickin’ hate real estate agents. Or that they’re just really cheap, too. And that’s okay. Horse for courses. Purplebricks isn’t for everyone any more than you are.
  • Negotiators R Us. Purplebricks flat-price philosophy works when you don’t truly understand the ugliness of human nature. That vendors and buyers are greedy, vulnerable, scared and largely unable to negotiate effectively. They’re strung out and emotional: they’re three year olds at dinnertime, waving around a contract of sale. That’s why there’s estate agents to coach them through this risky, emotionally fraught process. Vendors don’t believe they’re unreasonable with their price expectations. The fact they’ve rewired the garage and put in new carpet has to add $12,526.00 exactly to the price they’ll get for the home, right? They don’t understand the dangers of pricing a property inappropriately, and the risk that overexposure in the market has upon a property’s eventual value. Purplebricks aren’t an estate agency: they’re a technology business offering systems and access to task-oriented agents. They’re not you, agent.

If anything, Purplebricks will improve the state of the Australian real estate market by encouraging existing agents to finesse their offering to the public. To go about things in a different way, using technology and old school service. It will make stragglers practising in markets too long neglected  by lazy, backwards Principals shape up or ship out. The only people who have anything to fear from Purplebricks are agents who are lacking in skills, ideas or talent. So don’t worry about the disruptors: just get on the with the job.

* I did contact three Purplebricks estate agents in Melbourne to learn more about their model. All three told me they were under strict instructions not to speak to the media about their experience as Purplebricks agents.


Don’t Be a D*ck: The Homebuyer Guide


Homebuyers, I know you’re scared. You’re scared that the home of your dreams is going to slip through your fingers. You’re scared that the estate agent is trying to rip you off. You’re scared that you’re always going to be living with your folks in a quiet court in Boronia. And being scared makes us all into d*cks. But in the second of Hometruths Melbourne’s Don’t Be a D*ck Guides to Real Estate (read the first instalment here), we highlight ways you’re unconsciously being a tool during your journey for property – and how this toolery is actually preventing you from achieving the holy grail of property ownership.

1. No-one owes you a property, so stop acting as if they do.

Property prices in highly desirable areas with limited property supply – typified by their proximity to the city, to amenities and to employment –  are not going to become more affordable. The reality of our economy is that Baby Boomers are moving closer to the city. Baby Boomers are asset rich, thanks to both their time in the market AND the era they were born into. Their good fortune (and decision to invest in property) is broadly a trick of fate, and not a personal insult. As opined on in our Negative Hearing blog, some home buyers foster unrealistic ideas about the economy they exist in, and what they should be able to buy. They refuse to look the difficult reality of our economy squarely in the eye and adjust their expectations.

Australia’s capital cities are quickly mirroring their European counterparts, with the soon-to-be norm being lifelong tenancies rather than home ownership. Melbourne is growing by 1760 people per week, consistently. They’re all competing for a limited amount of affordable property. Interest rates are at all-time lows. Sitting on your hands and waiting for a ‘bubble’ to burst before purchasing is ultimately self-harming, pricing you out of your preferred inner-urban location. Property in the inner-city is expensive. I know it is. It’s galling to see a two-bedroom shitbox in Brunswick go for a cool million. It can make you feel helpless and uncared for by the community in which you live. So mourn it, gnash your teeth and rage to your peers.

And then make sure you get over it and make a decision to do the best with what you have, where you can.

2. Shit properties are the shit.

Just like everyone should have that one shit boyfriend/girlfriend to teach them the value of a quality relationship – everyone should have one shit property in their purchasing history. It builds character. And more importantly, it gives you the opportunity to spend time in the market watching your asset grow.

