How Brisbane's Real Estate Market Has Changed

Normal trends don't apply. Like people selling houses Christmas Eve, Boxing Day. It's all out the door. The market in Brisbane is becoming more and more auction-centric. Amazing things happen with auctions and vendors are surprised all the time what prices they're getting.

What I suggest for buyers to do is be very, very decisive. Don't haggle for $200, $300. Be very prepared with your finance and also know how much you've got to spend. The thing that irks me is verbal offers. That's the worst way to buy a property.

Put it in writing. You're competing for every single property. Know how to navigate competition. Buyer's agents will help, but you need the right one. So be in the game.

On today's episode, we've got Avi Khan, principal at Ray White AKG, here down from Brisbane. So we're feeling extra special today. Avi and I actually worked together for multiple years. When I say worked together, it sounds a bit strange, right? Buying, selling agent, working together.

It's more like we've actually bought many properties in Brisbane over the many years and their agency just happens to be an agency that we've done many of those deals with. But through that relationship comes great learnings. They get to see the buyer's agents and how they operate, how they work. We get to learn and see what sales agents want in terms of the X factors in building relationships to get more off markets. We also see the best ways to negotiate to have win-wins for all around.

And so we want to take all these lessons and learnings and bring them to life today in the conversation. We go through auctions, understanding what's happening in the Brisbane market there, the reasons for why vendors don't want to sell and what you should know about that and how that impacts you as a property investor. Lastly, we go into the no-nos of negotiations, the things that you should not be doing as a buyer that'll only just come back and bite you. So to see more of this and learn more of how we're working together in the buyer's agency and seller's agency space and how ultimately vendors and buyers can have more win-wins, check it out and tune into the very end of the episode. Let's get into it.

Nerd alert! Property Nerds, the home for data-driven property investors where we uncover Australia's hot and cold markets, latest headlines and trends. Avi, welcome from sunny Queensland over to miserable Sydney with the weather here. But it's actually not been too bad today, babe, but welcome to the show. Thank you.

Thank you for having me. I'm excited to be on. Well, me and you go back many, many years and so I'm actually very, very excited to have you on because it's the first time we're podcasting together on the Property Nerds. And I think like with your experience and with your scale in the team, the beautiful scenario here is that there's so many areas that we can go with this. It's almost like we're spoiled with choice on the show.

Thanks to what you've been building up in Queensland. But mate, I wanted to go into this world of like, you know, auctions because auctions is a place that's becoming more and more popular in the Brisbane market. Wasn't something when you wind the clock back five, six years, it wasn't as popular as very much a Sydney and Melbourne thing. And so I wanted to just talk to you about some of the advantages you're seeing of vendors taking that approach and also just what it means for a city like Brisbane when we start to have this occur more and more. I think auctions, it's becoming more consumer led than anything else.

I think about five, six years ago, vendors used to tell us, I don't want to do auctions. The perception is it's more of a fire sale. Something's wrong with the property. Agents used to say auctions don't work in my area. I'm like, but have you tried?

So what's actually happened is in Brisbane in particular, I think the state borders and barriers have broken down. So it's almost merging into one whole country in itself. So consumers themselves have said to us, because investors are selling, right? They've been buying from Sydney, buying from Melbourne. They start selling their properties and they're like, hey, what about auction?

Because they're so used to it in Sydney and Melbourne. So it's almost been driven by them. And then agents have had to go and level up. They've decided to get better at auctions because people are actually asking for it. Now for us, we recognized this earlier on.

As yourself, you guys are very data driven in your business and so are we. We realized that investors were buying heavily. Speaking to you as a buyer's agent, speaking to other investors who've got two or three properties, we knew that the Sydney and Melbourne market were buying heavily into Brisbane. So we decided to become better and better with auctions. And it's almost like when stock runs out, there's not much out there for people to buy.

So it was a perfect situation environment for us to say, okay, how can we now create better competition for our vendors? And the agents that know how to talk their language, they should work as the same as in they want to get the deal through. So if a broker is saying that you shouldn't bid, there's something wrong with the broker. They're not confident. They don't have experience.

They haven't taken someone through the auction route before. So there's one that's the main criteria to stop people from bidding is because the brokers don't have the confidence themselves. So we try to help them with that as well. And most often than not, we'll call the broker and say, hey, what's going on here? Did you know that it's actually easier to get finance for auction property most times than it is for private treaty property?

And giving them the confidence, hey, if you come to bid, one of our agents will be there helping you along. So you don't have to wave the paddle yourself. We'll come chat to you, tell you what's happening on the auction floor. It's actually the most transparent way to buy property. So there's a certain few things that go wrong all the time, but it's just giving them the confidence that the process is not there to swindle you.

