What's causing PANIC in the American real estate market?
My Clearance Rate Today: 6/10 (60% SOLD)
I don't know when it happened, but at some point in the last two decades we moved away from making the hero being the client and, all of a sudden, the real estate agent decided to be the hero in the transaction. And you see that, you see that in the way that real estate agents and not all of them, and that's the thing that annoys me A small cohort of people are beginning to act Like the bankers did before the GFC. If you remember the world of banking before GFC, it was like it was a money trail Do what you want, sell what you want, make money, don't worry about the client. This is going to be a party that's never going to end. Hey, paulie, good to see you, one of the great agents in the Eastern suburbs of Sydney, and he's definitely not in that category. But at some point, the hero moved from being the vendor, the client, and the real estate agent decided to become the hero, including the way they acted, the way they behaved, even the way they marketed in some properties, the way they marketed the agent is more marketed than the actual home and it's being funded by the vendor. And I've got to say to you, I don't know who it was. Is there a real estate trainer or educator out there that's telling people you know what? Just do what you want to do. Look good, screw everyone else Listen. That's not the Panos model. The Panos model is you want to build a long-term, sustainable business and you want to make it effortless, lucrative and fun. And the way you do that, you make the vendor the superhero. Right, that's what you do. You make the vendor the superhero and everything is about the vendor.
Speaker 1:Whilst you're looking at auction results around the country at the moment, I would not read too much into those results. There is just too small a sample size of properties to work out. Is the market great? Is the market average or, in fact, is it actually struggling? Is it too early to tell? One thing is for sure the quantity of people inspecting properties is high, but don't take that as being a sign of that is an active bidder. Ray White's giving their results every Saturday afternoon and they're indicating that their auctions today in New South Wales saw an average of five bidders registering and three bidders bidding per auction, which is a pretty good number. Their auction clearance rate today in New South Wales that they're reporting is 91%. That number will definitely be coming down when they've got a more larger number of their results coming back, because Saturday afternoon clearance rates are always higher than what they are on Monday, tuesday or Wednesday. Again, to recap, to get your auction results Saturday night you can go to realestatecomgoogle and you'll be able to get about 70% of the results if you Google auction results in the search box. Sqm is probably the best way to get a accurate description. They nearly have all the results. On a Tuesday, I would say Also call Logic RP data. But today I've got to tell you 10 auctions, which is a fair bit of auctions for me, because this time of the year I normally don't have campaigns that have run three weeks. No, three-week campaigns normally start running from around late Jan, but I'm actually doing a full 10 auction campaigns done and dusted the first week of February.
Speaker 1:Of course, guys and girls, the big issue is interest rates. Tuesday there is, I think, the first Reserve Bank meeting. All economists being interviewed in a number of stories in the FIN review this week I've been reading every property story in the FIN review are suggesting that it is highly unlikely. Most economists are saying no rate rise and in fact most of the economists are saying there will not be a rate rise in February, but probably another one, and that the next rate movement is going to actually be down, with many of the economists tipping August, september, october as being the period that we might see a rate cut. And I think one of the drivers of the big numbers of people out at open for inspections and watching as auctions is not that they were looking to buy, but they're getting ready to buy, doing their due diligence when they hear yes, rates are going to drop, or when the chatter starts getting more.
Speaker 1:Today's results was six out of ten. In fact, I only put the hammer down two times today. The other four properties had been sold prior and four did not sell at all. In fact, I had a couple of properties that had zero bidders in and good afternoon, brad. So team six out of ten, 60%. You would call that not bad, I would say in this market. But don't read into these results. Reading to the results at the end of February Avalanche of buyers once its clear rates heading down. I agree with that, grain, I agree with that, and I think that most buyers these days are so educated and sophisticated they actually make a decision and they jump. Before a rate cut is announced, they jump on the feeling that they're going to be a rate cut. So it's been factored in.
Speaker 1:And my final thing I want to touch on today is that to those of you team that are watching this right now, that are sort of buyers, I need you to understand. I'm not saying real estate agents should actually be treating buyers poorly, but it's important that everyone understands the relationship in real estate is, in Australia, between a vendor and an agent. That's it. The vendor is paying the agent. Now I understand that there are times where you've got buyers that use buyers agents. Then the buyer has a relationship with the buyer's agent. They have a contractual relationship. The vendors agent is there to get the vendor the best price. The buyers agent is there to get the buyer the best price.
Speaker 1:Now I'm not sure if you're aware of this, but in Australia I think our vendors have got it pretty good. They pay somewhere between one and a half and two and a half percent to sell their property, plus a bit of marketing in America and there's a big court case. This has been going on for decades in America at the moment a massive court case. This is big. This is a big story. Right, agents have been charging around six percent to sell a property. Out of that six percent, three percent would then go from then to another agent who was the buyer's agent, right, but who was funding it. The vendor and the federal courts have found in the USA that it's unlawful. So I've got to tell you the vendors in Australia you've been paying less than half the fee versus the American model, and what we're going to be seeing I'm pretty sore is the whole model in America totally disrupted. Think about it. They're going to be earning half the income. The model's got to change.
Speaker 1:But, team, let's finish off this wrap and if you're a real estate agent that's looking at this, let me tell you be different. Don't be like the others. Become a community agent. Become the ecosystem that brings your community together. Be the person in the real estate industry that gives all the community news. Go out there and look at the best businesses and talk about them, and talk about where the best place to get a coffee is, and talk about some of the great facilities that the area has. Team, that's what you've got to do. The community agent is the main agent.
Speaker 1:Well done, simon. Huge numbers in Melbourne. Good reporting there, simon, saying huge opens coming through. So, team, getting back to it, richard Edmonds says buyers agents would go broke in Australia 3%, 100%, rich, 100%. So, team, I've got to say to you, if you sit down, if you're in real estate and watch this, do this. Make your vendor the hero. That vendor becomes a salesperson for life for you. And I've got to tell you, word of mouth is how you get the best business. Anyway, team, I'm going to sign off. This is my last wrap for three weeks, but I'm going to stay in contact with you. I'm not going to be auctioning the next two Saturdays.