Are you turning your nose up at old school one bedrooms on the edge of growth suburbs, because they’re too far from your ideal, or because they’re a bit manky? Think carefully – these outer fringe growth corridors are ripe with the relatively-kinda-affordable properties that you need to buy to hop on the asset elevator. If you are on a strapped budget, avoid brand new off-the-plan apartments. They might appear convenient and glossy, but they come at a substantial premium for size and have stamp duty plus a margin built into their prices. Choose the ugly duckling, which will grow in value at a rate you can’t possibly hope to save yourself. If you’re lucky enough to be able to do so, buy an ugly property now, and in a decade you’ll be glad you did – congratulating your former self whilst quaffing single blend coffee in your renovated residence. Or continue dissing properties that don’t have all the bells and whistles while waiting for prices to come down. Whatever.

3. There’s no conspiracy to screw you over.

Estate agents are hard workin’ schmucks in shiny suits with leased European cars. (I say this with love – I’m married to one.) They’re not Bilderberg Group evil geniuses. They’re not making voodoo dolls of potential buyers and working out the most audacious lies to tell them. Bottom line: if you have enough money you’ll buy the property. If you don’t, you won’t. There’s nothing else to the story, not really.

What agents are doing is working very hard to help their vendor come to terms with the reality of the market they’re selling within. This is called conditioning. There’s nothing evil about this either – it’s just a process which helping sellers look more dispassionately at their asset so they can make a decision to sell when an appropriate offer presents itself. It involves the feedback of recent sales results, and comments direct from buyers too. And whilst you bitch to your mates that property sales results are offensively high (‘That guy paid waaaay too much for the property. What a rip off!’), the likelihood is that the vendor probably wanted 10 – 20% more for their property than it eventually transacted for. It’s only through the hard graft of education that the estate agent has eventually brought buyer and vendor together.

Remember that the estate agent works for and is paid by the vendor – not the buyer. This doesn’t mean that agents work against you or are hating on you. More often than not, buyers are working against the agent by not showing their true interest in a property, before becoming angry when it’s sold ‘under their noses’. As if, by showing their interest and enthusiasm for a property, something terrible will happen. If you’re finding your hand staid by agent paranoia or lack of knowledge of the property market and its machinations, I suggest you engage the services of a buyer’s advocate to help you acquire a property. Buyer advocates work for and are paid by their buying clients – and they can be just the ticket to help you get over your toolery in the kindest possible way.

4. Hand over your frickin’ details.

Enough with the playing hard-to-get with phone numbers and email addresses at open for inspections. If you don’t hand over your contact details to the agent or you make a song-and-dance about the process you are a tool. You’re disrespecting the owners of the property AND the property professional standing the open. It’s someone’s home and a space that needs to be secured – it’s not a free-for-all for nosey parkers. And whilst I am all for nosey-parkering, nothing is for free: your details are the passcard to the inspection. If you’re buying  or selling property (or even if you’re not – at least, you’re not now) – these details will allow the agent to invite you to similar upcoming opens, and to build a hopefully mutually useful relationship. Sure, their weekly emails are often boring and won’t regularly be tailored to your exact needs. It is what it is. It’s a social contract. Don’t be an open for inspection tool. (And don’t badmouth the property whilst you’re there loudly, either. There’s a special place in hell for those people.)

Don’t Be a D*ck: The Estate Agent Guide

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The ‘Don’t Be a D*ck’ Guide to Real Estate’ by Hometruths Melbourne comes from a good place. When I say ‘don’t be a d*ck’, I mean it with goodwill to mankind (and agent-kind) in my heart. Let’s be real: property transactions can bring out the tool in everyone.

A property transaction is one freaky concoction of anxiety-inducing factors: think jealousy, greed, mistrust and boredom – shaken, not stirred. We all participate in the real estate market to a greater or lesser degree, and we can all improve our behaviour whilst negotiating within it. Today, Hometruths Melbourne presents ‘Don’t Be a D*ck: The Estate Agent Guide‘, which focuses on common ways – often unconscious – that you, the estate agent, can come across as a real d*ck to the wider community. Read this guide and be downright legend instead.

1. You’re an agent. Not a gangsta, bro.

A wise Principal of mine had a pet hate: sunglasses on agents. Even worse – sunglasses on the HEADS of agents whilst at open for inspections. At the time I though he was being pedantic, but in reality his disdain at sunnies-on-Saturday was right on the money. They inferred a casualness that was at odds with the role of the serious, knowledgeable property professional.