It's there to actually help you. It's more transparent than the private treaty process. Now, auctions are one way to sell. There's obviously investors who have tenants in their properties, and they might be considering the private treaty or other things like that. But often when we have investors with tenants in their property, part of them is thinking, well, I don't want to sell because there's tenants here, or maybe I don't want to go and do this because it's not staged.

I'm not getting it to that best state. I don't want to sink in renovations, or maybe I should, I shouldn't. So what is your tips to investors who are looking to sell? Are some of these things correct? Are they true thoughts?

Or do you feel like, no, it's not the case, and it needs to be looked at differently? I think when you look at it, what investors want to do primarily, what we tell our investors is that you want to minimize the time your property is vacant on the market, right? So yes, sometimes selling with a tenant is hard, but we look at tenants as like a partner in their transaction. It comes down to the skill of the agent. We prefer to sell it when the property is about to go vacant.

So there's two, three, four weeks left. So then the new buyer coming through can be an investor, can be an occupier. It gives you more options for the buyer pool that you're selling to. So I don't think investors should be reluctant to sell the property when there's a tenant. They should be engaging an agent that can step them through their process and say, hey, this is the time we go to the market.

This is my deal with the tenant. My first call is the tenant. I'm going to sit down with them, show them how I'm going to do this, because tenants want people come in, come out quickly. They don't want to drag the sale on for two, three months. The other thing tenants want is a good reference.

So they're willing to work with a good agent as well. So I think we get caught up in this world of, hey, there's tenants, let's not sell it. But it's actually the optimal time to sell just before lease renewal is due, because it gives you so many more options going forward. That's good, because that helps from our clients from a timing perspective, and then also helps them from thinking of just more holistically, because you've got all those, what's in it for the tenant? How does it make the agent's life easier, the agent's job easier?

So it makes sense there. The other thing I would say to investors is that don't be shy getting good photos during rental time. If the property is vacant, get proper photos done. Don't rely on it when it's tenanted, right? So as soon as it's vacant, your property manager should be guiding you.

Hey, Arjun, this is actually the best time for you to get professional photos done. You're going to sell one day. Everyone's going to sell one day. Let's get it ready. Let's get it done.

So when it comes time to sell, your agent's got an easier pathway to get the property sold. Yeah, really good tip. Really good tip. Awesome. Avi, you mentioned how auctions were a very transparent process, but if we sort of talked about private treaties, it can be a little bit of a guessing game for a lot of people.

Naturally, we have the acquisition team who are really good at negotiating and conversing with yourselves as sales agents, but we've also got people who stumble all over themselves. Take example myself a couple of years ago when I was trying to buy it. I did everything wrong. So what do you sort of see as those really big no-nos when it comes to people trying to do it themselves without the skill or They'll have a good answer ready to go. So look for someone who can deal with things holistically rather than someone who says, hey, I've just found this deal.

There you go. Make an offer. Off you go. So buyers agents will help, but you need the right one. You can't just have someone who's just graduated.

I think there's 500 coming out every month nowadays. There's something crazy like that. It's the fastest growing field according to LinkedIn. Yeah, it's definitely up there. But that just made it more and more important to have the right team with the right trust and credibility on your side.

But what you've talked about is actually really important because when I speak to some of the agents in your team as well, they said, hey, we love working with you guys because of the actual convenience and logistical convenience it gives us. When you've got a right buyers agent, they're not letting milestones and things just happen or not happen and fall over. It's like, okay, deposit payment is a very important milestone. Pest and building ordering, pest and building due date, finance due date, pre-settlement, property management introduction, settlement, post-settlement, looking at depreciation, quantity surveying. So when you've got the right buyers agent, they want the customer to feel guided and supported and almost like one step ahead of the customer.

So the customer is never actually like thinking about what's next, it's happening. And then when you've got a sales agency that's working with a buyers agent that does it to that level, it's almost like, it's not like they take their eyes off the logistical experience, but they're like, hey, you know what, for this transaction, I can be a little bit more at ease because someone else wants their customer also to have the smoothest possible experience. And I've spoken to some people and they say these similar things. It's like, we want a smooth experience for our vendor. You really want a smooth experience for your buyer.

And guess who wins? The buyer and the vendor. They both win together because they just get a really smooth outcome. So yeah, no, I appreciate what you shared then on the whole world of buyers agents in terms of where they can have that X factor and support for a client. And you're right, it's no longer off markets anymore as the only hot sauce.

Like Adrian's division is all about strategy. The customers are now even going, well, you know what, property buying isn't the only thing anymore. It's like, we want to plan. Where do we get to? This is just a tool.

Like who's going to help me actually get to my end goal? Yeah, no one just wants to buy one, right? It's like five, six, seven. How can I get to 10? It's the journey, the whole thing.