You’re an estate agent: you need to dress the part. You need to present yourself in a way that makes people connect with you and trust you. The path of least resistance is the one to tread. Don’t wear tightly fitted fashion suits that can barely contain your pecs (do you even lift?), and don’t spray yourself so liberally in fragrance that the tenant next door can smell your Lynx Africa.

Are you a lady agent? Awesome. Word from the wise: don’t wear heels that make you totter like a dolly. This makes you appear vulnerable, weak, and far from businesslike. Wear heels if you like by all means, but be able to walk well in them, to look robust. Avoid clothing that’s been sprayed-on, and be careful with your spraytan and makeup, too. Aim to be bullet-proof in your physical appearance – don’t allow chinks in your professional armour put you at a disadvantage.

Lastly, make good choices with your vehicle – which is an extension of yourself. Clients will see you pulling up curbside, so try to make sure your car is clean, and that you’re not pumping out sweet tubthumping junglist cuts so deep the tarmac is vibrating. Avoid incredibly showy vehicles. Don’t alienate your customers – show them that you’re a lover of fine things, sure – but don’t be an ostentatious bogan. In short, don’t be a d*ck.

2. Be transparent.

As anyone who works within the industry knows, real estate is an arcane business. Down is up, right is wrong, what looks natural is confected. This is part of the reason why the public are so mistrusting of estate agents. They don’t understand the business, because in order to do so they’d need to step outside their own motivation: the buyer would have to put themselves in the vendor’s shoes, the vendor in the buyer’s. And whilst occasionally we might get clients who are eminently reasonable, most need a good does of firm but fair conditioning to be ready to make a decision about their future.

They need structure, they need rules, they need transparency above all. This makes the average punter – who only transacts property once in a blue moon – feel more fairly dealt with. Here are some ways to achieve greater transparency in your real estate practice:

  • Have a documented offers process for transactions. Be able to send your policies to clients who need to know more about making offers prior to auction, multiple offer scenarios, boardroom auctions etc. Your whole team needs to be on board with this.
  • Provide comparable sales. Regardless of your business’ philosophy on quoting, comparable sales are a great way to win the confidence of purchasers, and they should give a true indication of current market conditions.
  • Be firm and earnest in your responses. Sometimes we cringe to speak plainly with clients – whether they’re vendors, buyers, tenants or landlords – tell them the facts as they are. They might blow up in the first instance, but your working relationship will be stronger in the long run.

3. Don’t be the office leech.

Are you the person who’s always selling properties out from beneath the listing agent? Are you focused on working buyers rather than bringing new business on? I’ve got some bad news for you. You’re a leechIf you do this just occasionally, or you’re learning to be an agent and getting a few sales under your belt, you’re OK.  But if you’re being the creep who can’t list and exists by selling properties out from under listing agents, I’ve gotta say you’re a d*ck. Harden up with a long, cool glass of concrete-flavoured prospecting. #RealTalk

4. Don’t prospect like a d*ck.

‘Hi this is Jayden from XYZ Real Estate. Are you thinking of selling your property?’ ‘Hi is that Mrs Pana, erm, Popol, erm, Panapopoulos? It’s Cherie from ABC Property. Can I sell your house?’

If you’re making prospecting calls like this, stop. If you have a Principal who believes these calls are productive, find an agency to work for that believes in developing actual human relationships. As any agent knows, selling (and to a lesser degree, leasing) a person’s property is an intimate role. You earn the right to ask that question by offering service and showing competence and market presence. Asking a stranger flat-out if you can sell their property is a d*ck move for two reasons:

  • The likelihood of listing a property without a prior vendor relationship is next to nix. You’re more likely to offend them with your impertinence than anything else, spoiling your chances of beginning a useful conversation about their property.
  • If you were to be invited to list this property, you’d likely be in a ‘chicken raffle’ listing scenario with an array of other agents. As they vendor has no relationship with anyone they’re interviewing, they’re probably motivated by fee alone. Are you the pants-dropping agent who wants to work at an offensively low commission? No, you’re not.

Instead, focus on clever ways that build value around your identity as an agent. Think service first. Call people on the street when you list a property, and ask them if they’re interested in expanding their portfolio. This is an effortless question which infers the subjects’ competence and largesse. Call them to tell them what the property sold for. Call them when someone else lists in the same street, or sells in the same street. If you have a good conversation with someone, send them a thankyou card. And no, not some cheap corporate jobby. Go to the newsagent and make an effort. You will be remembered for your unusual attention to detail. Create a private social media group to invite communities to based on suburb. Become an authority. Make your vendors and buyers rave with unexpected, creative gifting – it doesn’t need to be expensive, but it does need to be thoughtful.

Are you a buyer, landlord or tenant? Stay tuned for your very own ‘Don’t Be a D*ck’ Guide to Real Estate’ by Hometruths Melbourne. Subscribe to receive our next blog post.

Want to learn more about the author of this article? Visit the Ruby Slipper website. 

All The Single Ladies, All The One Bedroom Apartments


Today’s Hometruths Melbourne blog is for the ladies in the audience. And not just the single ones. I want y’all to be financially literate and financially independent. And the key to this literacy and independence rests on one keystone: the one bedroom apartment in your own name.

In my years as an estate agent, I was privy to the financial and emotional bullying of young women who were attempting to assert their independence by purchasing their own asset. Here’s two ways their story would go:

Scenario One: 

The young woman would start attending open for inspections to get a measure of the market they were in. Most young female purchasers are well-informed, taking time to research their preferred investment location and its sales histories. They have their finance in order and they are ready to purchase. They absolutely have the capacity to make independent financial decisions for themselves. They’ve got their eye on a one bedroom apartment, and they’re ready to make a commitment. But then the well-meaning family members or significant others step in.

‘Oh darling, this place is so small! Why don’t you spend the same money on buying a villa unit in (insert outer urban location here)?’ says Mum. ‘Sweetheart, you’ve gotta be careful with these agents. They’re swindlers. Offer them $100,000 less, and not a penny more. And this place is old – think of all the repairs you’re gonna have to do. Trust Dad. We’ll help you save for a better place than this – something new, something where you’ll get better value for your dollar.’ Finally, the boyfriend (who often hasn’t the savings or will to assert financial independence behind him that she has) chimes in. ‘Babe. I don’t think we’re ready for this. What about the housing bubble? Wait for that. What about an overseas holiday for six months? Don’t you want to make memories with me? Also, I hear that Collingwood is going to become overvalued soon. Don’t take the risk honey.’

Scenario Two:

They would find a one bedroom apartment in an inner-urban area which matched their budget and lifestyle requirements. Their hands would shake with the gravity of the situation as they signed the contract of sale (after having their solicitor look it over, young women being the rightfully cautious peeps they are). The relief in their voices was palpable upon learning their offer had been accepted by the vendor – sometimes there were tears and hugs, too. But then it came time for their ‘final inspection’ of the property prior to settlement – and naturally, they’d bring along Mum and Dad and the boyf, wanting to share their joy and hoping for praise from their loved ones at their achievement.

This would rarely occur. Rather, she would skip into the apartment with glee ahead of me, before her Mum and Dad would begin picking out every irrelevant, negative detail of the property. ‘Ooh, the grout in the bathroom’s a bit dirty isn’t it?’ ‘Great living room, but it’s so close to the kitchen isn’t it?’ ‘The view’s not great darl. Wish you called me to have a look at it first.’ And often, in whispered tones ‘can you get out of this contract’? The joy in her eyes would dim. She had made the wrong decision, it seemed. She wasn’t capable of buying property – isn’t that something only the professionals, and men were to be relied upon to do well?