So you actually have a customer for life in a way. You have to really take care of them the first time so they understand everything and they'll keep coming back. And I think a lot of buyers agents out there, frankly, don't understand that much about that whole customer journey side of things. Absolutely. Yeah, so in finance, we have a really common scenario that happens with owner occupiers wanting to upgrade their principal place of residence.

But typically, most consumers will just say, oh, bridging finance. How easy is it to just do bridging finance? But knowing what I know, it's very difficult to do bridging finance, particularly when you have a portfolio already and borrowing powers is quite difficult. So typically where we go is a number of different options. I just want to get your perspective from a sales age perspective to see if either of those options would be a preference or if it's going to negatively impact the sale too much.

So one example would be a principal place of residence. You want to upgrade it. So you put your house on the market. You're still living there. And then you negotiate like a rent back off the new purchaser.

And then you can rent back the house for like six months, be pre-approved for an upgrade of a principal place of residence. And it's a simple transaction. Like, yeah, you've got a time limit, but at least you don't have to up and move and do something like that. Like, have you seen that scenario happen many times? Or do you think it's better for them to just move out and rent and then sell it as a vacant so that the new owner pool is larger?

No, so what we say to our clients, we understand buying and selling properties at the same time. It's one of the hardest things you can do. Super hard. Because most of the people buying and selling are owner occupiers and they're emotionally involved. They're mostly, their current property, I think their house is their castle, right?

So when they're selling something and buying, it becomes a harder process. So we tell them we do this probably about seven or eight times a month where someone's buying and selling at the same time. There's what, the simultaneous settlement is another one. That's, I just, never is that a good idea. Like, I've seen that go wrong.

It often always goes wrong. It's mostly the trucks break down or something happens, right? So what we say to them, there's several options. And yes, bridging is one of them. It's one of the ones we try to avoid because it is harder to do and it has extra costs involved with the seller and there's extra stress as well.

What we say to them, the first thing we have to encourage them is that a lot of them don't actually want to put their house on the market when they're buying. So they say to me, Avi, I want to find something before I put this on the market. Like, that's the wrong way to think. Yeah, it's the wrong way around. Because the market is so buoyant at the moment, right?

Agents won't let you buy something subject to sale. So first thing we do is like, okay, we need to put your house on the market. What can we do to get it on the market? That's the first thing. The second thing we say to them is like, look, we can actually negotiate longer settlement clauses as well.

So we try to do about three months without annoying the buyer on the other side. Three months is probably doable. So then all of a sudden you have about 60 days to find a house. So that's one thing. The second thing is rent back.

Rent back is easier done, but sometimes the sellers are reluctant because they say to you, hey, Avi, if I can't find a house in two months, what's the guarantee I'm finding a house in six months' time? I've just sold my house for 1. 2 and then six months later I'm going to pay 1. 5 for something. So that's another thing that we have to coach them through because you want to buy and sell in the same market.

Six months later the market's changed. So that becomes a bit more trickier, but definitely it is an option. It just depends on how much you want to get out of their house. It gives you more time. It's a better option than saying three months.

You've got a three-month settlement. At least if you have six months rent back, then if you still can't find a property in six months, well, you've had six months. You might have to move out and rent at that point, but still it's just a better option because it gives you more time. It gives you more time, but it might add to your cost of buying. You've got to balance it out.

It just goes to how much do you want to get out of this place? Are you downsizing? Are you upsizing? What's more important to you? Because you guys know better than me, six months, the market is moving at tremendous rates.

You could be 100K down and 20K for rent, so you could be 120K worse off. But it just depends on your circumstances. We always say three months is a good timeframe to try to extend it by and have yourself three months with an unconditional contract or settled contract to find something else. Avi, do you find, and maybe this does happen a fair bit, but do you find that it's helpful because I personally went through that journey of buying and selling at the same time for my dream home, selling a couple of places in Sydney and then buying up, and I personally felt this helped me and it'd be good to know from your side, is when you give the person that you bought the property from the business for the selling of your property too. So it's like I found that helped a lot because I didn't have any issues then with communication and it wasn't a, I hope the agent didn't understand what I'm thinking and going through on the buy or the sell.

It's because that person was looking after both. I was in the area moving to just a few suburbs out. They handled the sale and I bought that property from them, but then I was like, hey, I want this person to also sell my two homes that I had to upsize. And I found that made my life much easier. Do you also recommend that to the buyers who are trying to go through that and maybe buy that to look into that too and it does make an X factor in their communication?

Yeah, 100%. That should be done all the time. So anytime we get a subject to sale, we should be presenting to both clients on both sides of the deal so we can actually control the pace. We know that we want to make sure that both clients are looked after at the same time. Simultaneous settlement, it's easier to do when there's one agent involved in everything else.

The only thing you want to be cautious of is that if you're buying somewhere, you don't want to give an agent who's not very good at your area, hasn't sold much, doesn't get the best prices. That's the only thing you have to be conscious of. Like audit the agent as well.