This bullying is insidious, profoundly destabilising and ultimately misogynist. It’s sabotage. Sure, it’s coated in a veneer of concern – it’s probably unconscious on behalf of the perpetrators – but at core, these attitudes reinforce that she can’t make decisions about financial matters for herself. Which is patently untrue. In all cases, ‘she’ – the buyer of that much saved for and wanted one bedroom apartment – had saved her shekels, done her research and shown great bravery in committing to her own future.  For a woman, purchasing a one bedroom apartment on her own is a revolutionary, feminist act. She is saying to the world (and to herself, more importantly) that I can make a decision, I am capable and I am responsible for myself in this rowdy world.

A one bedroom is the keystone to a woman’s financial future. Don’t listen to the naysayers who pretend that one bedrooms aren’t valuable because they’re not on land. Pish tosh. Value has to do with location, not land per se. Particularly when you’re young and you just have to get a foothold in the escalating market. The one bedroom you buy isn’t for you to live in forever. It’s just an elevator – it will grow at a rate that you can’t hope to save for yourself per annum. It will give you equity as the years pass, and enforces savings on you into the bargain. Soon enough, you’ll be able to buy something else – either keeping that first, important one bedder or selling it to trade up. The only thing you need to worry about, lady, is buying in an area that is desirable – or in the suburb next to the desirable one. Older apartments are fine – they increase in value just as much (and often moreso) than their newer counterparts. I probably wouldn’t recommend buying in a giant development or ‘off the plan’ – but that’s my own peccadillo. A property in a good area that you can afford to service is better than no property at all. 

And that boyfriend? Don’t let him move into your hard-won asset, or ride on your coattails onto the contract of sale with a declaration of eternal love. If he didn’t put in half the deposit, he’s not the owner. Let something which has taken such focus and commitment – and bearing of emotional strain to purchase – be yours alone. Repercussions for allowing a casual partner to cohabit for an extended period of time in your residence can be severe: if you split up and a court rules you as de facto, that ex-partner may be due a portion of your property. If he liked it, then he should have a put a ring on it. Whether you’re a fan of marriage or not, buying a property with a partner at an appropriate stage in your relationship is the best bet. You can then liquidate your one bedroom and put it towards the bigger purchaser made together, or (even better!) keep it and build a portfolio in your name.

You can do it, ladies. Buy a one bedroom apartment. On your own. No boyfs or BS about it. 

Negative Hearing

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I had my popcorn. I had my Milo. I’d taken up most of the couch. My anticipation level was high: a Four Corners Home Truths special was about to explode all over my television screen. This was my Eurovision.

As a property commentator and real estate industry writer, I was looking forward to incisive debate and genuine reflection on Australia’s housing affordability issues, including negative gearing and its possible reframing. I live for this stuff. But rather than a discussion about factors which put upwards pressure on the housing market (read: ultra-low interest rates, booming populations in capital cities, an ageing population of asset-rich baby boomers downsizing and overly generous negative gearing benefits), Four Corners focussed on uninformed anecdotes on the difficulty of entering the property market – presented without criticism.

It is undoubtedly difficult for first home owners to get a foothold in the property market. But it is not impossible. If you have employment (winning!) and the ability to scrape a deposit together (the serious difficulty of which is one of the core reasons first home buyers can’t get a loan), you will be able to purchase somethingFour Corners presented the story of a buyer – Jules McKendry – a 25 year old who has managed to save an incredible $150,000 deposit. That is substantially more than most first home buyers – or second home buyers – have to their name. Jules has bid at over 20 auctions without success. She and her partner are looking in Kilsyth, Melbourne – which is about 40 kms from the city. Interviewer Ben Knight asks Jules if she subscribes to the ‘great Australian dream’. She responds ‘Yeah. That’s exactly right. You know, it is a three-bedroom, one-bathroom…’. And why is it that Jules posits she can’t buy a property? The investor.

BEN KNIGHT: Right. So you’re thinking that this is who you’re up against. You’re up against the investor…

JULES McKENDRY: A hundred per cent.

BEN KNIGHT: …who just wants to subdivide.

JULES McKENDRY: Yeah, exactly right.

BEN KNIGHT: And so ha- have you lost out on auctions to investors before?

JULES McKENDRY: Oh, 100 per cent. Yes.

This is complete suppositionFour Corners did not question Jules’ ‘100%’ certainty of having being beaten to property by investors. How does she know who has she been beaten by? Have they disclosed the motivation for their purchase? Does Jules think they are investors because they look like people from another country, or because they are older?  The bottom line is, Jules doesn’t know who her competition is. And they’re not the reason she hasn’t acquired a property.

When it comes to buying a property, Jules is her own worst enemy. The reason she hasn’t purchased a home are her own ideas about what she can afford, and what she needs. A 25-year-old may want a three-bedroom home on a quarter-acre block, but the reality is that it’s unlikely she needs one as her first home. After losing at auction 20 times, most buyers who are committed to purchasing a home would have learned something from their experience. They would have adjusted their expectations to match their budget, instead of competing for property that they cannot afford whilst the market around them continues to rise. Jules is indulging in a form of financial self-harm which I observed multiple times during my years as an estate agent. A particular client I recall waited year on year for the market to crash in order to buy her dream apartment. The market still hasn’t crashed – in any meaningful sense – and 15 years later, she still hasn’t purchased a property – just like Jules.

It isn’t the investors that’s stopping Jules from getting on with property ownership. It’s Jules. Jules is obviously hardworking and fortunate – she has done the hard yards in saving an amazing deposit. She has opportunity at her fingertips, but stubbornly rejects it because it doesn’t match her ideal of the great Australian dream. Both Jules and (second first home owner test-case family) the Robsons hope for a property market crash. But what do they think this crash might look like? And are they betting on catastrophe at the risk of being locked out of home ownership altogether?

Amy Reynolds from APT Capital Management posits a crash is on its way, saying: “According to pretty much any housing market indicator you want to look at, house prices in Australia are significantly overvalued. And we see it as having deviated from normal values and long-term averages by about 40 per cent. So we’re expecting this kind of fall to take place in the housing market.” But when, Amy? And why?

I am sorely disappointed that Four Corners didn’t look to major factors that differentiate our property markets from those of Europe and America. Four Corners also didn’t clarify that massive growth in the value of property is far from universal – it’s only growing in leaps and bounds in premium areas close to the city. As our population swells – Melbourne growing by an average of 1760 people per week – housing will remain in hot demand. As we enter a new stage in our national growth and development, areas close to cities which offer employment will become increasingly blue-chip and tightly held. They won’t be crashing any time soon, because there will always be a limited amount of property available in these premium locations. Investors and buyers are far more at risk of having their asset’s value ‘crash’ when purchasing new-builds in outer-suburban locations where there is low capital growth, and a surplus of land. There is limited resale value in these new communities, because of their isolation and a premium being placed on the build rather than the land value. The value of properties in outer-suburban areas could be improved by a government commitment to enhancing the amenities of those communities – think public transport, schools and hospitals and incentivising small and medium businesses to set up shop in these areas. Families could be assisted to stay living closer to the city with better planning regulations, which define a healthy mix of one, two and three bedroom apartments in any development. Importantly, we need to think creatively about re-engineering negative gearing.

These were the issues I had my popcorn at the ready for when I heard about the Home Truths special. I was looking for a meaty discussion on amending negative gearing in an inventive, fair way. At incentives we might offer first home owners to help them overcome the tyranny of that 10% deposit. And an even-handed unpacking of uninformed suppositions by buyers like Jules – who aren’t buying for a lack of means – but because of unrealistic expectations about their first property.

The only thing I’m expecting to crash in the near future are my expectations about Four Corner’s property reportage. (PS I’m a pinko-lefty from way back. You’ll always have a special place in my heart, Four Corners.)

The Buyer Who Cried Underquoting


Everyone loves to hate estate agents. It’s a national sport: like BBQs on election day and booing at Collingwood, hating estate agents is rooted deep in our national lizard brain.

It’s easy to understand why: they don’t answer questions properly, roll up at open for inspections late in their spivvy hotted-up cars with their sunglasses way back on their smarmy foreheads, and they stand between us and the property of our dreams. They pass in homes at auction willy-nilly for much more than they’re worth, and they’re so crooked on price it’s amazing they can walk properly in their Julius Marlow laceups. Who are these underquoting bastards, anyway?

Reader, I’ll tell you who these agents are. They’re a soft target for easy, lolling Saturday night media hate and a scapegoat for lazy governments. They’re also you and I every time we sell a property, their actions and approach to marketing and negotiation driven by their task: which is to sell your property for the most amount possible.

There are few industries less understood than real estate. The public perception of the industry: hijinks, dodgy greaseballs, genuine influence over the market and money – LOTS OF MONEY – is all complete rubbish. Most estate agents (and for the purposes of this article I’m referring to selling agents) are not successful, and make around 50k per year – working six days and evenings. Only the very few – the most talented, intelligent and competent – manage to eke out longterm sales careers and make good incomes. Most agents drop out after a few years of toil, and those that remain must become battle-hardened to help the Australian population transact housing.

Why? Because us Aussies are cheap bastards who hate estate agents, that’s why. As much as I hate to admit it, Australians are appalling when it comes to their attitude towards negotiation. They’ll kill you for a dollar – and if you need further proof of our disposition towards believing cheapness equals value, observe the race to the bottom undertaken by our supermarket monopolies. Down down, prices are down. Indeed. Except – when they’re not.

When prices are up and we can’t buy things at reduced prices (how very dare they!), our blood boils. In certain parts of Australia, real estate prices are absolutely on the up. When this occurs, media reports kick in with alarmist ‘prices on the up‘ Saturday evening broadcasts. As extraordinary results in hotted-up markets occur, discussion then turns to underquoting and the evil control that estate agents have on the market.

Reality check: estate agents have no control over the market. They are not selling their own property. Their vendors are, and their vendors are in control of the reserve they set and the price they’re ultimately willing to sell their home at. Once their property is on the market (i.e. it has reached the reserve at auction and is about to be sold), the vendor also has no control over the price their property sells for. Those in control are the buyers, who can keep bidding until they wish to stop. Value for these competing buyers is entirely personal: it has nothing to do with the price an advocate might recommend you pay for a property.

Most gallingly for disappointed buyers at auction, the price those willing to compete on property are willing to pay is disconnected from any quote range advertised, any vendor’s reserve or any council rates estimation of value. Of course, this is disappointing – particularly in a market which feels like it is spiralling out of reach for buyers. It sucks to be disappointed, it really does. The reality of a competitive market, however, is that there are winners and losers. And it hurts to lose, or to feel like you’ve been denied something that should have been yours. When this happens in an exponentially rising market, buyers begin to murmur about underquoting. Before long, this murmuring becomes a full-on village hunt with picks, lanterns and chanting that someone has to pay. And who’s that person – who deserves our blame for rising markets and competition?

Is it the government for failing to properly resource high-growth residential areas with the infrastructure to support families and small business?

Is it the Reserve Bank of Australia for setting our national cash rate at historically low levels, leading to a natural increase in the appetite for property because of cheap money?

Is it our swelling population wanting to live closer to areas of employment and enjoyment, making inner-city properties more hotly contested over?

Is it local councils for failing to demand better quality family-style apartment living options for an increasingly urban community, forcing those who require more than two bedrooms into the outer-outer-suburbs?

Is it Baby Boomers, for using the natural advantage of time of birth and large superannuation reserves to inflate the value of inner-urban property?

Oh, no, we say. It couldn’t possibly be. Rather, we turn our eyes from the actual market forces which are impacting on the way our community is developing and go the easy target.

Who’s to blame? Why, the agent of course. It’s them and their evil underquoting. What utter garbage.

You know who’s not crying underquoting? The vendor who sold their property successfully, the buyer who bought a property successfully. Those focussed on underquoting – and making it the scapegoat for problems of supply and demand – are those who did not actually participate in the transaction. Recently, the state government has announced legislation to change the way that estate agents quote – to prevent the disappointment of underquoting, to stop the dreadful agents hurting the feelings of the public who weren’t able to buy property in a successful transaction. If legislation against disappointment becomes a trend, I really do hope they create legislation against other disappointing things in life: jobs that go to less-intelligent candidates after long interview processes, George Lucas Films, fashion festivals that purport to be ground-breaking, and dudebros who pretend they’re your boyfriend when they’re actually lighting up Melbourne on Tinder.

This new legislation is just an easy smokescreen – a shifting of blame – for government. It assuages the mob. Rather than doing the hard work of legislating on new land releases, community housing schemes, appropriate planning permits that look to the future and the hard reform around negative gearing and superannuation, the government throws a bone to the disappointed and holds up new quoting legislation as true action on housing affordability. 

It’s not action, you know. These changes will do nothing but confuse Victorian buyers for around six months, before well-resourced buyers learn the new pattern of negotiation and begin to buy with fervour again. Think carefully: it’s not the agent that’s to blame for market forces – no matter how spivvy their car or smarmy their Facebook page. The people to blame are ultimately you and I, and the economy and democracy we participate in. 

Cooked Their Own Goose: Vendor Greed

Buyers are saying no. And with good reason, too. Vendor greed has killed the goose that laid the golden egg.

The property cycle is the same every time. Interest rates go down (or go up, as a warning shot over the parapets) and hopeful property buyers spring into action. They begin buying property under competitive conditions, and prices crawl upwards. Some neighbourhoods surge ahead in value – shocking their communities with a steady increase in property prices. Cue media outlets and newspapers opining on Melbourne’s property market balloon, resulting in Saturday night news featurettes on extraordinary auction results and the impossibility of first home buyers securing property. Some vendors make well above their reserves, elated and excited at their windfall.

Buyers keep buying property despite all this ‘balloon market’ talk, choosing to invest their dollars in property, confident that property prices aren’t going down anytime soon in desirable, urban areas as our population keeps growing. Clearance rates are high, and vendor’s appetites to sell are whetted. That’s where it all starts to go wrong.

It doesn’t go bad because of a balloon or buyers ceasing to see the value of property investment. It goes bad because of vendor greed. Vendors Gone Wild, if you will. The vendors just a few weeks earlier in the same property cycle were setting reasonable market reserves which left room for buyers to compete. It’s only when a vendor is listening to their agent’s feedback about quote range (or advice on why they shouldn’t display price) and setting a reserve buyers see as reasonable that competition occurs, properties sell, clearance rates remain high and prices increase naturally and incrementally. The vendors who weren’t greedy – weren’t trying to abuse the market’s confidence in property investment – were those prepared to sell at a fair price.

It’s the vendors who have more recently come onto the market – those who believe the media news that prices are outta sight and going north – that have cooked the market’s goose. They always appear in the property market cycle at its greediest  pinnacle. (Although they’re by no means the only kind of vendors attempting to sell their properties before Christmas.) These vendors don’t amend their expectations of price despite agent education and market feedback because they were never sellers in the first place. They’d sell for an extraordinary result, but their motivation to meet the market is low. The result of an out of control vendor are high pass-in rates, lower attendance at open for inspections and a general unwillingness to participate from buyers.

Buyers be like #HellNo and #OhNoYouDiint

This is as it should be: it’s a sign that the market is discerning and aware. Buyers are willing to bid to buy, but they won’t tolerate greed and an inability to compete openly.

If you’re a vendor who has not sold and you’re part of the current property cycle, ask yourself the hard question: are you really selling or are you just trying to fool the market into paying more than your property’s worth? Listen to your agent’s feedback and take action by meeting the market. If you are selling to buy, be logical about pricing and don’t get hung up on achieving a figure based on nothing but hope. Waiting for your ‘perfect price’ could mean watching the market cycle for several years. In that time, the property you’re hoping to buy will also go up in value  – and will be just as unaffordable as it is today. It’s critical (in most cases) to buy and sell in the same market, when values are balanced. Waiting won’t change the inherent value of properties if you’re selling to buy. Word to the wise? Don’t cook your own goose!

After all, if Tay-Tay and Yeezy can hug it out, so can buyers and vendors.